October 15, 2021

Volume XI, Number 288

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October 15, 2021

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October 14, 2021

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October 13, 2021

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California District Court Again Dismisses ERISA Lawsuit Challenging 401(k) Plan’s Fees

The Northern District of California dismissed with prejudice a lawsuit alleging a 401(k) plan’s sponsor and fiduciaries included unreasonably expensive funds in the plan’s investment lineup.  The court previously dismissed the plaintiffs’ claims without prejudice, finding their complaint failed to plead facts from which the court could infer the defendants breached their fiduciary duties.  In response, the plaintiffs filed an amended complaint.  The court held that the plaintiffs’ amended complaint suffered from the same infirmities as their initial complaint and dismissed the case again.

In particular, the court rejected the plaintiffs’ reliance on an industry publication’s calculation of median fees charged by a few plan funds because the data amalgamated fees charged by funds with disparate characteristics.  Thus, the court held the median fees were not an apt comparator for the fees charged by the specific challenged funds.  Similarly, the court nixed the plaintiffs’ comparison of actively managed funds to passively managed funds because the two types of funds “have different aims, different risks, and different potential rewards that cater to different investors.”  Finally, the court dismissed the plaintiffs’ claim that the plan should have offered less expensive share classes of some plan funds.  The court found unavailing comparisons between the less expensive share classes and those included in the plan because while the fees charged by the plan funds paid for the plan’s recordkeeping and other administrative services, the less expensive share classes’ fees did not.  Accordingly, the court held that the plaintiffs failed to cure the multiple fatal defects in their initial complaint and dismissed the amended complaint with prejudice.  The plaintiffs have not yet noted an appeal of the dismissal.

The case is Davis v. Salesforce.com, Inc., No. 20-cv-01753 (N.D. Cal. April 15, 2021).

Jackson Lewis P.C. © 2021National Law Review, Volume XI, Number 139
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About this Author

Principal

Stacey C.S. Cerrone is a Principal in the New Orleans, Louisiana, office of Jackson Lewis P.C. Her practice focuses on representing employers in workplace law matters, including preventive advice and counseling.

Practices

  • Employee Benefits

Admitted to Practice

  • 5th Circuit Court of Appeals, 1998
  • 6th Circuit Court of Appeals, 2014
  • Louisiana - E.D. La., 1999
  • Louisiana - M.D. La., 1998
  • Louisiana - W.D. La., 1998
  • Louisiana, 1998
504-208-1755
John W. Sulau Employment Attorney Jackson Lewis Greenville
Associate

John Sulau is a member of Jackson Lewis P.C.'s ERISA Complex Litigation and Employee Benefits practice groups.  He is an associate in the firm's Greenville, South Carolina, office. John defends employers, plan sponsors, and fiduciaries in ERISA class actions.  He has represented clients of all sizes in ERISA litigation nation-wide against a broad spectrum of claims, including claims for breach of fiduciary duty, benefit claims from health and welfare and pension plans, COBRA claims, statutory penalties claims, and excessive fee claims involving 401(k) Plans....

864-232-7000
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