COLLECTED WISDOM™ on Court and Legal Actions Related to Retirement Plans

A directory and index of articles that review what is happening in the courts and legal system.

The Ninth Circuit Rejects Plaintiffs' Challenge to 401k Investments in Private Equity

On May 22, 2025, the Ninth Circuit upheld a district court's decision that dismissed a class action lawsuit against Intel's defined contribution retirement plan fiduciaries regarding their investments in hedge funds and private equity. In the case of Anderson v. Intel Corporation Investment Policy Committee, the court agreed with the DOL that offering PE investments in 401k plans aligns with fiduciary duties under ERISA. This ruling serves as guidance for 401k fiduciaries considering PE options, highlighting the importance of providing thorough disclosures about investments to mitigate fiduciary liability. Additionally, the case emphasizes the necessity of using "meaningful benchmarks" for comparing the performance of investment options against similar funds with comparable risk profiles.

Source: Ktslaw.com, June 2025

Avoiding Litigation in the Aftermath of Cunningham v. Cornell University: Procedural Protections for Plan Sponsors

Following the Supreme Court's ruling related to fiduciary duties in Cunningham v. Cornell University, there's speculation about a surge in litigation, but a significant increase in meritless claims is unlikely. Instead, fiduciary lawsuits are expected to commonly include prohibited transaction claims along with other allegations such as excessive fees or breaches of duty. The lower threshold set by the ruling may enable these prohibited transaction claims to move past the initial pleading stage, extending litigation into discovery and further proceedings. However, plan sponsors can reduce litigation risk and associated costs by consistently following specific procedural practices, regardless of the ruling's overall impact on litigation rates.

Source: Reinhartlaw.com, June 2025

UBS Faces Latest 401k Forfeiture Lawsuit

UBS is facing legal action regarding its handling of forfeited funds in its 401k plans, as detailed in a lawsuit filed in the U.S. District Court for the District of New Jersey. The case, Czakoczi v. UBS AG et al, alleges that the investment bank prioritized its interests by using forfeited funds to lower employer contributions instead of applying them toward plan expenses. This mirrors claims made in other lawsuits under ERISA, including a recent case against Cigna Group and a prior settlement involving Intuit Inc.

Source: Plansponsor.com, May 2025

Another Suit Asserts Fiduciary Forfeiture Breach

A lawsuit has been filed by participant-plaintiff Holly Hendrickson, represented by Lynch Carpenter LLP, against the fiduciaries of the Elevance Health 401k Plan. The suit alleges that the defendants violated ERISA by failing to properly manage the plan's expenses. Specifically, it claims they misused plan forfeitures to offset the company's future contributions instead of using those funds to lower administrative costs for plan participants. The company is accused of benefiting financially from this practice, resulting in millions of dollars in contribution expenses.

Source: Napa-net.org, May 2025

The (Hopefully) Final Chapter in the Intel ERISA Litigation: Implications for Private Market Assets in 401k Plans

On May 22, 2025, the Ninth Circuit Court of Appeals upheld the fiduciaries of Intel Corporation's retirement savings plans regarding the inclusion of private fund investments. The court ruled that ERISA's duty of prudence focuses on a fiduciary's decision-making process rather than evaluating performance in hindsight, emphasizing that comparing returns or fees alone does not prove imprudence. The ruling aligns with the DOL's stance that private funds can be included in a diversified investment portfolio. However, the lengthy litigation and the possibility of differing standards in other circuits may lead fiduciaries to be cautious without clear legal protections for including diversified funds with private market components.

Source: Debevoise.com, May 2025

Intel Wins Appeal of "Speculative" Investment Suit

A federal appellate court has upheld a district court's dismissal of a lawsuit by Winston Anderson, a former Intel employee, which challenged the investment strategies of Intel's retirement plans. Filed in 2019, Anderson's suit claimed that the fiduciaries of the Intel 401k and Retirement Contribution Plans breached their duties by investing in speculative target-date funds that included hedge funds and private equity. He argued that these investments were characterized by high costs and poor performance, and were illiquid and opaque. The court found the claims insufficient to constitute a fiduciary breach.

Source: Napa-net.org, May 2025

Jury Awards Bank Workers $38M in Pentegra 401k Excessive Fee Lawsuit

In a notable case, a New York federal jury awarded over $38 million to more than 26,000 current and former bank employees in a 401k excessive fee lawsuit, Khan et al. v. Board of Directors of Pentegra Defined Contribution Plan. The lawsuit involved the Multiple Employer Defined Contribution Plan for Financial Institutions, administered by Pentegra, which manages over $2 billion in assets covering employees from 250 banks. This jury verdict may represent the highest award in an ERISA excessive fee suit to date. Typically, ERISA cases are resolved through settlements or bench trials, as many courts view them as involving equitable claims appropriate for judges. However, some judges in the Second Circuit have permitted jury trials for these claims.

Source: Hallbenefitslaw.com, May 2025

The ERISA Burden of Causation and Objective Prudence in the Home Depot Case Before the Supreme Court

The Supreme Court has requested guidance from the United States Solicitor General regarding the Home Depot excessive fee case, which involves allegations of fiduciary breaches related to underperforming BlackRock target-date funds and high managed account service fees. The case centers on the need to clarify which party in an ERISA lawsuit is responsible for proving that a fiduciary's breach caused financial losses to a retirement plan. The discussion here includes an examination of why participant-plaintiffs should carry the burden of proof concerning liability, causation, and damages under ERISA, and critiques the historical burden-shifting approach of the Solicitor and the DOL. Additionally, it addresses the often-overlooked issue of objective prudence in ERISA causation analysis.

Source: Encorefiduciary.com, May 2025

Plaintiff Assessed Court Costs in ERISA Case

A federal judge has approved a request from plan fiduciaries for costs in a dismissed excessive fee lawsuit originally filed in 2022 by participant-plaintiff Guillermina Lopex against Embry-Riddle Aeronautical University, Inc. The lawsuit claimed that the fiduciary defendants included more expensive funds in the $500 million retirement plan than necessary, given the availability of cheaper alternatives. Although it's a positive development for fiduciaries to seek cost recovery after litigation, the judge ultimately reduced their request by half, noting that the lawsuit appeared flawed from the beginning and failed to substantiate its claims after multiple attempts.

Source: Psca.org, May 2025

Plan Fiduciaries Faulted for Proprietary Fund Picks

A lawsuit has been filed by a former participant on behalf of the Teachers Insurance and Annuity Association of America 401k Plan and TIAA Retirement Plan, alleging multiple breaches of fiduciary duty under ERISA. The suit targets TIAA, its Board of Trustees, the Plan Investment Review Committee, and unknown defendants (John Does 1–30). The allegations state that TIAA has retained proprietary in-house managed funds with a higher-cost share class in the Plans, despite the availability of a lower-cost share class, leading to higher fees for the Plans.

Source: Napa-net.org, May 2025

Lawsuit Filed Against UnitedHealth Alleging Misuse of Forfeited 401k Plan Assets

UnitedHealth Group Inc. is facing a federal class action lawsuit, Kotalik et al. v. UnitedHealth Group Inc. et al., filed on April 28 in the District of Minnesota. The lawsuit alleges that UnitedHealth and the administrative committee of its 401k Savings Plan misused forfeited employee retirement plan assets, violating fiduciary duties under ERISA. Four current and former employees represent over 250,000 plan participants, claiming that the company improperly utilized 401k forfeitures to offset its contributions instead of covering plan expenses, which the plaintiffs argue is a breach of ERISA regulations.

Source: Planadviser.com, May 2025

Terms of Intuit Forfeiture Suit Settlement Unveiled

A settlement has been reached in a lawsuit involving Intuit, filed in the Northern District of California by plaintiff Deborah Rodriguez in October 2023. This case concerns forfeiture reallocation, and after 18 months, including a failed motion to dismiss, Intuit and Rodriguez have notified the court of their settlement, facilitated by mediator Hon. Morton Denlow (Ret.). Court approval is necessary for the settlement, and the parties will provide details on the process leading to the agreement.

Source: Napa-net.org, May 2025

Suit Says Cigna Committed Fiduciary Faults With Stable Value, Forfeitures

A lawsuit has been filed by participants Amanda Reven and Antoinette Argentine, accusing The Cigna Group 401k Plan Retirement Plan Committee of fiduciary breaches related to a stable value option and misuse of plan forfeitures. The plaintiffs, represented by Capozzi Adler PC, claim that the committee failed to properly and adequately review the plan's investment portfolio, both initially and continuously, to ensure that each investment option was prudent in terms of performance.

Source: Napa-net.org, May 2025

Cigna Hit With Forfeiture Lawsuit; Intuit Reaches Settlement

As lawsuits persist against companies accused of mishandling forfeited funds in 401k plans in violation of their obligations under ERISA, Cigna Group has become the latest firm to be sued regarding its management of forfeitures. In contrast, software giant Intuit Inc. has reached a settlement after the court approved the case to proceed into 2024.

Source: Plansponsor.com, May 2025

New Law Firm Brings Forfeiture Case Against W.W. Grainger

A lawsuit has been filed against W.W. Grainger's 401k plan, which has over 30,000 participants and approximately $3.45 billion in assets, for alleged breaches of fiduciary duties under ERISA. The plaintiffs claim that the plan's fiduciaries misused forfeitures to benefit the company by reducing future employer contributions. This practice is said to violate the responsibilities of loyalty and prudence mandated by ERISA.

Source: Psca.org, May 2025

Giant Eagle Settles ERISA Class Action Suit Alleging Failure to Control 401k Plan Costs

Giant Eagle, a grocery store chain, has settled a class action lawsuit that claimed it violated ERISA by not adequately managing administrative and recordkeeping costs for its 401k plan. The lawsuit, led by a former employee, alleged that this negligence resulted in significant financial losses for plan participants. The details of the settlement reached through mediation, have not been disclosed. The case is Cheryl Kehrer v. Giant Eagle Inc. et al., in the U.S. District Court for the Western District of Pennsylvania.

Source: Hallbenefitslaw.com, May 2025

Sixth Circuit Ruling Shows Toughening on ERISA Fiduciary Suits

A recent decision by the Sixth Circuit upheld the dismissal of a proposed class action against Denso International America, highlighting a trend among appellate courts to raise the standards for cases alleging breaches of fiduciary duty under federal benefits law. The three-judge panel supported a Michigan federal court's July 2023 ruling that rejected former employee Martha D. England's ERISA lawsuit for lack of a valid claim. This ruling has prompted defenses from attorneys representing employers in similar 401k excessive fee cases in other courts, including Florida and the Eighth Circuit.

Source: Wagnerlawgroup.com, May 2025

Sixth Circuit Stands by Plausibility Standard in 401k Excessive Fee Suit

The court rejected the plaintiffs' claims that the Commonspirit case was not relevant, noting that comparisons based solely on industry surveys are insufficient. It also disagreed with the Seventh Circuit's ruling in Hughes v. Northwestern University, stating that it lacks the context-specific details needed to demonstrate that fees are "excessive relative to the services rendered." In summary, in the Sixth Circuit, plaintiffs are required to provide plausible arguments that include both a comparison of fees and the services provided, rather than relying solely on fee comparisons.

Source: Napa-net.org, May 2025

Considerations for Plan Sponsors in the Wake of Cunningham v. Cornell

ERISA-related lawsuits, particularly those involving excessive fees, have significantly increased over the past decade, with newer strategies like forfeiture litigation gaining traction. While lawsuits were once primarily aimed at billion-dollar plans, smaller plans are now also being targeted. In 2024, there were a record 53 settlements totaling over $200 million, with an average settlement of $4.6 million. However, there are strategies that plan sponsors can implement to reduce their risk of litigation.

Source: Carltonfields.com, May 2025

Intuit Reaches Settlement in Forfeiture Case

Intuit has chosen to settle a lawsuit related to a fiduciary breach concerning the use of plan forfeitures after unsuccessful attempts to dismiss the case. Filed in October 2023 in the Northern District of California, the lawsuit highlighted that the Plan allowed forfeited nonvested accounts to be used for administrative expenses or to lower future Company matching contributions. Eighteen months later, following a failed motion to dismiss, Intuit and the plaintiff, Deborah Rodriguez, reached a settlement with the help of mediator Hon. Morton Denlow (Ret.) and are seeking court approval for their agreement.

Source: Psca.org, May 2025

Schlichter Bogard Files Second 401k Forfeiture Reallocation Suit

The law firm Schlichter Bogard LLC has filed a lawsuit against Northrop Grumman, focusing on a fiduciary breach related to the reallocation of plan forfeitures. The lawsuit claims that the defendants unlawfully charged plan administrative expenses to participants' retirement accounts, violating ERISA. The suit includes a demand for a jury trial, addressing a growing area of litigation in this context.

Source: Napa-net.org, May 2025

Empower Escapes Swiss Re 401k Fiduciary Suit

A recent ERISA fiduciary breach lawsuit against the fiduciaries of the $1.45 billion Swiss Re Group U.S. Employees' Savings Plan and service provider Empower has ended quickly in favor of the recordkeeper. The lawsuit, filed just weeks ago, included multiple allegations of fiduciary breaches. The likely reason for its abrupt conclusion is that recordkeepers, like Empower, are generally not considered fiduciaries, which weakens the chances of success for such lawsuits.

Source: Napa-net.org, May 2025

Texas Federal Court Allows an ERISA Fiduciary Challenge Against Alleged "ESG Investing" Without Any ESG Funds

On January 10, 2025, the Texas federal district court ruled in Spence v. American Airlines that both American Airlines and the committee managing its 401k plans violated their fiduciary duty under ERISA. This breach was primarily related to proxy voting of securities within specific investment funds in the 401k plans. The decision is noteworthy as it may pave the way for new types of ERISA fiduciary litigation targeting 401k plans, emphasizing proxy voting rather than traditional concerns like investment performance or administrative costs. This article discusses the court's findings, legal implications, and key considerations for 401k plan sponsors and fiduciaries in light of this ruling.

Source: Troutman.com, May 2025

Plan Sponsors Beware: The U.S. Supreme Court Just Eased Requirements to File ERISA Prohibited Transaction Suits

In the case of Cunningham v. Cornell University, many ERISA retirement plan sponsors and fiduciaries hoped the U.S. Supreme Court would establish new pleading standards to mitigate the increase in litigation against such plans. However, the Court ruled that plaintiffs are not responsible for proving that ERISA Section 408 exemptions do not apply; instead, plan sponsors and fiduciaries must assert these exemptions as affirmative defenses. This ruling is expected to lead to a new surge of lawsuits targeting ERISA plans related to essential transactions with service providers.

Source: Ropesgray.com, May 2025

Impact of Forfeiture Lawsuits on Plan Sponsors

Companies have discretion on how to use forfeitures -- unvested company contributions when an employee leaves -- provided the policy is clearly stated in the plan document. Common uses for these forfeitures include reducing contribution obligations to existing participants, covering plan fees, or reallocating funds to other participants. According to PSCA's 67th Annual Survey, historically about 60% of plans reduce company contributions with forfeitures, around 50% use them to offset expenses, and about 10% reallocate them. As lawsuits related to forfeitures increase, there is interest in whether companies are maintaining or changing their forfeiture policies.

Source: Psca.org, May 2025

Settlement Reached in Principle in Pentegra Fiduciary Breach Case

Parties involved in an ERISA fiduciary breach lawsuit concerning Pentegra's multiple employer retirement plan have reached a settlement in principle, as noted in a court order on May 2, filed in the U.S. District Court for the Southern District of New York. The case was poised for further court proceedings to address prohibited transaction claims. Recently, a jury awarded a class of plan participants over $38 million for fiduciary breaches under ERISA. U.S. District Judge Philip M. Halpern stated that all remaining deadlines are paused while the parties finalize the settlement terms, and they are required to seek preliminary approval of the settlement or provide a status update by May 16.

Source: Planadviser.com, May 2025

Judge Finds in Favor of Knight-Swift in 401k Forfeiture Case

A federal judge in Arizona has dismissed a class action lawsuit against Knight-Swift Transportation Holdings, which was accused of improperly using forfeited assets from its 401k retirement plan. The lawsuit claimed that the company violated ERISA by using these funds to offset company contributions instead of covering plan expenses. A key point of contention was whether Knight-Swift was obligated by its annual Form 5500 filings to the DOL, which stated that forfeited assets "shall be used" for plan expenses.

Source: Planadviser.com, May 2025

Kaiser Prevails in Motion to Dismiss 401k Forfeiture Reallocation Suit

A fiduciary defendant, Kaiser Foundation Health Plan, along with related entities, has successfully dismissed a lawsuit filed by Stacey M. Madrigal. The suit claimed a fiduciary breach concerning the use of plan forfeitures to offset employer contributions, alleging violations of ERISA.

Source: Napa-net.org, May 2025

High Court Sets Low Bar for ERISA Prohibited Transaction Claims

The U.S. Supreme Court's unanimous ruling in Cunningham v. Cornell University has made it easier for plaintiffs in excessive fee lawsuits against ERISA plans to advance their prohibited transaction claims. The decision establishes a low pleading standard, which may hinder fiduciaries' ability to dismiss such claims at the early stages of litigation. While the ruling could lead to an increase in these lawsuits and settlements, the Court acknowledges that lower courts have mechanisms to mitigate baseless claims. The impact on sponsors and fiduciaries will largely depend on how proactively lower courts utilize these tools.

Source: Mercer.com, May 2025

Supreme Court Clarifies ERISA Prohibited Transaction Pleading Standards

On April 17, 2025, the U.S. Supreme Court issued a unanimous ruling in Cunningham v. Cornell University, establishing a more favorable pleading standard for plaintiffs in ERISA-prohibited transaction claims. Authored by Justice Sonia Sotomayor, the decision reversed the Second Circuit’s ruling, clarifying that plaintiffs do not need to preemptively state that ERISA's exemptions are not applicable. Instead, it is the responsibility of plan fiduciaries to assert and prove these exemptions as affirmative defenses.

Source: Erisalitigationadvisor.com, May 2025

Trends in ERISA Litigation: What Plan Sponsors Should Consider Now

This article focuses on five trends in ERISA litigation that plan sponsors should consider in their risk mitigation efforts: Forfeiture Accounts, Health Plan Fee Litigation, SECURE 3.0?, Health Plan Cost and Fee Transparency, and Health Plan Regulation.

Source: Barran.com, May 2025

Supreme Court Declines to Hear AT&T ERISA Case

The U.S. Supreme Court declined to hear AT&T's appeal regarding a prohibited transaction in a defined contribution plan, allowing the case Bugielski et al. v. AT&T Services Inc. et al. to return to the district court for further proceedings. The case, which focuses on prohibited transactions under ERISA, has been in litigation since 2017. Several industry groups had submitted an amicus brief requesting the Supreme Court to take up the appeal, but the justices did not comment on their decision.

Source: Planadviser.com, May 2025

UWM Faces Class-Action Lawsuit Over Alleged Misuse of 401k Plan Assets

United Wholesale Mortgage is facing a class-action lawsuit in a Michigan district court, alleging misuse of assets in its 401k retirement plan. The suit claims UWM violated ERISA by using plan assets to offset future employer contributions instead of addressing plan expenses. Allegations include breaches of fiduciary duties and violations of ERISA's prohibited transaction rules. UWM has dismissed the claims as "baseless," stating that it is among many publicly traded companies challenged by similar lawsuits regarding 401k plan practices.

Source: Housingwire.com, May 2025

Unanimous Supreme Court Decision Makes It Easier for Prohibited Transaction Claims to Survive a Motion to Dismiss

Lawsuits against retirement plans for allegedly overpaying service providers, like recordkeepers, continue to rise. Previously, some courts required plaintiffs to provide detailed allegations that the arrangement was improper or involved unreasonable compensation. However, on April 17, 2025, the U.S. Supreme Court's unanimous ruling in Cunningham v. Cornell University determined that these requirements were too stringent. This new permissive pleading standard could lead to an increase in excessive fee litigation.

Source: Winston.com, May 2025

Supreme Court Decision on Prohibited Transactions Will Increase ERISA Lawsuits, DC Plan Costs

The retirement industry criticized the recent unanimous Supreme Court ruling in Cunningham et al. v. Cornell University et al., arguing that it will lead to increased lawsuits, higher costs for retirement plans, and stifle innovation in plan design. Trade groups expressed concern that the decision encourages litigation against plan fiduciaries for engaging service providers at reasonable fees, which is allowed under ERISA. They stated that only Congressional action can amend ERISA to address the legal complexities regarding prohibited transactions and their exemptions. Tim Rouse, executive director of the SPARK Institute, emphasized that the ruling could burden fiduciaries unnecessarily.

Source: Wagnerlawgroup.com, May 2025

Supreme Court Addresses Prohibited Transaction Lawsuits

In the case of Cunningham v. Cornell University, participants in the university's 403b plan contended that they should not have to prove that certain exemptions to ERISA's prohibited transaction rules do not apply when alleging excessive recordkeeping fees. The U.S. Supreme Court unanimously sided with the plan participants, making it easier for them to sue retirement plans over routine transactions with service providers.

Source: Segalco.com, May 2025

The Supreme Court Relieves ERISA Plaintiffs of a Pleading Requirement: What's Next for ERISA Plan Fiduciaries?

On April 17, 2025, the U.S. Supreme Court unanimously ruled in Cunningham v. Cornell University that plaintiffs alleging prohibited transactions under ERISA are not required to plead facts showing that exemptions to prohibited transactions do not apply. This decision resolved a conflict among appellate courts and overturned the Second Circuit's dismissal of a similar claim, making it easier for plaintiffs to bring prohibited transaction claims against benefit plan fiduciaries.

Source: Littler.com, April 2025

Supreme Court Establishes Lower Pleading Standard for Prohibited Transaction Claims

The U.S. Supreme Court, in a unanimous decision in Cunningham v. Cornell University, held that plaintiffs alleging prohibited party-in-interest transactions under ERISA section 406(a) do not need to allege facts disproving available statutory exemptions (like reasonable compensation for necessary services) to survive a motion to dismiss. This means such claims can proceed even if fiduciary breach claims based on the same conduct would fail. To address the potential for frivolous claims advancing to discovery, the Court provided guidance to district courts on ways to mitigate these risks.

Source: Erisapracticecenter.com, April 2025

Supreme Court's Cornell Decision Has Broad Implications for ERISA Litigation

On April 17, the Supreme Court issued its decision in Cunningham v. Cornell University, which will affect many plan sponsors with similar service arrangements. The Court set a very low standard for surviving a motion to dismiss, potentially encouraging meritless lawsuits. To address this, the Court suggested that district judges could impose safeguards -- such as requesting reply briefs and sanctions -- but these could be applied inconsistently at judges' discretion. As a result, more meritless claims are likely to survive initial dismissal, leading to increased settlements by defendants.

Source: Cohenbuckmann.com, April 2025

Supreme Court Endorses Plaintiff-Friendly Prohibited Transaction Pleading Standard

On April 17, 2025, the Supreme Court resolved a circuit split regarding the proper pleading standard for a particular type of prohibited transaction claim under ERISA. Although this ruling may seem technical, it carries substantial practical implications. The Court's decision makes it easier for plaintiffs to bring claims and more difficult for defendants, such as plans and plan sponsors, to have these claims dismissed early in litigation. This article reviews the case -- Cunningham v. Cornell University -- and highlights key takeaways for plan sponsors.

Source: Venable.com, April 2025

Supreme Court Lowers Hurdles for ERISA Plaintiffs but Highlights Tools to Stop Meritless Claims

Last week, the U.S. Supreme Court issued its decision in Cunningham v. Cornell University, easing the standard for pleading prohibited transaction claims under ERISA. The ruling permits claims to move forward based simply on allegations that an ERISA plan engaged in a transaction with a third party, regardless of whether the transaction appears harmless or even advantageous. However, while the Court broadened the scope for such claims, it also urged district courts to adopt innovative methods to promptly dismiss meritless cases.

Source: Sidley.com, April 2025

Supreme Court Sides With Plan Participants: Pleading Standards for Prohibited Transaction Claims

On April 17th, the U.S. Supreme Court unanimously ruled in Cunningham v. Cornell that plaintiffs in ERISA excessive fee cases only need to plausibly allege that a plan fiduciary engaged in a prohibited transaction. The Court clarified that the burden does not lie with plaintiffs to prove that ERISA's Section 408 exemptions (like fee reasonableness) do not apply. Instead, the Court held that these exemptions are affirmative defenses, so plan fiduciaries must bear the burden of proving that the exemption applies. This decision reversed the Second Circuit's prior ruling in the case.

Source: Sgrlaw.com, April 2025

Questions About Service Provider Selection Stem From Pentegra MEP Case

A jury awarded over $38 million to more than 26,000 participants in Pentegra's multiple employer plan after finding that the plan’s fiduciaries breached their duties under ERISA. The case, Khan et al v. Board of Directors of Pentegra Defined Contribution Plan et al., filed in September 2020, centered on allegations that the fiduciaries paid unreasonable recordkeeping and administrative fees by retaining Pentegra Services Inc., a provider affiliated with the plan sponsor. Despite attempts to dismiss the lawsuit, the court allowed it to proceed, highlighting concerns over working with related service providers and ensuring fees are reasonable for plan participants.

Source: Planadviser.com, April 2025

Supreme Court Wants Solicitor General Opinion on Excessive Fee 401k Case

The U.S. Supreme Court has requested the U.S. solicitor general's input on a 401k excessive fee lawsuit against The Home Depot Inc. The case involves a legal conflict between circuit courts about who bears the burden of proof in such cases. The 10th and 11th Circuits place the burden on plan participants, while the 1st, 4th, 5th, and 8th Circuits, along with the DOL under the Biden administration, rule that once a plaintiff shows a fiduciary breach and loss under ERISA, the burden shifts to the fiduciary. The Supreme Court invited Solicitor General John Sauer to submit a brief expressing the U.S. government's views, without setting a deadline.

Source: Planadviser.com, April 2025

Jury Slaps Pentegra with $39 Million in Damages in MEP Excessive Fee Suit

Plaintiffs represented by Schlichter Bogard LLC won a substantial jury award in Khan v. Bd. of Directors of Pentegra Defined Contribution Plan, a case alleging excessive fees in a multiple employer plan. The suit claimed that the defendants, instead of leveraging the plan's bargaining power for participants' benefit, enriched themselves and Pentegra by allowing unreasonably high administrative fees to be charged to plan participants.

Source: Napa-net.org, April 2025

Cunningham v. Cornell: Supreme Court Lowers Bar for ERISA 406(a) Claims

On April 17, 2025, the Supreme Court ruled in Cunningham v. Cornell University that to state a claim under ERISA section 406(a), plaintiffs only need to allege the elements of section 406(a) itself. Previously, courts were divided on whether plaintiffs also had to allege that section 408's exemptions did not apply. The Court clarified that section 408's exemptions are affirmative defenses for defendants to prove, not requirements for plaintiffs to allege. This ruling makes it easier for plaintiffs to overcome early dismissals, proceed to discovery, and potentially reach settlements in section 406(a) prohibited transaction claims, likely leading to an increase in related lawsuits involving 401k and employee stock ownership plans.

Source: Groom.com, April 2025

Whole Foods Reaches Settlement in Excessive Fee Case

The parties in an excessive fee lawsuit involving the nearly $2 billion Whole Foods Market Growing Your Future 401k Plan have reached a settlement agreement. The participant-plaintiffs, represented by Capozzi Adler PC, had alleged that the plan's large size should have allowed for better fee arrangements and that failing to secure them constituted a breach of fiduciary duty. Following mediation on April 16, 2025, the parties agreed in principle to resolve the case.

Source: Psca.org, April 2025

The Supreme Court Delivers Troubling Decision for ERISA Excess Fee Cases

On April 17, 2025, the U.S. Supreme Court issued a unanimous ruling making it harder for defendants to dismiss excess fee cases involving 401k or 403b plans at early litigation stages, potentially leading to more costly and burdensome discovery processes. While the Court recognized this could raise litigation costs for employers, it suggested some alternative measures for lower courts to filter out meritless cases, though these measures are not widely used and their adoption remains uncertain. Consequently, the ruling may increase litigation expenses for plan sponsors and could also drive up fiduciary liability insurance premiums, even for plans not currently facing excess fee claims.

Source: Ktslaw.com, April 2025

High Court's Cornell Ruling Stands to Supercharge 401k Suits

William Delany, principal, and co-chair of the Groom's litigation group, was featured in this Bloomberg Law article discussing the Supreme Court's Cornell ruling. He highlighted that without proactive measures and legislative action, plan sponsors, service providers, and regulated entities could face overwhelming ERISA litigation, hindering innovation in the retirement plan industry.

Source: Groom.com, April 2025

The Cornell Supreme Court Decision Sanctions ERISA Fiduciary-Breach Lawsuits Without Proof of Wrongdoing

Jerome Schlichter, a leading figure in excessive fee ERISA class action lawsuits, has achieved three unanimous U.S. Supreme Court victories in cases against Intel, Northwestern University, and Cornell University, with no justice ever ruling against his novel fiduciary liability theories. However, according to the article's author, his latest case against Cornell has pushed excessive fee litigation to an extreme by securing a ruling that allows filing ERISA-prohibited transaction claims with minimal allegations -- simply that a plan contracted a service provider -- without needing any proof of wrongdoing or excessive fees. This contrasts with breach-of-fiduciary duty claims, which require a higher level of evidence.

Source: Encorefiduciary.com, April 2025

U.S. Chamber Weighs in on 401k Excessive Fee Suit

The U.S. Chamber of Commerce and retirement trade associations have supported fiduciary defendants in a recent excessive fee ERISA class-action suit, describing it as part of a broader trend aimed at securing costly settlements. In the case against Telephone and Data Systems, Inc. Tax Deferred Savings Plan, the court dismissed the suit, with Judge Rebecca Ebinger ruling that the plaintiffs failed to allege specific, identifiable breaches of fiduciary duty. Instead, the plaintiffs only pointed to lower expenses in other plans to infer a possible breach, which was insufficient to proceed.

Source: Asppa-net.org, April 2025

Supreme Court Lowers Bar to Pleading Prohibited Transactions, Despite "Serious Concerns" of Meritless Litigation

In a unanimous decision reversing the dismissal of claims related to fees paid to defined contribution plan recordkeepers, the Supreme Court ruled that ERISA's prohibited transaction exemptions are affirmative defenses. Therefore, plaintiffs are not required to include these exemptions in their initial pleadings to state a valid claim. Although the Court recognized that this ruling might enable some plaintiffs to overcome dismissal with minimal allegations, it determined that concerns about a potential rise in meritless lawsuits do not outweigh the clear language and framework of the statute.

Source: Seyfarth.com, April 2025

Supremes Back Plaintiffs in Cornell ERISA Burden of Proof Standard

The U.S. Supreme Court ruled unanimously in favor of retirement plan participants who sued Cornell University over excessive fees in its 403b plan. The decision clarified that under ERISA, plan fiduciaries must both plead and prove exemptions to prohibited transactions. Additionally, plaintiffs challenging such transactions do not need to specify whether statutory exemptions apply in their complaints, marking a significant win for employees.

Source: Napa-net.org, April 2025

U.S. Chamber Pushes Back on 401k Excessive Fee Suit Appeal

The U.S. Chamber of Commerce and several retirement trade associations defended fiduciary defendants in a recent excessive fee lawsuit, claiming it is part of a larger trend of ERISA class-action complaints seeking costly settlements. Judge Rebecca Ebinger dismissed the lawsuit last November, stating the plaintiffs failed to provide proper benchmarks for comparing expenses, which hindered their claims of breached fiduciary duties. The plaintiffs have since appealed the dismissal.

Source: Napa-net.org, April 2025

Court Finds American Airlines Liable for Breach of Fiduciary Duty of Loyalty to Its 401k Plans

In the case of Spence v. American Airlines, Inc., U.S. District Court Judge O'Connor concluded that American Airlines breached its fiduciary duty of loyalty under ERISA after a four-day bench trial. Unlike typical excessive fee cases related to 401k plans, this case centered on American Airlines' relationship with BlackRock and its ESG proxy voting policies, rather than high investment management fees. The court found that while American Airlines prudently selected and maintained BlackRock as its investment manager, it acted disloyally by letting its corporate interests interfere with its fiduciary responsibility to monitor BlackRock.

Source: Truckerhuss.com, April 2025

AT&T Motion Calls Out Forfeiture Suit "Bandwagon"

Claiming that the "plaintiff is jumping on a bandwagon of cookie-cutter plan forfeiture challenges recently brought against dozens of large plans," AT&T has filed a motion to dismiss the suit. The lawsuit argues that this approach breaches ERISA's fiduciary duties, violates the anti-inurement provision, and constitutes prohibited transactions under ERISA. AT&T characterizes the suit as a generic challenge, akin to many others filed recently.

Source: Napa-net.org, April 2025

DOL's New Retirement Security Rule Remains on Hold as Agency Pauses Appeals

The DOL has requested the U.S. Court of Appeals for the Fifth Circuit to pause its appeals regarding two federal court cases that challenge its new Retirement Security Rule. This follows two orders from July 2024 that stayed the rule's implementation, originally set for September 2024. The rule aims to broaden fiduciary responsibilities under ERISA to include annuity sales, mandating financial advisors to act in their client's best interests rather than being incentivized by perks from insurance and annuity companies. However, industry groups, such as the American Council of Life Insurers and the Federation of Americans for Consumer Choice, sued to block the rule. After the federal courts' stays, the DOL filed notices of appeal under the Biden administration.

Source: Hallbenefitslaw.com, April 2025

Employer Considerations as New 401k Lawsuit Includes Extensive Claims

A recent lawsuit involving Swiss Re's 401k plan features a wide range of allegations, underscoring the need for 401k plan fiduciaries to adhere to best practices. Regardless of the lawsuit's outcome, these practices are crucial for fiduciaries to defend against potential lawsuits and to minimize the risk of breaching their fiduciary duties. The article outlines several best practices for plan fiduciaries to implement.

Source: Employeebenefitslawblog.com, April 2025

What Patent Trolls Can Teach Us About Tackling Problems in the ERISA Class Action Industry: Opinion

The "America Invents Act" aimed to resolve issues in patent prosecution and litigation, effectively addressing the patent troll problem while balancing the interests of various stakeholders, including industries reliant on patents and patent holders. A similar approach could be taken to tackle excessive class action litigation related to ERISA plans, seeking to balance participants' access to the courts with the risks faced by plan sponsors. The key challenge remains finding the right balance in managing the issues caused by such litigation.

Source: Bostonerisalaw.com, March 2025

Lawsuit Against Lockheed Martin Criticizes Firm for Using In-House TDFs

Lockheed Martin Corporation and its subsidiary investment management company are facing a lawsuit from current and former participants in their 401k plans. The plaintiffs allege that the company breached its fiduciary duties of prudence and loyalty by utilizing an in-house service provider and affiliated target-date funds. The lawsuit criticizes Lockheed Martin for adopting a "DIY" approach to investments, resulting in the creation of ineffective private funds that charged excessive fees. It claims that the company prioritized its own benefit by using underperforming target-date funds with high fees in the retirement plans.

Source: Plansponsor.com, March 2025

Insurance Company Providing 401k Retirement Plans Not an ERISA Fiduciary With Respect to Foreign Tax Credits

In Romano v. John Hancock Life Insurance, the Eleventh Circuit ruled that John Hancock, which provided investment and recordkeeping services for 401k plans, does not qualify as an ERISA fiduciary regarding its handling of foreign tax credits. The Romano Law Plan, established by the Romanos, made contributions to a separate account distinct from John Hancock's general funds, rather than making direct investments. The Romanos filed claims asserting that John Hancock's management of the foreign tax credits constituted a breach of fiduciary duty under ERISA and violated prohibited transaction provisions. The court, however, determined that John Hancock was not acting as a fiduciary in this context.

Source: 11thcircuitbusinessblog.com, March 2025

Why America Needs a Specialized ERISA Court: Opinion

The differing rulings in the HP and Clorox forfeiture cases highlight the need for a specialized court dedicated to ERISA litigation. ERISA was intended to create a uniform framework for plan sponsors to offer voluntary benefits and to ensure predictable fiduciary responsibilities across the country. However, this predictability and consistency have not been achieved, as more than forty judges are making determinations on fiduciary duty breaches related to unvested plan contributions, and twelve judges are reviewing decisions regarding independent fiduciaries selecting private-equity backed life insurance for pension risk transfers. This situation calls for reform to standardize rulings under ERISA.

Source: Encorefiduciary.com, March 2025

BlackRock Lifepath TDF Suit Dismissed, Again

A federal judge has dismissed a lawsuit involving BlackRock Lifepath target date funds on behalf of participants in multiple 401k plans, including those from Citigroup Inc. and Genworth, among others. After allowing the plaintiffs three opportunities to strengthen their case, the judge dismissed the suit with prejudice, meaning it cannot be refiled. The plaintiffs were represented by Miller Shah LLP, while the defendants were the fiduciaries of the Cisco Systems Inc. 401k plan, who had previously responded to similar allegations in August 2023.

Source: Planadviser.com, March 2025

Swiss Re Group, Empower Targeted in Sweeping Fiduciary Breach Suit

A recent lawsuit brings forth extensive allegations of fiduciary breaches related to excessive fees, inappropriate share classes, poor selections of target-date funds, and the improper use of plan forfeitures and participant data. The suit accuses the Swiss Re Defendants of "failing to comply with ERISA’s fundamental principles," claiming they employed flawed methodologies that resulted in suboptimal outcomes. Furthermore, the allegations assert that they opted for costly, underperforming investment options rather than more affordable and superior alternatives, while also imposing exorbitant recordkeeping fees on the Plaintiffs.

Source: Napa-net.org, March 2025

Court Greenlights ERISA Forfeiture Case Against Clorox

The U.S. District Court for the Northern District of California has decided not to dismiss a class action complaint against The Clorox Company and its employee benefits committee concerning the 401k Plan. The plaintiff accuses Clorox of violating ERISA fiduciary duties by using plan forfeitures to offset non-elective contributions instead of lowering administrative costs for participants. The court previously dismissed the initial complaint but found the amended complaint adequately alleged breaches of loyalty and prudence under ERISA. The court noted that the plaintiff's claims of self-interest and lack of a reasoned decision-making process were plausible, allowing for an inference of liability based on motivations for loyalty and the thoroughness of decision-making for prudence claims.

Source: Millerchevalier.com, March 2025

Eleventh Circuit Confirms Foreign Tax Credits Owned by Insurance Company Not Plan Assets of 401k Plan

In late October 2024, the Eleventh Circuit Court of Appeals ruled in Romano v. Hancock Life Insurance Company that foreign tax credits generated from 401k plan investments in accounts owned by John Hancock Life Insurance Company are not considered "plan assets" under ERISA. Consequently, the Court determined that JHLIC was not a fiduciary under ERISA and did not violate any fiduciary duties or prohibited transaction rules by failing to pass these foreign tax credits on to its 401k plan clients.

Source: Erisapracticecenter.com, March 2025

An ERISA Journey for ESG Via American Airlines by Way of Utah?

In 2025, U.S. district court decisions highlighted the ongoing debate over the permissibility of integrating environmental, social, and governance goals into ERISA-governed investing. Supporters of ESG investing can reference "State of Utah v. Micone," which upheld the Department of Labor's 2022 "tiebreaker" approach favoring ESG considerations. Conversely, opponents might cite "Spence v. American Airlines," which determined that the defendants violated their duty of loyalty by allowing proxy votes that supported ESG initiatives not focused on the financial interests of plan participants. Although both cases involve similar legal principles, they emerged in distinct contexts, with private litigation likely having a more significant influence on future fiduciary practices than the litigation surrounding the DOL's regulatory stance.

Source: Wagnerlawgroup.com, March 2025

Recent Developments in Forfeiture Cases

This article examines recent developments in "forfeiture" litigation, focusing on claims made by plaintiffs, defenses raised by defendants, and court decisions on these matters. So far, five motions to dismiss have been ruled upon: two in favor of plaintiffs and three in favor of defendants, including a notable decision in the Thermo Fisher case. The article also reviews a new complaint against Knight Smith and a similar 2017 forfeiture complaint by the Department of Labor. Unlike other complaints, these recent pleadings assert that plan documents necessitate that forfeitures be used for plan expenses first before reducing employer contributions. The article raises the possibility that this new angle on forfeiture allegations could signal a trend in upcoming lawsuits.

Source: Wagnerlawgroup.com, February 2025

Lawsuit Alleges Empower Misused Participant Data for Cross-Selling

Former employees of Swiss Re American Holding Corp. have filed a lawsuit against the company, its board of directors, the employee pension plan committee, and the recordkeeper Empower for alleged breaches of fiduciary duties under ERISA. Specifically, Empower is accused of providing improper rollover recommendations and using participant data for cross-selling. The lawsuit seeks class-action status and covers the period since January 2019.

Source: Planadviser.com, February 2025

Some New Twists on Forfeiture Reallocation Litigation: Podcast

Yet another 401k forfeiture fiduciary breach suit has been filed, but there are some key differences. And then there is a case that has been through several rounds of adjudication and though winning, has had to keep going back to court. In this podcast, Nevin Adams and Fred Reish examine the issues and potential implications, as well as a quick review of some recent updates.

Source: Napa-net.org, February 2025

401k Excessive Fee Class Action Lawsuits Proliferate in 2024

In 2024, excessive fee class action litigation under ERISA has increased by 35%, continuing a trend seen in other ERISA class action cases. The rise has been notable in the past six months, influenced by record-high settlements for plaintiffs over the previous three years. While some major cases have settled, plaintiff law firms are employing innovative legal strategies to initiate new lawsuits, including an uptick in forfeiture claims against defined contribution plans, excessive fee cases, and fraud claims under the Affordable Care Act. Additionally, the year has seen more claims against defined benefit plans, particularly around pension risk transfers, and an increase in fiduciary breach claims against health plans, including those related to tobacco and vaccine wellness programs.

Source: Hallbenefitslaw.com, February 2025

Supreme Court Declines to Address Circuit Split Over Arbitration Provisions in ERISA-Covered Plans

The U.S. Supreme Court has denied Tenneco's request to enforce an arbitration clause in its ERISA-governed retirement plan, leaving an ongoing circuit court split unresolved regarding the enforceability of such provisions. Tenneco and its subsidiary, Driv Automotive, faced a lawsuit from current and former employees who accused the company of mismanaging the retirement plan and violating fiduciary duties under ERISA. The employees alleged that the company's selection of poorly performing investment options resulted in significant financial losses in their retirement savings.

Source: Hallbenefitslaw.com, February 2025

An Emerging Trend in ERISA Class Action Litigation: 401k Forfeiture Suits

Litigation attorneys Monica Perkowski, Kayla Pragid, Lindsey Camp, and Todd Wozniak co-authored this article in the Employee Benefit Plan Review discussing the rise of ERISA class actions challenging the use of 401k plan forfeitures. Plaintiffs argue that offsetting future employer contributions with these forfeitures may violate fiduciary duties under ERISA. Although longstanding regulatory guidance permits this practice, the lawsuits present a new liability theory. The authors suggest that plan sponsors should reevaluate their forfeiture terms to ensure compliance and reduce litigation risks.

Source: Hklaw.com, February 2025

Federal Judge Reaffirms Biden Era ESG Rule

A federal judge in Amarillo, Texas, has once again dismissed the arguments from 26 Republican-led state attorneys general questioning the validity of the Biden Administration’s ESG rule. This coalition had requested the court to rethink its previous decision upholding the rule following the U.S. Supreme Court's overturning of the Chevron doctrine in June. The Labor Department's rule permits sustainable investment options in 401k plans, using ESG factors as a "tiebreaker" when other investment considerations are equal.

Source: Napa-net.org, February 2025

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