WASHINGTON, DC – October 25, 2022 – The ERISA Industry Committee (ERIC) yesterday continued its campaign to defeat the recent lawsuits targeting 401(k) plan sponsors that offered a particular suite of target-date mutual funds (TDFs).
ERIC, representing large employers that sponsor health and retirement plans for nationwide workforces, has again joined with coalition partners to file amicus briefs in defense of these employer plan sponsors, filing amicus briefs supporting Capital One in Andre Hall, et al. v. Capital One Financial Corp. (E.D. Va, 1:22-cv-00857) and Genworth Financial in Peter Trauernicht, et al. v. Genworth Financial (E.D. Va., 3:22-cv-00532). These briefs follow ERIC’s previous amicus filing in Tullgren v. Booz Allen Hamilton Inc., (E.D. Va., No. 1:22-cv-00856).
“It is critical that federal courts dismiss the purely hindsight-based allegations brought in these cases. If allowed to proceed, these cases will exacerbate the surge of 401(k) litigation costs and risks, undermining retirement security for workers and retirees across the country,” said James Gelfand, President of ERIC.
There have been 11 cookie-cutter lawsuits recently filed by the same law firm in district courts around the country alleging fiduciary breaches by simply offering these TDFs. The complaints rely on a flawed allegation that, because the funds briefly underperformed four plaintiff-selected competitor funds, plan sponsors placed too much consideration on the funds’ low management fees instead of eventual returns.
The briefs filed by ERIC and the coalition argues that:
- A complaint must plead allegations showing that a reasonable process could not have produced the decisions the fiduciaries made.
- Purely pleading underperformance is insufficient to survive a motion to dismiss.
- Allowing these claims to go forward will jeopardize the willingness of employers to sponsor retirement plans by creating never-ending litigation, spiraling insurance costs, and a counterproductive instruction to plan fiduciaries to consider past performance to the exclusion of other relevant considerations.
To read the coalition amicus brief filed in Andre Hall, et al. v. Capital One Financial Corp, visit ERIC’s website here.
To read the coalition amicus brief filed in Peter Trauernicht, et al. v. Genworth Financial, visit ERIC’s website here.
“ERIC remains committed to protecting plan sponsors from unsubstantiated legal claims that threaten their ability to design and administer retirement benefits for tens of millions of Americans,” Gelfand said.