WASHINGTON, October 17, 2022 – Joined by coalition partners, The ERISA Industry Committee (ERIC) today filed the first in a series of amicus briefs aimed at defeating a recent flurry of lawsuits against 401(k) plan sponsors that offered a particular suite of target-date mutual funds (TDFs). The brief was filed today in Tullgren v. Booz Allen Hamilton Inc., (E.D. Va., No. 1:22-cv-00856) supporting Booz Allen Hamilton.
“Federal courts should dismiss cases where plaintiffs’ lawyers bring allegations based purely on hindsight. If these cases are allowed to proceed based solely on the outcome instead of the process used to select funds, the exploding costs and risks of 401(k) litigation will continue to undermine retirement security for workers and retirees,” said James Gelfand, President of ERIC, representing large employers that sponsor health and retirement plans for nationwide workforces.
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 brief 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 in its entirety, 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.