Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
Franklin Templeton can’t immediately appeal a decision giving class action status to workers who accused the company of filling their 401(k) plan with expensive, affiliated mutual funds.
The U.S. Court of Appeals for the Ninth Circuit rejected the financial company’s request for an immediate appeal in a one-page order issued Jan. 24. The case will stay with the district court judge who in July 2017 certified a class of more than 5,000 people who invest in Franklin Templeton’s 401(k) plan. The judge refused to dismiss the lawsuit seven months earlier.
The case raises unresolved and hot-button questions about whether an employer can use contracts signed by departing employees to reduce its exposure to future class actions over retirement benefits. Franklin Templeton says the former employee who filed the lawsuit can’t maintain the case because he signed a termination agreement that included a class action waiver. The Ninth Circuit is considering a similar case asking whether an employment agreement signed by a University of Southern California worker upon hire blocks a proposed class action challenging the school’s retirement plan.
The case against Franklin Templeton is one in a long series of recent cases challenging financial companies that put their own investment products in their workers’ 401(k) plans. Many cases have led to early losses for the financial companies, with courts granting wins to employees of BB&T Corp., Deutsche Bank, American Century, and Edward Jones. Wells Fargo and Capital Group have succeeded in defeating these claims in the early stages of litigation. The first case to go to trial resulted in a victory for Putnam Investments.
The case is Cryer v. Franklin Resources, Inc., 9th Cir., No. 17-80213, order denying petition to appeal 1/24/18.
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