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Marathon Petroleum Co. executives are accused in a new lawsuit of wrongly allowing workers to invest their retirement savings in the stock of Marathon Oil Corp. ( Yates v. Nichols , N.D. Ohio, No. 3:17-cv-01389, complaint filed 6/30/17 ).
The lawsuit, a proposed class action filed under the Employee Retirement Income Security Act, is a novel twist on the typical case challenging companies that put employer stock in their workers’ retirement plan. A Marathon Petroleum worker claims that ERISA’s special protections for employer stock investments don’t apply to the $88 million worth of Marathon Oil stock in the plan, because the two companies have been independent and unaffiliated since a 2011 corporate spinoff.
Stripped of any legal protections, this investment violated ERISA’s prudence requirement and was “reckless under any common-sense investment strategy,” the lawsuit claims. The Marathon Oil stock “dramatically underperformed the market” since the spinoff and caused tens of millions of dollars in plan losses, according to the complaint.
Marathon Oil stock fell about 40 percent over the past six years, while a fund tracking the Standard & Poor’s 500 Index increased by more than 80 percent, the lawsuit claims. The complaint also argues that stock in a single oil company—and Marathon Oil in particular—was an unwise investment vehicle for retirement savings during this period.
The lawsuit names as a defendant Marathon Petroleum’s retirement plan committee, along with individual committee members. The company isn’t named as a defendant.
A spokesman for Marathon Petroleum declined to comment on the lawsuit, citing a policy against discussing pending litigation.
The lawsuit was filed in the U.S. District Court for the Northern District of Ohio on June 30, the sixth anniversary of the Marathon spinoff. ERISA imposes a six-year statute of limitations on many claims of fiduciary breach.
Bailey & Glasser LLP and Izard Kindall & Raabe LLP represent the worker who filed suit.
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Text of the complaint is at http://src.bna.com/qps.
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