Pioneer Natural Worker Likely to Get Class Status in 401(k) Row

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Carmen Castro-Pagan

Pioneer Natural Resources USA Inc. likely will face class action claims by an ex-worker at the company challenging the allegedly high fees in its 401(k) plan, if he can include in his lawsuit a current plan participant.

A federal judge in Colorado July 26 said he would reserve his ruling on the class status request because the former employee won’t be able to serve as a class representative for all plan participants—specifically current participants—since he no longer participates in the plan.

A class representative with no stake in a prospective remedy has no incentive to vigorously pursue those claims and is therefore an inadequate representative, said Judge William J. Martinez of the U.S. District Court for the District of Colorado.

Martinez’s unusual order underscores the broad discretion judges have to resolve legal issues in complex cases in which claimants seek class status.

Instead of denying the ex-worker’s request for class certification, Martinez reserved the ruling, holding that it would better serve the interest of justice not to force the parties through the “inevitable procedural hoops” that would follow if he denied it now. In such a case, the former employee would have to search for a new or additional class representative, file a motion to amend the lawsuit to add that person as a named plaintiff, and, if that motion was granted, file a renewed motion for class status.

Martinez said that he would likely grant class status to the worker on his claims that Pioneer violated the Employee Retirement Income Security Act by allowing unreasonably high record-keeping fees and failing to monitor the fiduciaries who administered the plan.

The decision comes one month after Martinez tossed the ex-employee’s claim that the company violated federal benefits law by keeping a money market fund that had poor returns as an investment option in its $665 million plan. The ex-employee didn’t have standing to bring this claim because he didn’t invest in the particular fund at issue, Martinez said.

In his latest order, Martinez granted the ex-employee leave to file an amended lawsuit naming a current participant in the plan as a co-plaintiff or substitute plaintiff, on or before Aug. 24.

Franklin D. Azar & Associates PC represents the worker. O’Melveny & Myers LLP and Bryan Cave Leighton Paisner LLP represent Pioneer.

The case is Barrett v. Pioneer Natural Res. USA, Inc., D. Colo., No. 1:17-cv-01579-WJM-NYW, order reserving ruling on class certification 7/26/18.

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