Pension & Benefits Daily™ covers all major legislative, regulatory, legal, and industry developments in the area of employee benefits every business day, focusing on actions by Congress,...
The flurry of litigation over 401(k) plan fees has reached a new frontier: a union retirement plan covering more than 27,000 Teamsters and other union workers.
The proposed class action, filed Nov. 30 in a California federal court, targets the trustees of the Supplemental Income 401(k) Plan, a $921 million union retirement plan based in California. According to the lawsuit, the plan paid excessive fees to its two record keepers and offered expensive, retail share classes of mutual funds when cheaper, institutional share classes were available ( Ybarra v. Bd. of Trs. of Supplemental Income Tr. Fund , C.D. Cal., No. 8:17-cv-02091, complaint filed 11/30/17 ).
Many large companies, including Verizon, Chevron, American Airlines, and Anthem, have been accused of similar violations, but class actions challenging the fees of union retirement plans are very rare. In recent years, the litigation effort has trickled from billion-dollar plans of large public companies to more modest plans, including those of Checksmart Financial LLC ($25M), Gucci America Inc. ($97M), and Novitex Enterprise Solutions Inc. ($157M). Elite universities, including Yale, Duke, and Vanderbilt, also have been targeted.
The lawsuit against the union plan is one of a growing number of Employee Retirement Income Security Act cases to argue that plan fiduciaries should be held liable if they offer more expensive retail share classes when identical institutional share classes are available at a lower cost. Federal courts have disagreed over whether this is a viable claim under ERISA. Judges have allowed these claims to proceed against Cornell, Emory, and MIT, while Johns Hopkins, Columbia, and the University of Pennsylvania saw these claims dismissed.
In September, a long-running class action against Edison International forced the company to pay more than $13 million for retirement plan violations, including its decision to offer retail share classes.
A representative for the union plan declined to offer an immediate comment on the lawsuit.
The lawsuit was filed in the U.S. District Court for the Central District of California by Frank Sims & Stolper LLP and Franklin D. Azar & Associates, the latter of which is a personal injury law firm that specializes in motor vehicle accidents, defective products, and slip-and-fall accidents, according to its website. This is at least the fourth time the Colorado-based firm has filed an ERISA class action involving alleged mismanagement of retirement savings.
To contact the reporter on this story: Jacklyn Wille in Washington at email@example.com
To contact the editor responsible for this story: Jo-el J. Meyer at firstname.lastname@example.org
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)