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Voya Retirement Insurance and Annuity Co. beat a lawsuit accusing it of earning undisclosed profits by setting the crediting rate for its stable value funds in retirement plans for its own benefit ( Dezelan v. Voya Ret. Ins. & Annuity Co. , 2017 BL 234003, D. Conn., No. 3:16-cv-01251, 7/6/17 ).
A plan participant lacked standing to bring a claim of fiduciary breach under the Employee Retirement Income Security Act concerning Voya’s general account stable value funds because Voya didn’t offer that product to her retirement plan, the Cedars-Sinai Medical Center 403(b) Retirement Plan, federal District Judge Victor A. Bolden held July 6. In addition, the participant lacked class standing to bring fiduciary breach claims on behalf of other plans because she didn’t own any of the products referred to in the claim and provided no information to suggest that the products were similar to the ones she actually did own, Bolden said in dismissing the lawsuit.
ERISA legal challenges related to stable value funds—one of the most popular investment strategies for pension plans because of their low risk—have increased recently. Retirement plan sponsors, including Anthem Inc., Chevron Corp., and Insperity Inc., have been sued—unsuccessfully—for failing to include stable value funds in their investment lineups. Other lawsuits have targeted the companies that offer and manage stable value funds, with cases pending against Massachusetts Mutual Life Insurance Co. and Prudential Retirement Insurance & Annuity Co. Two companies— CVS Health Corp. and Fidelity Management Trust Co.—recently defeated lawsuits challenging their stable value practices, and a magistrate judge recommended dismissing a similar case against a subsidiary of Principal Financial Group Inc.
Bolden’s decision is an early win for Voya, which provides retirement services to more than 47,000 institutional clients and nearly 4.5 million investors.
At issue in the case were two types of stable value funds offered by Voya: the separate account stable value fund, which uses a separate account established by the company for the sole purpose of holding invested assets, and the general account stable value funds, in which the underlying assets are held alongside the company’s other assets.
Because the participant didn’t own any general account stable value funds, she couldn’t show that any of Voya’s alleged misdeeds concerning those funds caused her to suffer a distinct and palpable injury, Bolden said. As a result, the participant lacked standing to bring claims related to those products, he said.
As to the participant’s lack of standing to bring claims on behalf of purported class members who invested in general account products, Bolden agreed with Voya’s argument. The participant’s claims concerning the general account products didn’t involve the same set of concerns as her claims concerning separate account assets, the judge said. Her claims are distinct and require different proof from those she brings on her own, Bolden concluded.
Bolden, of the U.S. District Court for the District of Connecticut, granted the participant leave to amend her allegations.
Izard Kindall & Raabe LLP represents the participant. Morgan Lewis & Bockius LLP represents Voya.
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