Coca-Cola Bottlers’ 401(k) Plan Breach of Fiduciary Duties ERISA Class Action

Retirement plans, such as the Coca-Cola Bottlers’ Association 401(k) Retirement Savings Plan, which are established for large companies, are governed by the Employee Retirement Income Security Act (ERISA). The complaint for this class action alleges that the Coca-Cola Bottlers’ Association (CCBA) and certain persons responsible for managing the plan have breached their fiduciary duties to the plan, in regards to investment options and expenses.

The class for this action is all participants in and beneficiaries of the plan, between February 1, 2015 and the present, not including the defendants in this case, their beneficiaries, and their immediate families.

The complaint quotes the law in saying that fiduciaries for a retirement plan must act “solely in the interest of the participants and beneficiaries.”

“When selecting investment options for an ERISA-governed plan, the plan’s fiduciaries are required to act for the exclusive benefit of the plan participants and beneficiaries, perform with undivided loyalty, act prudently, defray reasonable plan expenses, diversify investments to minimize large losses unless clearly prudent not to do so, and discharge their duties in accordance with the governing documents and instruments…”

CCBA is a fiduciary of the plan, and so is Stephanie R. Griffin, the Senior Relationship Manager for Employee Benefits, the complaint claims. Yet it alleges that they did not fulfill these duties.

The plan is a large one, with more than 19,000 participants and nearly $800 million in net assets as of December 2019. This puts it into the top 0.1% of all 401(k) plans according to size. The complaint thus argues that those in charge of the plan could have used its large size to bargain for lower recordkeeping fees. According to the complaint, they did not do this, and the amounts paid for these services were too high.

Another thing that the plan did not do, the complaint says, is to leverage its size to obtain lower-cost versions of certain investments. Different share classes of the same investments may offer lower costs and fewer penalties. Plan fees also differ greatly; the complaint displays charts showing that certain of the plan’s options involved fees that exceeded lower-fee alternatives by as much as 700%.

Fiduciaries are also supposed to choose investment options for the plan carefully, and after they are chosen, to monitor them, to make sure that their expenses are low and that they are performing well. If they do not perform well, they should be replaced with better-performing options.

One of the options in the plan, for example, was the Coca-Cola Common Stock Fund, a non-diversified option. According to the complaint, this investment option should have been replaced with better-diversified options and, since it “performed poorly in comparison to its benchmark,” it should have been replaced because of its performance as well. The complaint alleges that retaining it “impos[ed] more risk on and less return for participants.

Article Type: Lawsuit
Topic: Employment
Tags: Breach of Fiduciary Duty, ERISA Violations, Employment Violations, Retirement Plans