DISH Network 401(k) Plan Breach of Fiduciary Duties ERISA Class Action

This class action claims breach of fiduciary duties on the part of those responsible for the DISH Network Corporation 401(k) plan. It brings suit against DISH Network Corporation, its Board of Directors, its Retirement Plan Committee (the plan’s administrative committee), and members of the board and committee, alleging that they breached their fiduciary duties of loyalty and prudence.

The class for this action is all participants and beneficiaries of the DISH Network Corporation 401(k) plan, at any time between January 20, 2016 and the date of judgement in this case (or an earlier date determined by the court), including beneficiaries of deceased persons who were participants in the plan during this period.

The complaint claims that the defendants in this case are fiduciaries under the Employee Retirement Income Security Act (ERISA) and therefore owe certain duties to the plan. These include, the complaint alleges, “obligations to act for the exclusive benefit of participants, ensure that the investment options offered through the Plan are prudent and diverse, and ensure that Plan expenses are fair and reasonable.”

The DISH plan is a large one, with more than 18,000 participants and assets of around $841 million. The complaint asserts that these numbers place it in the top 0.2% of 401(k) plans by size. As a large plan, the complaint says, it has “significant bargaining power,” so that it can expect low-cost administrative and investment management services in a potentially competitive market.

The complaint alleges, however, that the defendants have failed in their duties in three ways:

• They “failed to fully disclose the expenses and risk” of the investment options in the plan to the participants.
• They “allowed unreasonable expenses to be charged” that participants had to pay.
• They “selected, retained, and/or otherwise ratified high-cost and poorly-performing investments” instead of more prudent and better-performing alternatives, even though such alternatives were available.

The complaint takes issue with the choice of Fidelity Freedom Funds as target date funds for the plan. Target date funds are meant to become more conservative as participant retirement target dates approach. The complaint alleges that the Freedom Funds are actively-managed investments that are “riskier and more costly” than other choices, such as the Freedom Index Funds and others.

Page 17 of the complaint shows a chart comparing the per-participant recordkeeping and administration fees for DISH and other comparable plans. DISH’s is the highest, at $49 per participant, while the others range from $23 to $34 per participant.

The complaint also claims that the Freedom Funds are inferior investments and that other investors have lost confidence in them. Page 30 has a table comparing their returns with other, alternative investments. The complaint alleges that the 401(k) also offers “additional objectively imprudent investment options.”

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