Estee Lauder 401(k) Plan Breach of Fiduciary Duty Class Action

The Employee Retirement Income Security Act of 1974 (ERISA) governs retirement plans at larger companies. The complaint for this class action alleges that Estee Lauder, Inc., its Board of Directors, and the Estee Lauder Inc. Fiduciary Investment Committee, alleging that these defendants breached their fiduciary duties to the Estee Lauder Companies 401(k) Savings Plan for employees.

The class for this action is all persons who were participants in or beneficiaries of the Estee Lauder plan, at any time between June 22, 2014 through the date of judgment in this case.

The complaint points out, “ERISA imposes strict fiduciary duties of loyalty and prudence on employees and other plan fiduciaries.” The complaint quotes the law as saying that these fiduciaries must act “solely in the interest of the participants and beneficiaries,” with the “care, skill, prudence, and diligence” that could be expected in the management of a similar plan.

What, specifically, did the defendants fail to do? First, the complaint says, they “fail[ed] to objectively and adequately review the Plan’s investment portfolio to ensure that each investment option was prudent, in terms of cost. Second, it says, they “maintain[ed] certain funds in the Plan despite the availability of identical or materially similar investment options with lower costs and/or better performance histories.”

The expenses of the plan are paid by the plan. According to the complaint, the breach of fiduciary duty cost the plan millions of dollars that should have belonged to the participants.

The Estee Lauder plan is among the largest plans in the US, with over $1.2 billion in assets.

The complaint alleges, “As a large plan, the Plan had substantial bargaining power regarding the fees and expenses that were charged against participants’ investments. Defendants, however, did not try to reduce the Plan’s expenses or exercise appropriate judgment to scrutinize each investment option that was offered in the Plan to ensure it was prudent.”

It was the duty of the Fiduciary Investment Committee, the complaint says, to “determine[] the appropriateness of the Plan’s investment offerings and monitor[] investment performance.”

The complaint alleges, “In 2018, nearly half of the funds in the Plan (at least 9 out of the Plan’s 19 funds) were significantly more expensive than comparable funds found in similarly-sized plans (plans having over a billion dollars in assets).” The complaint publishes charts that purport to show that expenses were excessive in certain of the funds selected as investments for the plan.

The counts include breach of the fiduciary duties of loyalty and prudence and failure to adequately monitor other fiduciaries.

Article Type: Lawsuit
Topic: Employment

Most Recent Case Event

Estee Lauder 401(k) Plan Breach of Fiduciary Duty Complaint

June 23, 2020

The Employee Retirement Income Security Act of 1974 (ERISA) governs retirement plans at larger companies. The complaint for this class action alleges that Estee Lauder, Inc., its Board of Directors, and the Estee Lauder Inc. Fiduciary Investment Committee, alleging that these defendants breached their fiduciary duties to the Estee Lauder Companies 401(k) Savings Plan for employees.

Estee Lauder 401(k) Plan Breach of Fiduciary Duty Complaint

Case Event History

Estee Lauder 401(k) Plan Breach of Fiduciary Duty Complaint

June 23, 2020

The Employee Retirement Income Security Act of 1974 (ERISA) governs retirement plans at larger companies. The complaint for this class action alleges that Estee Lauder, Inc., its Board of Directors, and the Estee Lauder Inc. Fiduciary Investment Committee, alleging that these defendants breached their fiduciary duties to the Estee Lauder Companies 401(k) Savings Plan for employees.

Estee Lauder 401(k) Plan Breach of Fiduciary Duty Complaint
Tags: Breach of Fiduciary Duty, ERISA Violations, Employment Violations, Retirement Plan Mismanagement