Eversource 401(k) Plan Breach of Fiduciary Duties Class Action

The Eversource 401(k) plan, like most such plans, is governed by the Employee Retirement Income Security Act (ERISA). Those responsible for the plan include Eversource Energy Service, the Board of Directors of Eversource Energy Service and its members, and the Investment Management Committee and its members. The complaint for this class action contends that these parties owe a fiduciary duty to the plan which they have breached.

The class for this action is all persons (except the defendants in this case and their immediate family members) who were participants in or beneficiaries of the Eversource 401(k) plan, at any time between August 11, 2014 through the date of judgement in this case.

ERISA specifies that employers and others have strict fiduciary duties of loyalty and prudence. The law requires that fiduciaries act “solely in the interests of the participants and beneficiaries” with the “care, skill, prudence, and diligence” that would be expected in managing such a plan. The law calls these duties “the highest known to the law.”

The law also requires that plan fiduciaries give consideration to the costs of investment options. The complaint quotes the Uniform Prudent Investor Act (UPIA) as saying, “Wasting beneficiaries’ money is imprudent. In devising and implementing strategies for the investment and management of trust assets, trustees are obligated to minimize costs.”

When plan participants have to pay higher fees, they lose not only those amounts but the additional amounts that the money would have earned if it had continued to be invested in the plan.

Fiduciaries must take costs and investment vehicles into consideration not only in setting up the plan and choosing the original investment options but also in periodically monitoring and reviewing those options. They also must ensure that the investment options are performing adequately and to replace any that are significantly underperforming.

The complaint says, “Investment fund options chosen for a plan should not favor the fund provider over the plan’s participants. Yet, here, to the detriment of the Plan and [its] participants and beneficiaries, the Plan’s fiduciaries included and retained in the Plan many mutual fund investments that were more expensive and necessary and otherwise were not justified on the basis of their economic value to the Plan.

The Eversource plan is substantial. The complaint alleges that at all times during the period under consideration in this case, the plan had at least $2.7 billion in assets under management, which makes it a “jumbo plan.” “As a jumbo plan, the Plan had substantial bargaining power regarding the fees and expenses that were charged against participants’ investments.”

The complaint alleges that the fiduciaries failed to do these things. For example, in 2018, the expense ratios for a majority of the mutual funds offered as investment options were, in some cases 78% to 100% higher than the median expense ratios in the same category.

Article Type: Lawsuit
Topic: Employment

Most Recent Case Event

Eversource 401(k) Plan Breach of Fiduciary Duties Complaint

August 11, 2020

The Eversource 401(k) plan, like most such plans, is governed by the Employee Retirement Income Security Act (ERISA). Those responsible for the plan include Eversource Energy Service, the Board of Directors of Eversource Energy Service and its members, and the Investment Management Committee and its members. The complaint for this class action contends that these parties have breached their fiduciary duties to the plan.

Eversource 401(k) Plan Breach of Fiduciary Duties Complaint

Case Event History

Eversource 401(k) Plan Breach of Fiduciary Duties Complaint

August 11, 2020

The Eversource 401(k) plan, like most such plans, is governed by the Employee Retirement Income Security Act (ERISA). Those responsible for the plan include Eversource Energy Service, the Board of Directors of Eversource Energy Service and its members, and the Investment Management Committee and its members. The complaint for this class action contends that these parties have breached their fiduciary duties to the plan.

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