fbpx

L Brands 401(k) Plan Breach of Fiduciary Duty Class Action

Company retirement plans, like 401(k) plans, are governed by the Employee Retirement Income Security Act (ERISA), and those who handle them are fiduciaries, with the duties of prudence and loyalty to the participants. This class action brings suit against L Brands, Inc., L Brands Service Company, LLC, and the plan’s administrative committee, alleging that these entities have breached their fiduciary duties towards the L Brands, Inc. 401(k) Savings and Retirement Plan.

The class for this action is all participants and beneficiaries of the L Brands, Inc. 401(k) Savings and Retirement Plan, at any time between November 23, 2014 and the present, including beneficiaries of deceased persons who were participants during this period.

Plan expenses are paid out of plan assets, and they are mostly paid by participants. The participants lose not just the amounts paid out, but the future interest or value the paid-out amounts would have earned in subsequent years.

The L Brands plan has more than 33,000 participants and around $1.6 billion in assets. This put it into the top 0.1% of plans in size. This means that when it is looking for parties to provide recordkeeping and other administrative duties, it should have significant bargaining power.

The complaint alleges that the average cost for recordkeeping and administrative services in 2017 for plans much smaller, that is, with 100 participants and $5 million in assets, was $35 per participant.

The complaint says, “Given its size, and resulting negotiating power, with prudent management and administration, the Plan should have unquestionably been able to obtain recordkeeping and administrative services for significantly lower than $35 per participant.” Instead, the complaint alleges that the plan has been paying $56 per participant.

In other words, the complaint claims that participants have been paying around 60% more than they should have for these services. The complaint says that “it is clear that Defendants either engaged in virtually no examination, comparison, or benchmarking of the recordkeeping/administrative fees of the Plan to those of other similarly sized define contribution plans, or were complicit in paying grossly excessive fees.”

Also, the complaint alleges that the defendants did not pay proper attention to the expense ratios charged as investment management fees. This resulted in an excessive total plan cost, it says: “Indeed, participants were offered an exceedingly expensive menu of investment options, clearly demonstrating that Defendants neglected to benchmark the cost of the Plan lineup or consider other ways in which to lessen the fee burden on participants… From 2014 through 2019, the Plan paid out investment management fees of 0.38%-0.46% of its total assets, a figure much higher than that of comparable plans.”

Finally, the complaint alleges that the plan did not take advantage of the least expensive share classes. It alleges, “There is no distinction whatsoever, other than price, between the share classes for the same investment option. The share class used is typically, if not always, dependent on the negotiating leverage of the investor.”

Article Type: Lawsuit
Topic: Employment

Most Recent Case Event

L Brands 401(k) Plan Breach of Fiduciary Duty Class Action

November 23, 2020

Company retirement plans, like 401(k) plans, are governed by the Employee Retirement Income Security Act (ERISA), and those who handle them are fiduciaries, with the duties of prudence and loyalty to the participants. This class action brings suit against L Brands, Inc., L Brands Service Company, LLC, and the plan’s administrative committee, alleging that these entities have breached their fiduciary duties towards the L Brands, Inc. 401(k) Savings and Retirement Plan.

L Brands 401(k) Plan Breach of Fiduciary Duty Class Action

Case Event History

L Brands 401(k) Plan Breach of Fiduciary Duty Class Action

November 23, 2020

Company retirement plans, like 401(k) plans, are governed by the Employee Retirement Income Security Act (ERISA), and those who handle them are fiduciaries, with the duties of prudence and loyalty to the participants. This class action brings suit against L Brands, Inc., L Brands Service Company, LLC, and the plan’s administrative committee, alleging that these entities have breached their fiduciary duties towards the L Brands, Inc. 401(k) Savings and Retirement Plan.

L Brands 401(k) Plan Breach of Fiduciary Duty Class Action
Tags: Breach of Fiduciary Duty, ERISA Violations, Employment Violations, Retirement Plan Mismanagement