This class action concerns the North Memorial Health 401(k) Plan, alleging that the parties responsible for it—North Memorial Health Care and the Board of Directors of North Memorial Health Care and its members—breached their fiduciary duties to the plan under the Employee Retirement Income Security Act of 1974 (ERISA). The complaint alleges that in choosing investment options and retaining service providers, the defendants did not exercise their duties of prudence and loyalty.
The class for this action is all persons, except for the defendants in this case and their immediate family members, who were participants in or beneficiaries of the plan, at any time between July 15, 2016 and the date of judgment in this case.
ERISA requires that the fiduciaries of plans like the 401(k) plan owe them and their participants and beneficiaries the duties of prudence and loyalty. In particular, plans must control their costs, because participants who must pay too much lose not only the money that was poorly spent but also the additional sums that money might have earned if it had remained within the plan.
With at least $286 million under investment at all times during the class period covered by this action, and $465 million in net assets at the end of the 2020 fiscal year, the plan is a large plan, the complaint alleges, and therefore has a good deal of bargaining power to negotiate fees and expenses.
The complaint alleges that those responsible for the plan failed in at least three ways:
They failed to review the plan’s investments with “due care to ensure that each investment option was prudent, in terms of cost[.]”
They kept certain funds as investment options even though similar or identical investment options were available “with lower costs and/or better performance histories[.]”
They did not control the recordkeeping costs for the plan.
The complaint displays a number of charts, including one that compares the plan share classes for certain investments with different share classes with lower expense ratios; one that compares the fees of certain funds in the plan with fees for better-performing alternatives; and one that compares the performance of certain funds with the performance of selected alternatives.
The complaint also looks at the plan’s recordkeeping fees, which apparently were a combination of flat recordkeeping fees and revenue sharing. The complaint claims that this combination of fees “resulted in a worst-case scenario for the Plan’s participants because it saddled Plan participants with above-market recordkeeping fees.” It alleges that when both sources of fees are added up, the total for the plan participants “is more than three times the recent national median.”
Article Type: LawsuitTopic: Employment
Most Recent Case Event
North Memorial Health 401(k) Plan Breach of Fiduciary Duties Complaint
July 15, 2022
This class action concerns the North Memorial Health 401(k) Plan, alleging that the parties responsible for it—North Memorial Health Care and the Board of Directors of North Memorial Health Care and its members—breached their fiduciary duties to the plan under the Employee Retirement Income Security Act of 1974 (ERISA). The complaint alleges that in choosing investment options and retaining service providers, the defendants did not exercise their duties of prudence and loyalty.
North Memorial Health 401(k) Plan Breach of Fiduciary Duties ComplaintCase Event History
North Memorial Health 401(k) Plan Breach of Fiduciary Duties Complaint
July 15, 2022
This class action concerns the North Memorial Health 401(k) Plan, alleging that the parties responsible for it—North Memorial Health Care and the Board of Directors of North Memorial Health Care and its members—breached their fiduciary duties to the plan under the Employee Retirement Income Security Act of 1974 (ERISA). The complaint alleges that in choosing investment options and retaining service providers, the defendants did not exercise their duties of prudence and loyalty.
North Memorial Health 401(k) Plan Breach of Fiduciary Duties Complaint