Old Dominion Retirement Plan Breach of Fiduciary Duty Class Action

Old Dominion Freight Line, Inc. has a retirement plan for its employees, the Old Dominion 401(k) Retirement Plan, which is governed by the Employee Retirement Income Security Act (ERISA). The complaint for this class action alleges that Old Dominion has breached its fiduciary duties of prudence and loyalty under ERISA by choosing high-priced investment options for the plan.

The class for this action is all persons who were participants or beneficiaries of the plan, at any time between November 18, 2016 and the present.

As of December 31, 2021, the complaint says, the plan had more than 24,000 participants and more than $1.95 billion in assets. It quotes the Uniform Prudent Investor Act 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.”

The complaint alleges, “The US Department of Labor (‘DOL’) has noted that a 1% higher level of fees over a 35-year period makes a 28% difference in retirement assets at the end of a participant’s career.” When fees are high, the compliant says, participants lose not only the amount paid in fees but also the money those amounts would have earned over time.

How, specifically, did Old Dominion cause the retirement plan participants to pay too much? The complaint alleges that it “failed to prudently monitor and select proper share classes of eleven (11) investments offered by the plan.”

Because retirement plans hold a great deal of money that needs to be invested, the complaint alleges, investment companies want their investments to be chosen as options for these plans. To make them attractive, they may offer a different share class to plans than they do to retail investors. These shares are different in that they have lower expenses than share classes available to retail investors, but they are otherwise the same.

The complaint alleges that Old Dominion “selected more expensive share classes than identical less expensive share classes of the same investments. It displays a table showing the investment options in question, the cheaper share classes, and the expense ratios that represent the costs charged investors for each. In most of these cases, the cheaper share classes save the investor .10% over the more expensive share classes.

The complaint claims, “As of December 31, 2021, Plan participants had nearly $500,000,000 (five hundred million dollars) invested in the above identified imprudent share classes.” According to the complaint, the choice of the more expensive options has cost the plan and its participants approximately $3 million in unnecessary losses.

The complaint also cites a group of JP Morgan funds that are similar to the imprudent investments, saying they charge only twenty rather than fifty basis points and outperform the funds in the plan.

Article Type: Lawsuit
Topic: Employment
Tags: 401(k) Plans, Breach of Fiduciary Duty, ERISA Violations, Excessive Fees, Retirement Plans