December 22, 2009
--- A federal judge has moved forward claims by Kraft Foods Global
employees that retirement plan fiduciaries breached their duties by
offering investment options that underperformed and charged excessive
fees. ---
U.S. District Judge Ruben Castillo of the U.S. District Court for the Northern District of Illinois rejected Kraft's argument that the excessive fee claims were time-barred under the Employee Retirement Income Security Act (ERISA), saying that since the employees' complaint did not reference the plan's summary plan description and other plan-related communications, the company cannot prove the employees had knowledge of the fees through these documents prior to three years before the case was filed. Castillo also found the claims against Kraft and Altria Corporate Services regarding improper management of the Kraft Foods and Altria stock funds were not time-barred for the same reason.
However, the court did find that some of the employees' claims against the Altria Investment Committee were time-barred because it stopped serving the plan in 2001, so its last alleged breach would have occurred more than six years before the suit was filed.
Castillo rejected the defendants' argument that the employees did not satisfy Rule 8 pleading standards, which require that "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim of relief that is plausible on its face.'" He cited the 8th U.S. Circuit Court of Appeals reversal of a lower court decision in Braden v. Wal-Mart Stores, Inc. in which it found that employees stated claims of misconduct that could be traced to defendants' actions and were likely to receive favorable judgment (see “Court Rules Wal-Mart 401(k) Suit Requires Further Discussion”).
Castillo directed all parties to "exhaust all efforts to settle this case" and ordered a review of the case status on January 6.