A lawsuit alleging Lowe’s Cos. and its investment consultant Aon Hewitt Investment Consulting made imprudent investment choices for the Lowe’s 401(k) plan, in violation of the Employee Retirement Income Security Act (ERISA), will move forward because the parties failed to reach a settlement agreement.
A certificate of settlement conference filed in the U.S. District Court for the Western District of North Carolina says, “Plaintiff and defendant Aon Hewitt Investment Consulting Inc. are unable to resolve this case through a voluntary settlement.” The parties had asked more than one month ago for proceedings to stop pending settlement negotiations. Three days before the deadline to file a motion for preliminary approval of a settlement agreement, the plaintiff and defendant Lowe’s Cos. asked for an extension. The certificate did not mention the state of negotiations between the plaintiff and Lowe’s.
The core of the lawsuit challenges the selection and retention of the Hewitt Growth Fund for the plan. The plaintiff says Lowe’s selected the fund, in consultation with Hewitt, “despite the fact that (1) the Hewitt Growth Fund was a new and largely untested fund at the time it was added to the plan; (2) the Hewitt Growth Fund was underperforming its benchmark at the time it was added to the plan and continued to underperform after it was added to the plan; and (3) the Hewitt Growth Fund was not utilized by fiduciaries of any similarly sized plans and was generally unpopular in the marketplace.”
According to the text of the complaint, defendants placed $1 billion of the Lowe’s 401(k) plan’s assets into the new fund. At least some of the money, plaintiffs allege, was inappropriately reallocated from eight existing funds in the plan, “which were generally performing well,” when the Hewitt Growth Fund replaced these options on the investment menu.
The deadline for the plaintiff and defendant Lowe’s Cos. to file a motion for preliminary approval of a settlement agreement is May 28.