Microsoft Escapes Retirement Plan TDF Suit

One of a string of lawsuits filed against companies that put retirement savers into a BlackRock TDF suite was dismissed by a district court judge.

A U.S. District Court judge on Tuesday dismissed a lawsuit against Microsoft Corporation claiming that the BlackRock LifePath Index Funds suite of target-date funds was an imprudent investment choice for Microsoft’s retirement plan participants.

Plaintiffs who were in the retirement plan accused the company of selecting and keeping BlackRock TDFs that offered lower fees but were not performing as well as comparative TDFs. The claim was one of a string of lawsuits filed by the Miller Shah law firm against companies who offered the TDF, including Booz Hamilton, Cisco, Citigroup and Stanley Black & Decker.

U.S. District Judge James Robart, presiding in the Western District of Washington at Seattle, accepted Microsoft’s motion to dismiss the case, Beldock v. Microsoft, with leave to amend by February 17.

In the decision, Robart sided with the defendants in part by agreeing that the plaintiffs did not prove that comparative TDFs outperformed BlackRock’s suite, and that it is not clear the plaintiff would have invested in a different TDF if other options had been given.

“Whether [the plaintiffs] would have invested in pre-retirement vintages if the plan had offered one of the comparator TDFs is purely conjectural,” Robart wrote in the order.

The judge also wrote that the plaintiffs were not able to support claims that Microsoft breached its fiduciary duty under the Employee Retirement Income Security Act by not divesting from the BlackRock TDFs. Robart wrote that the plaintiffs did not allege any facts showing that staying with the TDFs went against fiduciary duties.

The plaintiffs’ complaint said in this case, as well as in the others still pending, that the defendants appear to have chased low fees, which they say is “currently in vogue,” and did not consider the BlackRock TDFs’ ability to generate returns.

Neither Microsoft nor Miller Shaw immediately responded to a request for comment.