Parties Reach Settlement in Case Over Use of Actively Managed TDF Suite
Meanwhile, the same law firm that filed the settled case has launched a new case with similar claims against another retirement plan’s fiduciaries.
The parties in a lawsuit against fiduciaries of a 401(k) plan sponsored by Coca-Cola Consolidated have filed a notice of settlement.
“With the assistance of a mediator, the parties have reached an agreement in principle to settle all matters in controversy between them,” the notice states. The parties asked the court to stay all case deadlines until March 7. According to the court document, the court has set a settlement deadline for February 22.
The lawsuit had claimed the continued offering of the actively managed Fidelity Freedom Funds target-date fund (TDF) suite represented an ongoing fiduciary breach.
“The defendants were responsible for crafting the plan lineup and could have chosen any of the target-date families offered by Fidelity, or those of any other target-date provider,” the complaint alleged. “The defendants failed to compare the active and index suites and consider their respective merits and features. A simple weighing of the benefits of the two suites indicates that the index suite is and has been a far superior option, and consequently the more appropriate choice for the plan.”
Last April, the case survived a motion to dismiss.
Separately, the same law firm that filed the suit against Coca-Cola Consolidated has filed a lawsuit against the fiduciaries of the DISH Network Corp. 401(k) Plan that includes identical verbiage about the use of the Fidelity Freedom Funds TDF suite.
The complaint against DISH also accuses the fiduciaries of breaching their Employee Retirement Income Security Act (ERISA) fiduciary duties by allowing “unreasonable expenses to be charged to participants” for recordkeeping and administrative (RK&A) services.
“The fees paid by the plan for virtually the same package of services are much higher than those of plans with comparable, and in many cases smaller, participant counts,” the complaint states. “Indeed, based on fees paid by other large plans during the class period receiving materially identical RK&A services, it is clear and more than reasonable to infer that the defendants failed to follow a prudent process to ensure that the plan was paying only reasonable fees.”
DISH Network has not yet responded to a request for comment about the lawsuit.