401(k) and 403(b) Plan Fee Litigation

Sidley has had unparalleled success in defending plan sponsors and service providers against the ongoing wave of fee and expense litigation.

Dismissal for CareerBuilder in ERISA Class Action

• Sidley successfully defended CareerBuilder in an ERISA class action alleging that its 401(k) plan improperly included investment options with excessive fees that underperformed and that the plan paid too much in recordkeeping fees. The district court granted the motion to dismiss and plaintiff did not appeal. Martin v. CareerBuilder, LLC, No. 19-6463, 2020 WL 3578022 (N.D. Ill. July 1, 2020).

Summary Judgment Victory for CAPTRUST Financial Advisors in ERISA Fee and Expense Class Action

• Sidley won summary judgment on behalf of an investment advisor in an ERISA class action—part of a wave of such cases targeting elite private colleges and universities. A class of retirement plan participants sued Cornell University and our client, an investment advisor to the university’s 403(b) plans, alleging violations of ERISA by including imprudent investment options in the retirement plans. The court agreed that our client had not acted imprudently and granted summary judgment in its favor. Cunningham v. Cornell University, No. 1:16-cv-6525, 2019 WL 4735876 (S.D.N.Y 2019).

Secured Summary Judgment for Great-West Life & Annuity Insurance Company

• Sidley obtained a significant victory for Great-West Life & Annuity Insurance Company in an ERISA class action when the District of Colorado granted summary judgment and rejected the plaintiff’s claim alleging that our client acted improperly with respect to a guaranteed fixed income product. The opinion represents the first merits victory for a defendant in one of the seven general account class actions brought against the insurance industry and established standards by which to evaluate whether offerors of such products act as a fiduciary. Teets v. Great-West Life & Annuity Insurance Company, 919 F.3d 1232 (10th Cir. 2019) (affirming summary judgment), cert. denied.

Ninth Circuit Sides With Sidley Clients, Orders Dismissal of Novel Theory of Fiduciary Status

• The U.S. Court of Appeals for the Ninth Circuit ordered dismissal of claims that an insurance company acted as a fiduciary under ERISA when providing services to 401(k) plans. Sidley represented three amicus parties that argued for this result: the Chamber of Commerce of the United States of America, the American Council of Life Insurers, and the American Benefits Council. Santomenno v. Transamerica Life Ins. Co., 883 F.3d 833 (9th Cir. 2018).

Sidley Wins Dismissal of Claims in ERISA Class Action

• Sidley obtained a victory for Galliard Capital Management in a class action alleging our client charged excessive fees and imprudently managed a proprietary stable value fund. Our motion to dismiss the complaint was granted and the ruling was affirmed on appeal. Barchock v. CVS et al., 886 F.3d 43 (1st Cir. 2018).

Dismissal of Putative Class Action Against Merrill Lynch

• On behalf of Merrill Lynch, we won dismissal with prejudice of a putative class action alleging that our client, a service provider to 401(k) plans, acted as a fiduciary and violated its fiduciary duties by collecting allegedly excessive fees. Walker v. Merrill Lynch & Co., 181 F. Supp. 3d 223 (S.D.N.Y. 2016); amended complaint dismissed with prejudice on March 31, 2017.

Victory for CapFinancial Partners in ERISA Class Action

• On behalf of an investment advisor, we won dismissal with prejudice of an ERISA class action alleging that a 401(k) plan’s fund ”menu” included too many actively managed funds and funds with excessive expenses. Rosen v. Prudential Ret. Ins. & Annuity Co., No. 15-cv-1839, 2016 WL 7494320 (D. Conn. Dec. 30, 2016).

Eighth Circuit Upholds Dismissal of Claims Against Principal Life

• The U.S. Court of Appeals for the Eighth Circuit affirmed the dismissal of a class action alleging that a retirement plan service provider violated fiduciary duties under ERISA. The case provides helpful precedent for defendants in similar cases at a time when federal courts around the country are experiencing an uptick in ERISA class actions. McCaffree v. Principal Life Ins. Co., 811 F.3d 998 (8th Cir. 2016).

Dismissal Upheld in Closely Watched Class Action Appeal

• The U.S. Court of Appeals for the Third Circuit affirmed the dismissal of an ERISA class action alleging that a retirement plan service provider charged excessive fees to 401(k) plans, concluding that plaintiffs failed to allege the service provider’s fiduciary status.
• The court also rejected arguments offered by the Department of Labor, which filed an amicus brief in support of the plaintiffs. Sidley represented the American Council of Life Insurers in its submission of an amicus brief in support of the service provider’s position; much of that brief addressed the Department’s arguments. Santomenno v. John Hancock Life Ins. Co. (U.S.A.), 768 F.3d 284 (3d Cir. 2014).

Victory for American United Life Limits Reach of ERISA’s Definition of “Fiduciary”

• In a victory with broad implications for the financial services and health insurance industries – and ERISA cases in general – the Seventh Circuit limited the reach of ERISA’s definition of “fiduciary.”
• The court held that our client, a 401(k) service provider, was not a fiduciary with respect to its receipt of “revenue sharing” from mutual fund companies. The opinion rejected a novel theory of fiduciary liability that the Department of Labor had espoused in an amicus brief. Leimkuehler v. American United Life Ins. Co., 713 F.3d 905 (7th Cir. 2013).

Sidley Secures Dismissal of All Claims Against Exelon Corporation

• We won dismissal of all claims against Exelon Corporation and certain of its directors and officers. The Seventh Circuit affirmed. Loomis v. Exelon Corp., 658 F.3d 667 (7th Cir. 2011).
• Other similar cases brought by the same law firm have settled or resulted in judgments for eight-figure sums.

Class Certification Denied in “Revenue Sharing” Lawsuit Against Principal Life

• We won the first denial of class certification in a “revenue sharing” lawsuit against a 401(k) service provider. The Eighth Circuit subsequently dismissed plaintiff’s appeal for want of jurisdiction. Ruppert v. Principal Life Insurance Co., 252 F.R.D. 488 (S.D. Iowa 2008), appeal dismissed, 705 F.3d 839 (8th Cir. 2013).

Sidley Secures Favorable Settlement for Hartford Life

• After we moved for summary judgment, this case against a 401(k) service provider settled on favorable terms that included a court finding that our client did not act as an ERISA fiduciary in connection with “revenue sharing” payments.

Class Certification Denied in IRA “Roll-Over” Class Action

• We won denial of class certification in an ERISA class action involving “roll-over” IRAs. Plaintiffs accused our client, a 401(k) service provider, of breaching its fiduciary duty by marketing a more expensive share class to participants who roll over their plan account balances after leaving an employer.
• The court agreed that the case could not be resolved on a classwide basis. Walsh v. Principal Life Ins. Co., 266 F.R.D. 232 (S.D. Iowa 2010).