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Defined Contribution

Judge dismisses suit against record keeper of 3 Ford Motor plans

A federal court judge in Port Huron, Mich., dismissed a suit against record keeper Xerox HR Solutions LLC by participants in three Ford Motor Co. defined contribution plans who alleged violations of the Employee Retirement Income Security Act.

The participants argued that the firm, now known as Conduent, breached its fiduciary duties in contracting with Financial Engines to provide advisory services to the participants in the Ford plans, according to court documents. They said Financial Engines paid Xerox HR Solutions a "significant percentage" of fees it collected from the plans' participants, according to court documents. This constitutes a "kickback," they alleged, because Xerox HR Solutions "is already collecting fees for its record-keeping services.

Ford, the three Ford 401(k) plans and Financial Engines were not named as defendants in the case, Chendes et al. vs. Xerox HR Solutions LLC, which was dismissed Oct. 19.

"Plaintiffs have not yet carried their burden … to plead facts sufficient to 'state a claim for relief that is plausible on its face,' " wrote District Judge Robert H. Cleland.

The plaintiffs maintained Xerox HR "dictates and controls certain of the terms and conditions on which Financial Engines will provide services to the retirement plans administered on the Xerox platform," according to court documents.

According to Mr. Cleland's ruling, the participants' claims were based primarily on the assertion that Xerox HR Solutions and Financial Engines were fiduciaries to the three plans — the Ford Retirement Plan, the Ford Motor Company Savings and Stock Investment Plan for Salaried Employees and the Ford Motor Company Tax-Efficient Savings Plans for Hourly Employees.

"Because (the) defendant did not have discretion over the amount of its own compensation as it relates to plaintiffs, (the) defendant was not acting as a fiduciary in collecting fees from Financial Engines," the judge wrote.