Case consolidated with similar suit against Franklin Templeton 401(k) plan
A federal judge in San Francisco rejected a request by Franklin Resources to throw out an ERISA-based complaint against the Franklin Templeton (BEN) 401(k) plan. Instead, U.S. District Judge Claudia Wilken consolidated the complaint with a similar pending suit against executives of the 401(k) plan.
A former Franklin employee and plan participant sued the company and plan executives in November 2017, alleging violations of Employee Retirement Income Security Act such as charging excessive fees, offering poor-performing proprietary mutual funds and failing to monitor fiduciaries of the Franklin Templeton 401(k) Retirement Plan, San Mateo, Calif. The plan had $1.21 billion in assets at year-end 2016, according to the latest Form 5500.
The defendants in the case of Nelly Fernandez vs. Franklin Resources Inc. asked Ms. Wilken for summary judgment, arguing that a severance agreement precluded the lawsuit. "The severance agreement does not bar plaintiff's claims in this lawsuit," Ms. Wilken wrote on April 6.
The defendants also asked that Ms. Wilken dismiss the case, arguing that it is the same as a pending case, Cryer vs. Franklin Resources Inc. et al., also before Ms. Wilken.
"This suit is not duplicative of Cryer," wrote Ms. Wilken, noting that the new complaint contains allegations against more defendants than in the Cryer case. Citing "the interests of judicial economy," Ms. Wilken ordered the cases consolidated.
In the Cryer case, a former employee and 401(k) plan member sued in 2016, alleging several ERISA violations. In January 2017, Ms. Wilken rejected Franklin Resources' request for dismissal. She also rejected its request for summary judgment based on the company's argument that the severance agreement with Marlon Cryer precluded a lawsuit.
In the Fernandez case, Franklin Resources also unsuccessfully asked for a dismissal, alleging that the lawsuit was filed after a statute of limitations. "It is the defendants' burden to show that it is clear from the face of the complaint that the claim is time-barred, which they have not done," Ms. Wilken wrote.