A U.S. appeals court on Nov. 25 overturned a ruling that had thrown out a class-action lawsuit claiming Wal-Mart Stores charged excessive fees for management of its $10 billion 401(k) plan.
The decision by the 8th U.S. Circuit Court of Appeals overturns a decision by U.S. District Court Judge Gary Fenner dismissing the case.
Neither Wal-Mart officials nor Wal-Mart employee Jeremy Braden, who filed the original lawsuit, could be reached for comment. Mr. Braden had alleged that Wal-Mart had used retail mutual funds that carried higher fees than institutional vehicles, and that mutual fund companies kicked back fees to trustee Merrill Lynch in exchange for their funds being used in the plan. He argued that plan fiduciaries had violated their duty of loyalty to plan participants for failing to disclose complete information about the funds and how they were selected.
The appellate court ruled the burden should lie with Wal-Mart to show that the payments were “reasonable,” and thus reinstated the lawsuit.