A U.S. District Court judge in Oakland, Calif., has again dismissed a complaint by participants in a Chevron Corp. 401(k) plan who claimed that plan managers breached their fiduciary duties under the Employee Retirement Income Security Act.
Judge Phyllis J. Hamilton initially dismissed the complaint on Aug. 29, 2016, because participants presented “insufficient facts” to state a claim against managers of the $19 billion Chevron Employee Savings Investment Plan. However, the judge allowed plaintiffs to amend their complaint in the case of Charles E. White et al. vs. Chevron Corp. et al. Chevron moved to dismiss the amended complaint, and the judge agreed with Chevron in a ruling Wendesday.
“Because plaintiffs have failed to correct the deficiencies identified by the court in its prior order” and because the judge rejected one new argument in the amended complaint, “the court finds that further leave to amend would be futile,” wrote the judge, dismissing the complaint “with prejudice,” meaning plaintiffs cannot refile.
The participants, who had sought class-action status, made six fiduciary-breach claims against Chevron, including allegations that some funds in the plan's lineup, including those of Vanguard Group, charged “unreasonably high” investment management fees. Vanguard is the record keeper.
The plaintiffs contended that Vanguard charged excessive record-keeping fees because it used a revenue-sharing strategy for some investment options. They also alleged a conflict of interest at Vanguard because the firm owned Chevron stock while also serving as the plan's record keeper.
The judge wrote that the conflict-of-interest argument was “insufficient” to state a claim, adding that plaintiffs “allege no facts” in backing up their argument. The plaintiffs' argument about high fees “contained no facts regarding any process for choosing” investment options, she wrote.
And the judge said the plaintiffs' arguments about management fees were, in some instances, “little more than guesses, and are either invalid or relatively incomprehensible.”
The lead attorney for the plaintiffs was Schlichter, Bogard & Denton. The lead attorney for Chevron was O'Melveny and Myers.