A federal judge in Philadelphia has turned back a request by the International Union of Elevator Constructors to dismiss an ERISA complaint against the union and its 401(k) plan fiduciaries by two plan participants.
"The court rejects defendants' arguments that the complaint is insufficient under ERISA jurisprudence of the Supreme Court, and finds that Third Circuit case law requires this court to construe an ERISA complaint liberally," U.S. District Court Judge Michael M. Baylson wrote on June 7. The 3rd U.S. Circuit Court of Appeals covers Pennsylvania, New Jersey, Delaware and the Virgin Islands.
"The court finds that plaintiffs facts are sufficient (under previous Supreme Court rulings) to require the defendants to answer the complaint," the judge wrote.
The participants sued the union and plan fiduciaries in October 2022. They argued that the plan's size gave it bargaining power to reduce fees and expenses, according to the case of McLachlan et al. vs. International Union of Elevator Constructors et al. The participants are seeking class-action status.
"Defendants, however, did not try to reduce the plan's expenses or exercise appropriate judgment to scrutinize each investment option that was offered in the plan to ensure it was prudent," the lawsuit said.
The union offers this retirement plan to many unions throughout the country, making it a multiple employer plan, the lawsuit said. The plaintiffs' employers were not identified in the original complaint.
The Elevator Constructors Annuity and 401(k) Retirement Plan, Newtown Square, Pa., had assets of $5.81 billion as of Dec. 31, 2021, according to the latest Form 5500.