A federal judge in Springfield, Mass., has dismissed an ERISA lawsuit against Massachusetts Mutual Life Insurance Co. and fiduciaries of a company 401(k) plan by a former employee who criticized the plan’s use of proprietary investments, alleged poor performance and complained about high fees.
U.S. District Court Judge Mark Mastroianni on March 29 rejected the lawsuit, saying the plaintiff waited too long to sue over some issues and was restricted in pursuing other issues due to a previous MassMutual 401(k) plan settlement in which the plaintiff was a beneficiary.
The plaintiff failed to “plausibly state a claim,” Mastroianni wrote in Judy Lalonde vs. Massachusetts Mutual Life Insurance Co. et al.
Lalonde was a member of the settlement class in Gordan et al. vs. Massachusetts Mutual Life Insurance Co. et al., which the insurance company settled for $30.9 million in November 2016. Plaintiffs sued in 2013, accusing defendants of charging excessive fees, retaining poor-performing investments and offering a risky fixed-income option for two MassMutual retirement plans.
“In return for agreeing to the settlement payments and fiduciary process related improvements, MassMutual received releases from each of the Gordan class members,” the judge wrote. “Specifically, the Gordan class agreed not to bring any further actions related to or arising out of the plan.”
The settlement terms covered the four-year period from Dec. 3, 2016, to Dec. 3, 2020.
“Defendants contend the Gordan settlement agreement's release provision limits plaintiff to allegations arising after Dec. 3, 2020,” Mastroianni wrote. “Plaintiff argues the release only applies to claims arising before Dec. 3, 2016. The court agrees with Defendants.”
The judge wrote that the plaintiff could amend her complaint alleging ERISA violations after Dec. 3, 2020.
The Gordan settlement covered two of Lalonde’s complaints filed in November 2022, alleging self-dealing by the defendants in selecting proprietary investments, charging high fees and retaining poor investments, Mastroianni wrote.
The plaintiff’s other allegations accused the defendants of conducting prohibited transactions under ERISA, the judge noted. However, the three-year statute of limitations had expired, and he dismissed these allegations with prejudice, meaning Lalonde cannot refile in his court.
Mastroianni pointed out that the plaintiff knew the challenged investments were available as early as December 2016, adding that she had invested in some of them.
MassMutual Thrift Plan, Springfield, Mass., had $3.6 billion in assets as of Dec. 31, 2022, according to the latest Form 5500.
