A federal judge in Santa Ana, Calif., has rejected a request to dismiss a lawsuit against Universal Services of America by participants in a company 401(k) plan who allege several ERISA violations.
The original complaint was filed in June 2022, accusing the security company, an affiliate and 401(k) plan fiduciaries of failing to evaluate record-keeping fees, which plaintiffs alleged are unreasonable.
"At the pleading stage, plaintiffs have succeeded in stating a claim for breach of fiduciary duty of prudence," U.S. District Court Judge John W. Holcomb wrote on Feb. 1 in the case of Tsui et al. vs. Universal Services of America et al. Plaintiffs are seeking class action status.
The judge noted that plaintiffs contended the plan fiduciaries should have reduced record-keeping and administrative fees as the number of participants grew, adding that plaintiffs had provided enough information to survive a motion to dismiss.
"Plaintiffs have sufficiently stated a plausible claim for breach of duty to monitor" plan executives, and they "sufficiently allege" that the defendants could remove plan executives who didn't follow ERISA's guidelines for prudent plan management, he wrote.
The Allied Universal 401(k) Plan, Santa Ana, Calif., had assets of $498 million as of Dec. 31, 2022, according to the latest Form 5500.