Former employees of Whole Foods Market sued the grocery chain and its fiduciaries, alleging that a company 401(k) plan violated ERISA because the plan's record-keeping fees were excessive.
The plaintiffs accused the plan of charging high fees for record-keeping services from Fidelity Investments even though the services were "routine" and did not justify the fees, said the complaint filed Nov. 6 in a U.S. District Court in Austin, Texas. Fidelity isn't a defendant.
The plaintiffs are seeking class-action status.
The contract with Fidelity "did not identify any unique services Fidelity would have to provide to the plan that would make the record-keeping services provided to the plan differ in any material way from record-keeping services provided by Fidelity or other nationally recognized record keepers to other jumbo plans like the plan," said the complaint in Winkelman et al. vs. Whole Foods Markets Inc. et al.
The lawsuit said Fidelity has been the record keeper since 2011 "with little meaningful change in the already excessive" fees for record keeping and administration.
The plaintiffs argued that the Fidelity's long tenure "strongly suggests that the plan fiduciaries failed to act in the best interests of plan participants when they failed to genuinely attempt to seek a competitive market rate" for record-keeping and administrative fees.
Scouting for other record keepers would have enabled the plan to reduce costs "given that the market for record keeping is highly competitive, with many vendors equally capable of providing a high-level service," the complaint said.
A company representative did not respond to a request for comment.
The Whole Foods Market Growing Your Future 401(k) Plan, Austin, had assets of $1.68 billion as of Dec. 31, 2022, according to the latest Form 5500.