Seven former employees of Cumulus Media have sued the owner and operator of radio stations and its 401(k) plan fiduciaries, alleging ERISA violations due to the plan's fees and investment-selection processes.
"The plan had substantial bargaining power regarding the fees and expenses that were charged against participants' investments," said the complaint filed Dec. 15 in a U.S. District Court in Atlanta in Dean et al. vs. Cumulus Media Inc. et al. "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 accused the defendants of failing to control record-keeping costs and "maintaining certain funds in the plan despite the availability of identical or similar investment options with lower costs and/or better performance histories."
The plaintiffs, who are seeking class-action status, said the defendants should have offered the lowest cost share class for "many of the mutual funds within the plan."
This is the second ERISA lawsuit against Cumulus Media, making similar complaints and filed by the same two law firms, Johnson Fistel and Capozzi Adler, albeit with different plaintiffs.
In December 2020, U.S. District Court Judge Thomas W. Thrash Jr. dismissed the first lawsuit, filed in February 2020. Mr. Thrash wrote that the plaintiffs failed to pursue all administrative remedies described the in the plan document and filed the lawsuit too late.
A company representative did not respond to a request for comment.
The Cumulus Media 401(k) Plan, Atlanta, had $260 million in assets as of Dec. 31, according to the company's most recent Form 5500 filing.