Judge tosses 401(k) suit against Cisco over BlackRock TDFs

A federal judge in San Jose, Calif., has dismissed a lawsuit against Cisco Systems Inc. and its 401(k) plan fiduciaries filed by participants who said the plan's offering of a BlackRock target-date series violated ERISA.

The plaintiffs, who sued just over 12 months ago, contended that plan executives should have replaced the BlackRock LifePath Index Retirement Funds due to poor performance in the case of Bracalente et al. vs. Cisco Systems Inc. et al. The plaintiffs are seeking class-action status.

"To the extent the complaint relies solely on the BlackRock TDFs' underperformance compared to other TDFs', the court finds that these allegations are insufficient by themselves to support a reasonable inference that Cisco had acted imprudently by continuing to offer the BlackRock TDFs," U.S. District Court Judge Edward J. Davila wrote on Aug. 11.

"Federal courts have nonetheless widely and consistently rejected attempts to impose ERISA liability where the claims are based solely on a fund's underperformance," he wrote.

Cisco is one of is one of 11 companies sued by different plaintiffs making similar criticisms of the BlackRock target-date series. The lawsuits, all seeking class-action status, were filed by Miller Shah LLP either as lead counsel or co-counsel, using similar language and the same statistical comparisons of the BlackRock target-date series vs. several other target-date series.

BlackRock isn't a defendant in any of the cases.

In addition to Cisco, federal judges have dismissed lawsuits against Wintrust Financial, Advance Publications, Microsoft (twice), Capital One Financial (twice) and Booz Allen Hamilton (twice). Plaintiffs in the latter two cases filed notices of appeal, then withdrew them.

Earlier this month, a federal judge in Hartford, Conn., gave 401(k) plan participants 30 days to amend their BlackRock target-date lawsuit against Stanley Black & Decker.
U.S. District Court Judge Stefan R. Underhill issued the request on Aug. 3 in a one-page order that granted in part and dismissed in part a petition by the company to throw out the case. However, the document provided no details in the case of Kistler et al. vs. Stanley Black & Decker Inc. et al.

In the Cisco case, the judge told plaintiffs they could amend their complaint to address "deficiencies" in their arguments within 21 days. "Plaintiffs are cautioned, however, that simply providing metrics or opinions further describing the BlackRock TDFs' underperformance is not likely to cure these deficiencies," the judge wrote.

The Cisco Systems Inc. 401(k) Plan, San Jose, Calif., had assets of $15.5 billion as of Dec. 31, 2022, according to the latest Form 5500.