Seven ex-employees of industrial holding company Marmon Holdings have filed a class-action lawsuit against their former employer, alleging the company mismanaged its 401(k) plan.
The lawsuit filed Tuesday in the U.S. District Court for the Northern District of Illinois against Marmon, its board of directors and retirement administrative committee claimed the company breached its fiduciary duty by failing to review the plan's investment portfolio to ensure that each investment was prudent in terms of cost. It also criticized the company, which is owned by Berkshire Hathaway, for alleged excessive administrative and record-keeping fees.
"Their actions were contrary to actions of a reasonable fiduciary and cost the plan and its participants millions of dollars," lawyers for the plaintiffs wrote in the complaint.
The plaintiffs also took aim at the plan's suite of company-created target-date funds, whose performance they claimed severely lagged those of target-date suites available on the market.
"It was clear breach of fiduciary duty to have created these poorly performing target-date funds instead of choosing from the many better performing target-date suites with expected stability for each expected retirement date," the lawyers said.
A spokeswoman for Marmon vigorously disputed the allegations. "The Marmon retirement plan is prudently managed and closely monitored with a single focus on the best interests of the participants and beneficiaries of the plan," she said in a statement. "Marmon retains third-party experts to assist in the selection and monitoring of the plan's investment options, including objectively reviewing the plan's investment portfolio with due care to ensure that each investment option is prudent — in terms of both cost and performance — considering various market trends and cycles. With input from these experts, Marmon also negotiates for lower administrative, record-keeping and investment expenses."
The lawsuit seeks to compel Marmon and other defendants to make good to the plan all losses resulting from their fiduciary breaches.
As of Dec. 31, 2020, the Marmon Employees' Retirement Plan had $1.1 billion in assets, according to its latest Form 5500.