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October 01, 2019 02:46 PM

Court denies Home Depot request to dismiss ERISA lawsuit

Robert Steyer
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    Bloomberg

    A federal district court judge in Atlanta has refused a request by Home Depot Inc. to dismiss a lawsuit by participants in the company's 401(k) plan who allege an array of ERISA violations.

    However, the judge dismissed the participants' claims against units of Edelman Financial Engines and Alight Solutions that provide investment services to The Home Depot's FutureBuilder 401(k) plan.

    The participants, who are seeking class-action status, filed suit in April 2018, claiming that 401(k) plan managers imprudently chose and retained investment options that performed poorly and charged high fees.

    "The court finds that plaintiffs have stated a plausible ERISA claim for breach of duty of prudence by sufficiently alleging that Home Depot utilized an imprudent decision-making process in managing the plan's investment funds," U.S. District Judge William M. Ray II wrote Sept. 20 in rejecting Home Depot's request for dismissing one of the plaintiffs' allegations.

    The judge also rejected Home Depot's request to dismiss a claim that the plan breached its duty of prudence by failing to monitor the services from the Alight Solutions and Edelman Financial Engines units.

    "The court finds that plaintiffs have alleged sufficient facts to support an inference of an imprudent decision-making process," the judge wrote in the case of Pizarro et al. vs. The Home Depot Inc. et al.

    The plaintiffs also argued that Alight Solutions and Edelman Financial Engines should be held accountable under ERISA for their "negotiation and collection of fees," the judge wrote in dismissing the complaint against the firms. "Such allegations are insufficient."

    The judge also dismissed the participants' claims that the two firms engaged in self-dealing by allegedly churning retirement accounts, writing that the plaintiffs "have failed to state a claim" under ERISA rules.

    Home Depot's 401(k) plan had assets of $7.2 billion as of Dec. 31, according to the latest Form 5500.

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