A U.S. District Court judge in Minneapolis has dismissed a lawsuit against Taylor Corp. and its fiduciaries by five former 401(k) plan participants who alleged that the company's plan violated ERISA due to excessive record-keeping fees, poor investment selection and high investment management fees.
"This claim fails on its merits ... because plaintiffs do not allege facts plausibly showing that the amount of the plan's recordkeeping fees are unreasonably high," U.S. District Court Judge Eric C. Tostrud wrote on Dec. 12.
"The claim's failure leaves plaintiffs without constitutional standing to pursue their remaining ERISA theories," he wrote. "Plaintiffs' complaint will therefore be dismissed without prejudice, and plaintiffs will be given an opportunity to replead."
He gave the plaintiffs 30 days to file an amended complaint in Fritton et al. vs. Taylor Corp. et al.
The former participants, who are seeking class action status, sued in February 2022.
They criticized the plan's record-keeping strategy of using revenue-sharing, contending that it "burdened the plan's participants with excessive, above-market record-keeping and administrative fees," according to the original complaint.
They also argued that investment management fees were excessive when compared with fees in plans of a similar size, adding that fiduciaries failed to "prudently monitor" mutual fund investments to make sure the plan offered the lowest-cost share classes.
Taylor Companies 401(k) and Profit-Sharing Plans, North Mankato, Minn., had $946.9 million in assets as of Dec. 31, 2021, according to the latest Form 5500.