A federal judge in Atlanta issued multiple rulings in a lawsuit filed by former employees of Rollins Inc., who accuse the company, its fiduciaries and several other defendants of ERISA violations in a Rollins 401(k) plan.
Each defendant had asked U.S. District Court Judge Eleanor L. Ross to dismiss the many claims in Fleming et al. vs. Rollins Inc., et al., which was initially filed in December 2021 and later amended.
In her 59-page ruling on January 30, Ms. Ross:
- Rejected the Rollins defendants' motion to dismiss all seven allegations, including breach of duty of prudence, breach of duty of loyalty and failure to monitor fiduciaries. Plaintiffs alleged breaches of fiduciary duty for, among other things, excessive record-keeping fees and investment management fees, poor investment selection and self-dealing.
- Granted the motion to dismiss by LPL Financial LLC covering all five allegations of ERISA violations, removing the company from the case. LPL is a broker-dealer and was an investment adviser to the plan, according to court documents.
- Issued a split decision for Alliant Insurance Services LLC and Alliant Services Inc., granting their motion to dismiss some allegations, but denying their request for most. The Alliant companies provide commercial insurance, employee benefits and retirement plan consulting, and they were investment advisers to the plan, according to court documents.
- Issued a split decision for Prudential Insurance and Annuity Co. and Prudential Bank & Trust, refusing to dismiss most allegations. Empower Retirement acquired Prudential's record-keeping business in April 2022. The Prudential defendants are the plan's record keeper and directed trustee, according to court documents.
Ms. Ross rejected the Rollins defendants' argument that the plaintiffs filed their lawsuit too late under ERISA guidelines. "Because plaintiffs claim the Rollins defendants' concealment prevented them from discovering the various breaches alleged in the amended complaint until 2019, they have sufficiently alleged that their claims are timely," the judge wrote.
In granting the LPL petition for dismissing all complaints, Ms. Ross wrote that the plaintiffs "have not sufficiently alleged" actions by LPL occurred within the time limit set by ERISA rules and "have not sufficiently alleged" that LPL "engaged in fraud or concealment" within the time limit.
As for the Alliant defendants, the judge rejected the motion to dismiss regarding the Alliant defendants' role in recommending allegedly poor investment options and allegedly high fees. She also noted that the Alliant defendants' recommendations included "direct and indirect benefits," leading to a plaintiffs' claim of self-dealing.
Ms. Ross also rejected the motion to dismiss by the Alliant defendants responding to the plaintiffs' allegations that they didn't comply with the 401(k) plan terms. She upheld the participants' claim that the defendants had co-fiduciary liability for the plan.
However, the judge granted the motion to dismiss two allegations that the Alliant defendants engaged in prohibited transactions such as fraud or concealment.
As for the Prudential defendants, Ms. Ross rejected the motion to dismiss that argued plaintiffs took too long to sue under ERISA guidelines.
The judge wrote that the plaintiffs' claims of ERISA breaches of duty of prudence and loyalty may proceed against the Prudential record-keeping defendant based on alleged surplus revenue fees and on how the terms of one investment were calculated. She rejected the plaintiffs' claims based on the Rollins defendants' decision to invest in certain funds.
However, Ms. Ross denied the motion to dismiss by the Prudential trustee defendant related to violations of duty of prudence and duty of loyalty alleged by the defendants. She also rejected motions to dismiss two allegations of prohibited transactions asserted in the lawsuit.
The Rollins 401(k) Savings Plan, Atlanta, had $1.1 billion in assets as of Dec. 31, 2021, according to the latest Form 5500.