Four former employees of Estee Lauder Inc. sued the company, its directors and its fiduciaries. alleging ERISA violations in the management of the company's 401(k) plan.
The defendants failed to "objectively and adequately review the plan's investment portfolio with due care to ensure that each investment option was prudent, in terms of cost," said the complaint filed June 23 in a U.S. District Court in New York.
The plaintiffs, who are seeking class-action status, also accused plan executives of "maintaining certain funds in the plan despite the availability of identical or materially similar investment options with lower costs and/or better performance histories."
The lawsuit said plan executives should have considered similar, lower-priced collective investment trust target-date funds rather than the ones provided by J.P. Morgan Investment Management Inc., which isn't a defendant.
They "breached their fiduciary duties by failing to continually monitor the investment management fees of the target-date funds to ensure they were reasonable," said the complaint in the case of Billelo et al. vs. Estee Lauder Inc. et al. These investments "were more expensive than the plan could and should have obtained given its bargaining power."
The plaintiffs also alleged that the plan's record-keeping costs were "unreasonable" and that plan executives had failed to conduct an RFP for record keeping since "at least 2014" to compare costs.
A company representative did not respond to a request from comment.
The Estee Lauder Companies 401(k ) Savings Plan had $1.65 billion in assets as of Dec. 31, 2018, according to the latest Form 5500.