Former employees sue MITRE for alleged ERISA violations

Six former employees of MITRE Corp. have sued the not-for-profit operator of federally funded research and development centers for alleged ERISA violations in two retirement plans run by the organization.

"Defendants failed to adequately monitor the plans' administrative and recordkeeping expenses," said the June 22 complaint filed in a U.S. District Court in Boston against the organization and fiduciaries of MITRE's 403(b) and 401(a) plans.

The complaint attacked the plans' use of two record keepers – TIAA-CREF and Fidelity Investments. Neither record keeper is a defendant.

"While it may not be per se imprudent for a plan to have two record keepers, here it seems that it had disastrous effects on participants retirement savings," said the complaint in the case of Aaron Brown et al. vs. The MITRE Corp. et al.

"It's difficult to understand how the plans could take advantage of its economies of scale to get the best possible record-keeping fees when it continues to utilize two record keepers, a job which is traditionally handled by only one," the complaint said.

The lawsuit also argued that a number of investments in both plans charged excessive fees due to the plans' use of revenue sharing. "Although utilizing a revenue sharing approach is not per se imprudent, unchecked, it is devastating for plan participants," wrote the plaintiffs, who are seeking class-action status.

A representative of MITRE did not respond to a request for comment.

This is the second lawsuit against MITRE filed by Mr. Brown. He was the sole plaintiff in a September 2021 complaint against the organization and plan fiduciaries alleging that the charging of high fees for certain plan investments, caused by the plans' use of revenue sharing, violated ERISA.

U.S. District Court Judge Richard G. Stearns dismissed the complaint on April 28, 2022, saying Mr. Brown lacked legal standing to sue "individually or on behalf of others."

Mr. Brown's "theory of damages, premised on the revenue sharing model, cannot explain how he was personally injured by MITRE's allegedly unreasonable fee practices," the judge wrote. "Defendants point out that Brown had invested only in a single fund in the relevant time period (and) that fund belonged to the lowest cost class, and critically, paid no revenue-sharing fees."

In the current complaint, the six plaintiffs cite their investing in multiple options in the plans.

The MITRE Corp. Tax Sheltered Annuity Plan had assets of $4.55 billion and the MITRE Corp. Qualified Retirement Plan had assets of $2.51 billion, both as of Dec. 31, 2020, according to the latest Form 5500 reports on the Bedford, Mass.-based plans.