A federal court judge in Alexandria, Va., has again dismissed a lawsuit against Capital One Financial Corp. and its fiduciaries by current and former participants in a company 401(k) plan who claimed the offering of a BlackRock target-date series violated their fiduciary duties under ERISA.
The March 1 dismissal document from U.S. District Court Judge Michael S. Nachmanoff uses similar language to his dismissal, also on March 1, of a similar complaint against Booz Allen Hamilton Inc. and fiduciaries by a former participant in that company's 401(k) plan.
Plaintiffs in both cases sued in August 2022, making the same argument — that plan executives should have removed the BlackRock LifePath Index Fund target-date series, citing unfavorable performance comparisons with target-date series from four other providers. Both sets of plaintiffs sought class-action status.
Mr. Nachmanoff dismissed both lawsuits in December, saying the plaintiffs could file amended complaints. Both did. He held oral arguments for both on Feb. 3. And now both have now been dismissed "with prejudice," meaning they cannot be refiled in his court.
The Booz Hamilton and Capital One lawsuits are among 11 ERISA lawsuits making the same claims against different sponsors who offer the BlackRock target-date series. BlackRock isn't a defendant in any of the cases. The plaintiffs in all cases are represented by Miller Shah LLP as lead counsel or co-counsel.
A U.S. District Court judge in Seattle dismissed a similar lawsuit against Microsoft on Feb. 7.
"Plaintiffs have provided no factual allegations from which the court may reasonably infer that the choice of the BlackRock TDFs was imprudent from the moment the administrator selected it, that the BlackRock TDFs became imprudent over time, or that the BlackRock TDFs were otherwise clearly unsuitable for the goals of the fund based on ongoing performance," Mr. Nachmanoff wrote.
"Plaintiffs allege nothing beyond data allegedly indicating the BlackRock TDFs' disappointing performance relative to plaintiffs' preferred alternatives over the course of a limited period of time," the judge wrote in the case of Hall et al. vs. Capital One Financial Corp. et al.
Plaintiffs in all 11 BlackRock-related lawsuits compared the firm's target-date series to four other series — two, like BlackRock, were passively managed, and two were actively managed — over certain time periods.
"ERISA simply does not provide a cause of action for fiduciary breaches based solely on a fund participant's disappointment in the fund's performance," the judge wrote. "As defendants correctly note, courts that have rejected TDF comparisons have done so not because the plaintiffs advanced the wrong metrics, but rather because the underlying investment strategies and styles were meaningfully different to start."
The Capital One Financial Corp. Associate Savings Plan, McLean, Va., had $7.9 billion in assets as of Dec. 31, 2021.