A federal judge in Minneapolis has ruled an ERISA complaint against U.S. Bancorp can go to trial based on former employees’ allegation that a company 401(k) plan charged excessive record-keeping fees.
However, U.S. District Court Judge Patrick J. Schiltz, in his March 21 opinion, dismissed plaintiffs’ allegation of excessive fees for managed account services in the case of Dionicio et al. vs. U.S. Bancorp et al.
The former employees sued U.S. Bancorp and its 401(k) plan fiduciaries in January 2023, seeking class-action status, and later amended their complaint.
“The court holds that plaintiffs have adequately pleaded that defendants breached their duty of prudence by allowing the plan to incur excessive fees” for record-keeping and administrative services, the judge wrote. Alight Solutions, the plan’s record keeper, is not a defendant.
The plaintiffs used seven other 401(k) plans for comparison, and they contended that record-keeping services “are materially indistinguishable with respect to their quality,” the judge wrote. That information placed the focus on fees, he added.
By contrast, the judge found that the plaintiffs’ attempt to compare managed account fees with six other plans was unpersuasive.
“In contrast to its allegations about the recordkeeping comparators,” the lawsuit “is devoid of even basic information about the managed-account-service comparators, such as the number of participants or total assets,” the judge wrote.
The lawsuit “lacks any well-pleaded allegations about the fee schedules of the comparator plans,” he wrote.
“Without more information about what exactly the plan and the comparator plans offered to participants, there is no way to tell whether the plan paid excessive fees for the particular managed-account services it purchased.”
The managed-account provider, Alight Financial Advisors, was not a defendant.
The U.S. Bank 401(k) Savings Plan, Robbinsdale, Minn., had $8.3 billion in assets as of Dec. 31, 2022, according to the lawsuit.
