A federal judge in Chicago rejected a request by R.R. Donnelley & Sons Inc. to dismiss an ERISA lawsuit by former employees who accused the company and fiduciaries of mismanaging a 401(k) plan.
"The court finds plaintiffs have adequately pled the allegations in the operative complaint," U.S. District Court Judge Mary M. Rowland wrote Monday regarding arguments that the plan's fees were excessive in relation to services offered and that there was an "imprudent process" for choosing a record keeper.
An initial lawsuit filed in December 2020 was followed by an amended complaint in February 2021, in which plaintiffs also alleged ERISA violations in the plan's managed account fees and in plan disclosures. These allegations were later withdrawn, according to court records in Tolomeo et al. vs. R.R. Donnelley & Sons Inc. et al.
Ms. Rowland denied the defendants' motion to dismiss in January 2022, allowing the plaintiffs to amend their complaint. The Monday ruling covers the fourth amended complaint by the ex-employees.
The judge wrote that her decision follows the guidelines set by the 7th U.S. Circuit Court of Appeals, Chicago, in March 2023, on whether allegations of excessive record-keeping fees should be dismissed.
The appeals court's ruling in Hughes et al. vs. Northwestern University et al. "made clear" that an excessive-fee claim by plaintiffs must contain enough facts to show the allegation of comparing a plan's fees to other plans' fees is plausible, Ms. Rowland wrote. In this case, she added, plaintiffs showed there were other record keepers in the marketplace offering comparable services for a lower cost.
RR Donnelley Savings Plan, Chicago, had $1.4 billion in assets as of Dec. 31, 2021, according to the latest Form 5500.
