A federal court judge in Los Angeles has allowed to proceed to trial an ERISA lawsuit originally filed against three defendants by seven plan participants as he rejected some of the defendants' requests to throw out the case.
The defendants are Wood Group U.S. Holdings, Houston, the 401(k) plan sponsor; NFP Retirement Inc., an investment adviser doing business as 401(k) Advisors; and flexPATH Strategies, an investment manager.
U.S. District Court Judge James V. Selna ruled on Nov. 17 in favor of plaintiffs in two of five counts against Wood Group and one count against flexPath Strategies.
The original complaint by participants in a multiemployer 401(k) plan was filed in February 2021 — and amended twice — in the case of Lauderdale et al. vs. NFP Retirement Inc. et al. Twelve months later, Mr. Selna, dismissed some allegations against all defendants, but he said plaintiffs had provided adequate information on other allegations to permit the lawsuit to go to trial.
Subsequently, each defendant filed a motion for summary judgment against the remaining complaints.
On Nov. 17, Mr. Selna denied the motion by FlexPath, and he denied summary judgment for Wood Group in two of five allegations. Motions for summary judgment are usually filed after the parties have completed discovery, giving a judge a more detailed opportunity to review a case. A motion to dismiss is usually filed by a defendant soon after a complaint is filed, contending that the plaintiff has failed to state a claim.
Addressing the allegation that a target-date series offered by flexPath was imprudent, the judge wrote that "plaintiffs have presented sufficient evidence to defeat flexPath's motion for summary judgment." He said plaintiffs presented sufficient information at this stage to allow their claims of imprudence in target-date series selection and conflict-of-interest to proceed to trial.
The judge also sided with plaintiffs in their allegation that the Wood Group defendants failed to adequately monitor fiduciaries' review of the flexPath target-date series relative to peer groups or marketplace benchmarks. He also supported their allegation that the Wood Group defendants didn't do a good job of checking flexPath's qualifications.
"While the evidence demonstrates that the Wood defendants considered multiple other investment candidates for its advisor, there is no evidence of any investigation (let alone an extensive one) into flexPATH's qualifications and ability to manage the plan's assets," he wrote.
The Wood 401(k) Plan, Houston, had $2.8 billion in assets as of Dec. 31, 2021, according to the latest Form 5500.