A federal court judge in Los Angeles has ruled for fiduciaries of an AT&T 401(k) plan, granting summary judgment against claims by plan participants of ERISA violations.
The Sept. 28 decision by U.S. District Court Judge Virginia A. Phillips covered the third amended complaint from the participants in a lawsuit initially filed in November 2017. The judge dismissed the original lawsuit in 2018, but gave plaintiffs the opportunity to amend their complaint in the case of Alas et al. vs. AT&T Services Inc. et al.
A motion for summary judgment is usually filed after the parties have completed discovery, giving a judge the opportunity to review details of a case. A motion to dismiss, usually requested soon after a complaint is filed, argues that the plaintiff has failed to state a claim.
AT&T Services Inc. is the plan administrator. AT&T Inc., an original defendant, was later dropped from the complaint via agreement of the plaintiffs and defendants.
The plaintiffs argued that the plan's record-keeping fees were too high and that fiduciaries didn't use the plan's size to negotiate better terms. They accused the fiduciaries of failing to monitor record-keeping compensation. They complained the plan's Form 5500s didn't provide an accurate accounting of fees.
"Plaintiffs ... present no facts to support their claim that the Form 5500 disclosures were inaccurate or incorrect," Ms. Phillips wrote in her Sept. 28 decision. "In contrast to defendants' detailed, thorough application of the Department of Labor's instructions for the Form 5500s, plaintiffs have not met their burden of showing there is a triable issue of fact pursuant to the forms."
The judge also rejected the plaintiffs' allegations of excessive record-keeping fees. "Apart from debating the method of calculation, plaintiffs present no other evidence disputing the reasonableness of the plan's record-keeping fees," the judge wrote. "On their end, defendants present substantial evidence that their record-keeping fees were both accurately computed and reasonable."
The judge also turned down the plaintiffs' argument that fiduciaries violated the ERISA duty of prudence guideline by failing to adequately monitor record-keeping fees.
"Defendants present extensive evidence that they acted prudently in monitoring the plan's record-keeping expenses," the judge wrote. "Plaintiffs produce no evidence from which a reasonable jury could find that defendants acted imprudently."
AT&T Retirement Services Plan, Dallas, had $50.6 billion in assets as of Dec. 31, 2020, according to the company's latest 11-K filing.