A federal judge in Hartford, Conn., has issued a split decision in a lawsuit filed against Voya Financial Inc., allowing some ERISA-violation allegations to proceed to trial while dismissing others for the management of a company 401(k) plan.
Participants sued the company and plan fiduciaries in December 2021, arguing that executives should have removed certain proprietary investments from the 401(k) lineup, retained underperforming third-party investments and failed to use the plan's asset size to negotiate better terms and fees.
Voya moved to dismiss all allegations in the case of Ravarino et al. vs. Voya Financial Inc. et al. The plaintiffs are seeking class-action status.
U.S. District Court Judge Omar A. Williams on June 13 dismissed ERISA complaints alleging mismanagement of a Voya stable value fund, a Voya target-date series, a Voya real estate fund and two other funds offered by third-party investment managers.
He also dismissed the allegation that the defendants failed to monitor administrative fees.
However, he refused to dismiss allegations that the defendants engaged in certain prohibited transactions covered by ERISA.
"Defendants correctly point out that the mere fact that a financial institution offers its own investment products as part of a menu of investment options available in a retirement plan does not in and of itself violate ERISA," wrote the judge, noting that ERISA's prohibited transaction rules contain exemptions.
"Here, defendants entirely have failed to show that the exemption is clearly applicable," he wrote. "They provide no description of any internal safeguards or specific guidelines governing the provision of services."
The judge rejected defendants' motion to dismiss allegations of mismanagement of a Voya small cap growth fund, adding that the plaintiffs' allegation of self-dealing also could proceed to trial against the company and fiduciaries.
The Voya 401(k) Savings Plan, Atlanta, had assets of $2.44 billion as of Dec. 31, 2021, according to the latest Form 5500.