A federal court judge in Memphis, Tenn., rejected a petition by AutoZone Inc. to dismiss a series of allegations of ERISA violations filed by 401(k) plan participants.
"The court finds plaintiffs have alleged sufficient facts to state a claim to relief that is plausible on its face," wrote U.S. District Court Judge Mark S. Norris in his ruling issued Sept. 18.
The participants sued in November 2019, arguing that AutoZone fiduciaries violated ERISA by retaining GoalMaker, an asset allocation service offered by Prudential Financial Inc., which allegedly steered participants' investments into high-cost investment options. Prudential, the plan's record keeper, isn't a defendant.
The plaintiffs also alleged that AutoZone fiduciaries retained mutual funds and separate accounts that charged "exorbitant management fees and have hidden trading costs," according to a recounting of the complaint by Mr. Norris in his ruling.
He also noted that participants claimed AutoZone fiduciaries failed to invest in lower-share classes and failed to monitor "exorbitant" record-keeping fees in the case of Miller et al. vs. AutoZone Inc.
The judge ruled that plaintiffs had provided enough information to allow the complaint to go to trial regarding the use of GoalMaker; the retention of a stable value fund; the use of actively managed mutual funds and separate accounts; the fiduciaries' methodology for selecting investment share classes; and the comparing of record keeping fees to benchmarks.
The AutoZone 401(k) Retirement Savings Plan, Memphis, Tenn., had assets of $549 million as of Dec. 31, 2018, according to the judge's order denying the request for dismissal.