A federal district court judge has ruled for a plaintiff in a seven-year old ERISA lawsuit against Verizon Communications, setting a May 23 trial date for the allegation that Verizon and 401(k) plan fiduciaries retained a poor-performing investment option.
The class-action complaint focuses on a global opportunity fund that Verizon added to the 401(k) menu in 2007, initially containing investments from three asset managers. Verizon Investment Corp. "was responsible for monitoring and allocating the assets of the global opportunity fund among the investment managers that it selected, and for making changes to the global opportunity fund," according to court records.
The original complaint by a now-former plan participant was filed in February 2016 alleging three ERISA violations: failure to monitor the global opportunity fund, failure to monitor the performance and fees of a target-date series; and failure to provide adequate fee-disclosure information to participants.
U.S. District Judge Paul G. Gardephe dismissed the target-date allegation and the fee-disclosure allegation in September 2017, but he refused to dismiss the allegation involving the global opportunity fund in the case of Melina N. Jacobs vs. Verizon Communications Inc. et al.
The plaintiff said the fund's poor performance merited removal from the Verizon Savings Plan for Management Employees.
The defendants subsequently asked the judge for summary judgment against this remaining claim, but he denied the request on April 20.
"Plaintiff has offered substantial evidence that the Global Opportunity Fund underperformed several comparators by a substantial amount, during both the periods between the fund's inception and the end of 2009, and between the fund's inception and the end of 2016," the judge wrote.
"To the extent that defendants dispute plaintiff's calculations and comparisons, they have shown merely material issues of fact, and not a right to judgment as a matter of law," he added.
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.
"There is no evidence that defendants were engaged in a process to monitor the global opportunity fund, or had a reason to maintain the global opportunity fund as an investment option in the Savings Plan in light of its poor performance," the judge wrote.
The Verizon Savings Plan for Management Employees, Basking Ridge, N.J., had $31.1 billion in assets as of Dec. 31, 2021, according to its latest Form 5500 filing.