A federal judge in Toledo, Ohio, has rebuffed a request by O-I Glass Inc. to dismiss a lawsuit by a former employee who alleges ERISA violations in the management of two 401(k) plans.
"The complaint provides sufficient benchmarks and outlines several facts that, if true, could demonstrate defendants were imprudent or disloyal" based on ERISA guidelines, U.S. District Court Judge Jack Zouhary wrote on June 30.
The company and its employee benefits committee were sued in July 2022 for allegedly stocking the plans with investments that charged "excessive fees" and performed poorly and failing to monitor the investments, according to the case of Schaf vs. O-I Glass Inc. et al. The plaintiff is seeking class-action status.
(O-I Glass Inc. is the successor entity to Owens-Illinois Inc., a manufacturer of glass containers, the lawsuit said.)
The lawsuit criticized the plans' offering of investments from its former record keeper, New York Life, as having "unnecessarily high costs and material underperformance." New York Life isn't a defendant.
The primary focus of the lawsuit is the plans' use of investments from Harbor Capital Advisors.
Harbor Capital was once owned by Owens-Illinois, which was initially created to manage the company's pension plans and which later began offering mutual funds to the general public, the lawsuit said.
Owens-Illinois sold Harbor in 2001 to Robeco Groep N.V. Neither Harbor nor Robeco is a defendant.
"Since the sale, Harbor has continued to manage the assets of the plans and O-I Glass' defined benefit plans," the lawsuit said. Many of the plans' investments are Harbor products, and the plaintiff criticized the cost and performance.
The plaintiff accused the defendants of placing their interests above those of participants by keeping the Harbor investments after the sale.
This claim "alleges direct cash incentives for defendants," Mr. Zouhary wrote. "Those allegations, taken as true, are sufficient to plausibly allege that defendants were motivated by self-interest."
According to the latest Form 5500s for the year ended Dec. 31, 2021, the Owens-Illinois Inc. Long-Term Savings Plan, Perrysburg, Ohio, had assets of $309 million and the Owens-Illinois Inc. Stock Purchase and Savings Program, Perrysburg, Ohio, had assets of $425 million.