A federal judge in Cleveland dismissed a lawsuit by former employees of Parker-Hannifin, who accused the company and its fiduciaries of violating ERISA guidelines in the company's 401(k) plan.
The five former employees, who remain plan participants, sued in January 2021 – later amending their complaint – criticizing plan executives for retaining underperforming investments and charging excessive fees for certain investments.
U.S. District Judge Bridget Meehan Brennan dismissed all allegations on Dec. 4 in the case, Johnson et al. vs. Parker-Hannifin Corp. et al.
The plaintiffs argued that plan executives should have removed a target-date series from Northern Trust, offering examples of other companies' target-date series that they said were cheaper and better-performing.
They also claimed the Northern Trust target-date series underperformed the S&P Target Date Series index as a benchmark. Northern Trust is not a defendant.
"None of the plaintiffs' comparisons ... constitute meaningful benchmarks," the judge wrote.
Comparing the Northern Trust target-date series to S&P statistical data composite is not meaningful, she wrote. Comparing the series to three other target-date series "suffers a similar fate due to insufficient allegations," she wrote.
The plaintiffs also contended that plan executives should have chosen institutional shares instead of higher-priced shares for the target-date series and three mutual funds from Vanguard Group, which is not a defendant.
"Plaintiffs essentially ask this court to find that any time a plaintiff alleges a large plan did not obtain the lowest-fee shares, plan beneficiaries and participants have stated viable ERISA fiduciary duty claim," the judge wrote. "To plaintiffs, no other factual allegations are required – only the size of the plan and the existence of shares with lower fees must be pleaded. Rubber-stamping this view is inconsistent with binding authority."
The Parker Retirement Savings Plan, Cleveland, had assets of $7.12 billion as of Dec. 31, 2021, according to the latest Form 5500.