A federal judge in Dallas rejected a petition by Kimberly-Clark Corp. to dismiss an ERISA lawsuit against the company and its 401(k) plan fiduciaries by two former employees who say the plan is mismanaged due to high fees and an inadequate decision-making process.
The plaintiffs sued in April 2021 — later amending their complaint — seeking class-action status and arguing that record-keeping fees were excessive compared with similar 401(k) plans, according to Seidner et al. vs. Kimberly-Clark Corp. et al.
"Defendants did not engage in a prudent decision-making process, as there is no other explanation for why the plan paid these objectively unreasonable" fees for record-keeping, the initial complaint said.
"The court agrees with plaintiffs that their allegations, combined with the comparisons included in their amended complaint, allow the court to reasonably infer imprudence by defendants with respect to their decision-making process involving the plan's payment of recordkeeping fees," U.S. District Court Judge Sam A. Lindsay wrote Thursday.
Mr. Lindsay also rebuffed the defendants' request to dismiss the allegation that they violated ERISA's duty-to-monitor fiduciaries standard. By rejecting the motion to dismiss the ERISA duty-of-prudence claim for excessive record-keeping fees, that ruling rendered moot the request to throw out the duty-to-monitor claim, he explained.
Kimberly-Clark Corp. 401(k) & Profit Sharing Plan, Neenah, Wis., had $4.9 billion in assets as of Dec. 31, 2021, according to the latest Form 5500.