A federal judge in Orlando, Fla., rejected a petition by L3Harris Technologies Inc. to dismiss an ERISA lawsuit accusing the company and its fiduciaries of mismanaging a 401(k) plan.
Eight current and former employees sued in March 2022, saying plan executives didn't assess the prudence of investments, retained options that were more expensive than comparable ones in the marketplace and charged high record-keeping and administrative fees. They are seeking class-action status.
"While many of these allegations in isolation are insufficient, taken as a whole and interpreted in the light most favorable to plaintiffs, it is at least plausible that defendants breached their fiduciary duty of prudence," U.S. District Court Judge Paul G. Byron wrote March 24 addressing the plan investment committee's duty of prudence under ERISA.
Mr. Byron also cited total claims relating to investments, record-keeping fees and investment selection as sufficient to reject a motion to dismiss in Stengl et al. vs. L3Harris Technologies Inc. et al. "While the court doubts that some of the individual allegations here by themselves are enough to state a claim, in sum total the court finds it plausible that the defendant investment committee's process was flawed," Mr. Byron wrote.
"Notably, this is not a case where nothing plus nothing adds up to something," he added. "Instead, the individual well-pled allegations accumulate as fractional parts of the whole, at some point crossing the plausibility line."
The judge also rejected the defendants' requests to dismiss a claim that the plan executives failed to monitor fiduciaries according to ERISA guidelines. "Where a plausible breach of the fiduciary duty of prudence is alleged against the appointees of appointing fiduciaries, courts have routinely found similarly plausible an attendant failure to monitor," Mr. Byron wrote.
As of Dec. 31, 2021, the L3Harris Retirement Savings Plan had $15.7 billion in assets, according to the latest Form 5500.