A federal judge in Boston refused to dismiss a lawsuit against MITRE Corp., saying the former employees who sued the company and its fiduciaries provided sufficient information to claim that executives of two defined contribution plans acted imprudently in violation of ERISA.
Six former employees sued in June 2022, criticizing plan executives for failing to adequately monitor record-keeping and administrative expenses for the company's 403(b) plan and 401(a) plan. They also contended that the not-for-profit operator of federally funded research and development centers should have retained one record keeper instead of two.
"The court finds that the complaint's factual allegations are sufficient to state a plausible claim of imprudence," U.S. District Court Judge Denise J. Casper wrote March 6, referring to the plaintiffs' allegations of "unreasonable" record-keeping fees in Aaron L. Brown et al. vs. The MITRE Corp. et al.
Ms. Casper also supported the plaintiffs' allegation that the plans' use of revenue-sharing was too expensive and that the plans failed to conduct record-keeping RFPs at "reasonable intervals."
She added that plaintiffs "plausibly allege" that MITRE's retaining of two record keepers "caused the plans to incur excessive fees." Hiring multiple record keepers isn't necessarily sufficient to support a claim of imprudence under ERISA, Ms. Casper wrote, but retaining the same two record keepers for at least 14 years "despite relatively high record-keeping fees is sufficient to infer imprudence."
The judge dismissed Mr. Brown, the lead plaintiff, from the case, noting that he was the sole plaintiff in a similar — and unsuccessful — lawsuit against the defendants filed in September 2021. Mr. Brown, Ms. Casper said, was trying to relitigate his original complaint.
U.S. District Court Judge Richard G. Stearns, in Boston, dismissed Mr. Brown's lawsuit on April 28, 2022, saying Mr. Brown lacked legal standing to sue "individually or on behalf of others."
MITRE Corp. Tax Sheltered Annuity Plan had $5 billion in assets and MITRE Corp. Qualified Retirement Plan had $2.7 billion in assets, both as of Dec. 31, 2021, according to the latest Form 5500 reports for the Bedford, Mass.-based plans.