Two employees of McLane Company Inc. filed a lawsuit in a Waco, Texas, federal court alleging ERISA violations based on record-keeping fees and investment selection.
"The plan is eligible — given its massive size — for favorable pricing on investments," said the April 24 complaint in the case of Barner et al. vs. McLane Company Inc.
"Instead of taking advantage of favorable pricing, McLane caused plan participants to pay more for investments than what they were eligible for and more than what they should have paid," said the lawsuit, which is seeking class-action status.
The lawsuit alleges the ERISA violations started April 24, 2017, and continue today.
A company spokeswoman wrote in an email that the company doesn't comment on pending litigation.
The plaintiffs accused the plan of charging excessive record-keeping fees including "undisclosed, undocumented and simply ignored indirect compensation" paid to the plan's record keeper, Bank of America Merrill Lynch, which isn't a defendant.
Plan executives should have conducted an RFP process every year, "or at least every three years, rather than not at all," the lawsuit said.
Such a process would enable a prudent fiduciary to "review the level of service provided by the recordkeeper and compare fees in the marketplace to those being offered by the current recordkeeper," the lawsuit said. "This also allows the plan fiduciary to negotiate with its current provider for a lower fee and/or move to a new provider to provide the same or better services for a more competitive and reasonable fee."
The plaintiffs also blamed plan executives for failing to choose "less expensive" share classes of investments in the plan's lineup. "There is no good-faith explanation for utilizing a high-cost share class when a lower-cost share class is available for the exact same investment," the lawsuit said. "The plan did not receive any additional services nor benefits based on its selection of more expensive share classes; the only consequence was higher costs for plan participants."
The McLane Company Inc. Profit Sharing Plan, Temple, Texas, had assets of $1.54 billion as of Dec. 31, 2021, according to the latest Form 5500.