A federal court judge in San Jose, Calif., has issued a split decision in an ERISA complaint against LinkedIn Corp. and fiduciaries of the company's 401(k) plan, rejecting some of the defendants' requests for dismissal but permitting some plaintiffs' allegations to proceed to trial.
Current and former plan participants sued LinkedIn and its fiduciaries in August 2020 alleging defendants violated ERISA because they "did not try to reduce the plan's expenses or exercise appropriate judgment to scrutinize each investment option that was offered in the plan to ensure it was prudent," according to the original complaint.
U.S. District Court Judge Edward J. Davila issued an opinion Tuesday in the case of In Re LinkedIn ERISA Litigation for which plaintiffs are seeking class-action status.
Among the plaintiffs' arguments that the judge supported was the complaint that fiduciaries imprudently retained an actively managed Fidelity Investments target-date series instead of a Fidelity index-based target-date series even though LinkedIn removed the actively managed option from the plan in 2019.
"The Court finds that plaintiffs have adequately stated a claim for breach of prudence based on the inclusion and retention" of the actively managed option, Mr. Davila wrote. He also wrote that "plaintiffs have adequately pled breach of prudence based on excessive management fees as to" the actively managed target-date series.
However, Mr. Davila granted the defendants' motion to dismiss allegations that they retained an allegedly poor-performing and high-fee AMCAP Fund, managed by Capital Group's American Funds, and that they should have chosen a lower-fee class for the American Beacon Small Cap Value Fund. In both instances, Mr. Davila said plaintiffs failed to provide "sufficient facts" to support their allegations.
The judge gave plaintiffs until Dec. 16 to amend their complaint.
The LinkedIn Corporation 401(k) Profit Sharing Plan and Trust, Sunnyvale, Calif., had $1.28 billion in assets as of July 1, 2020, according to its Form 5500.
