A federal court judge in Los Angeles denied a request by VCA Inc. to dismiss an ERISA complaint filed by 401(k) plan participants who accuse the plan's fiduciaries of mismanagement.
The plaintiffs, who sued the veterinary hospitals company in November 2021, contended that participants were forced to pay "excessive" administrative and investment management fees between November 2015 and July 2020. The plaintiffs are seeking class-action status.
In rejecting the motion to dismiss on April 7, U.S. District Judge George H. Wu acknowledged that defendants had disputed plaintiffs' calculations over the cost of record-keeping fees in Smith et al. vs. VCA Inc.
"Despite defendants characterization that there is only one way to calculate the per participant fee for purposes of ERISA's duty of prudence, the court notes that there appears to be no set method for the record keeping calculation," Mr. Wu wrote. "Given that there is not a set formula for calculating the per participant record keeping fee, the court accepts the plaintiffs' alleged calculation as plausible at the pleading stage."
"It may very well turn out that the per participant record-keeping fee (and others costs) is actually reasonable and prudent under the circumstances," he added.
However, at the lawsuit's motion-to-dismiss stage, "plaintiffs' allegations are sufficient to state a claim for breach of the fiduciary duty of prudence," the judge wrote.
As of Dec. 31, 2019, the VCA Inc. Salary Savings Plan had $563 million in assets, according to the plan's final Form 5500 filing.
As of July 24, 2020, the plan was merged into the Mars Veterinary Health 401(k) Savings Plan. That plan had $852 million in assets on Dec. 31, 2020, according to its most recent Form 5500 filing. Mars Inc., McLean, Va., purchased VCA in 2017.
