A federal judge in San Jose, Calif., has told challengers to a BlackRock target-date series offered by Cisco Systems' 401)k) plan three strikes and you’re out, dismissing their lawsuit and telling them not to file again in his court.
The latest amended complaint “amounts to a claim based impermissibly on hindsight,” U.S. District Court Judge Edward J. Davila wrote March 11 in Bracalente et al. vs. Cisco Systems Inc.
“Plaintiffs had two chances to amend their pleadings, and plaintiffs have failed to plausibly state a claim,” Davila wrote, dismissing the lawsuit with prejudice, thus precluding a refiling in his court.
The Cisco participants sued in August 2022. Davila dismissed the complaint in August 2023 and again in May 2024.
Cisco is one of about a dozen plan sponsors that have been sued in recent years for allegedly violating ERISA due to offering BlackRock LifePath Index Funds.
Plaintiffs, including Cisco 401(k) plan participants, have accused their respective plan sponsors of failing to monitor these investments and alleging that the BlackRock target-date series performed poorly vs. a select group of other target-date series.
Most claims have been dismissed. BlackRock isn’t a defendant in any of the lawsuits.
The latest Cisco case dismissal was based on plaintiffs citing another target-date series to bolster their argument that the BlackRock series performed poorly in comparison. The judge wrote that plaintiffs relied only on promotional materials “touting the ‘expected’ outperformance” of this other target-date series.
“It is not plausible that prudent fiduciaries” would have considered this other target-date series vs. the BlackRock investment “before there was any performance history,” Davila wrote.
“Here, plaintiffs allege the (investment policy) committee should have invested in a fund with no performance history based solely on its ‘expectation’ to outperform,” the judge wrote.
Cisco Systems Inc. 401(k) Plan, San Jose, Calif., had $18.9 billion in assets as of Dec. 31, 2023, according to the latest Form 5500.
