Two participants in a 401(k) plan run by Adidas America Inc. have sued the company claiming the plan's high administrative fees violate ERISA rules.
"These excessive fees cannot be justified," said the complaint filed July 10 in the case of Paul Enos and David Freitas vs. Adidas America Inc., in U.S. District Court in Portland, Ore. The fees "represent something more than a sloppy business practice. They are a breach of fiduciary duties."
Rich Efrus, a company spokesman, wrote in an email that Adidas doesn't comment on pending legal matters.
The lawsuit, which seeks class-action status, said participants "had no knowledge of how the fees charged to and paid by Adidas plan participants compared to market norms." It also accused the plan's managers of "failing to adequately investigate the use of superior lower-cost mutual funds" for the plan's investment lineup.
The plaintiffs argued that plan managers could have chosen passively managed mutual funds instead of actively managed mutual funds, claiming that the former "would have resulted in significantly lower administrative fees yet generated comparable returns."
The Adidas Group 401(k) Savings and Retirement Plan, Portland, Ore., had assets of $642.6 million as of Dec. 31, 2017, according to the latest Form 5500 filing.