A federal court judge in Boston has issued a divided opinion regarding allegations by participants in a Schneider Electric Holdings Inc. retirement plan that plan fiduciaries and its former investment consultant violated their ERISA obligations.
Schneider and the investment consultant, Aon Hewitt Investment Consulting — now known as Aon, filed separate motions to dismiss the lawsuit after the initial complaint was filed in May 2020.
On March 26, U.S. District Judge Nathaniel M. Gorton supported requests by both defendants to dismiss certain complaints, but he rejected their requests to dismiss other allegations of ERISA violations in the case of Turner et al. vs. Schneider Electric Holdings Inc. et al.
The original complaint by seven current and former participants criticized plan executives for allowing "unreasonable" investment management, record-keeping and managed account expenses.
Plaintiffs complained that fiduciaries failed to offer a lower-cost class of some investments in the plan menu. They objected to the plan's offering of an Aon group of collective investment trusts, and they argued that the plan overpaid Vanguard Group for record keeping. Vanguard isn't a defendant.
Mr. Gorton dismissed all complaints against Aon except for the argument that Aon and Schneider breached their ERISA duty of prudence in offering the Aon collective investment trusts.
The plaintiffs also argued that both defendants violated their ERISA duty of loyalty to participants and beneficiaries relating to the Aon investments. The judge dismissed the claim against Schneider but retained the claim against Aon.
Mr. Gorton also rejected Schneider's petition to dismiss several other counts in the complaint, including the ERISA duty of prudence regarding investment management fees; the duty of prudence in negotiating record-keeping fees and managed account fees; and the duty of prudence in monitoring fiduciaries.
As of Dec. 31, 2019, the Schneider Electric 401(k) Plan, Schaumburg, Ill., had assets of $4.3 billion, according to the latest Form 5500.