Multiple employer plans (MEPs) have become larger targets for litigation when they achieve a plan of substantial size.
An employee of Heartland Coca-Cola Bottling Company, LLC, an employer that participated in the Coca-Cola Bottlers’ Association 401(k) Retirement Savings Plan, a multiple employer plan has sued the Coca-Cola Bottlers’ Association (CCBA), a Georgia corporation headquartered in Atlanta, whose members consist of all 65 U.S. independent bottlers of Coca-Cola. The MEP covers about 19,000 participants, and had nearly $800 million in assets spread across 24 investment options, including a Coca-Cola Common Stock Fund.
The complaint for the lawsuit alleges that the Plan:
- served up target date funds that directed a substantial portion of their assets to an S&P 500 fund that charged more than seven times the market rate;
- knew or should have known of the existence of collective trusts and should therefore have promptly identified the prudence of transferring the Plan’s funds into these lower cost alternative investments
- failed to take advantage of lower-cost shares and utilize lower-cost collective trust versions of the investment options they did offer;
- failed to consider and select lower cost investment options that were similar to or in the same investment style as those being offered in the Plan; and
- failed to timely switch to an investment option that was the same investment in a different wrapper at a much lower price.