Coca-Cola MEP sued

Ary Rosenbaum
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Ary Rosenbaum - The Rosenbaum Law Firm P.C.

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.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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