Plaintiff Lacks Standing To Challenge Retirement Plan Investment Options And Fees

Jackson Lewis P.C.

On July 16, 2021, the District Court for the Western District of Wisconsin dismissed without prejudice four ERISA claims brought by a former employee alleging mismanagement of Infinity’s defined-contribution 401(k) plan. Plaintiff’s two Fair Labor Standards Act claims were not at issue and remain pending.

Plaintiff alleged that plan fiduciaries violated their fiduciary duties by offering allegedly imprudent, actively managed investment options, and by paying excessive administrative and recordkeeping fees. The court found that plaintiff lacked standing to assert her ERISA claims for two main reasons.

First, plaintiff included a list of the allegedly imprudent funds in her complaint, but Infinity provided evidence that all of her retirement assets were invested in a fund that was not included on the list. Because standing is a question of subject-matter jurisdiction, the court permitted evidence outside the complaint. The court went on to hold that because Infinity’s evidence regarding plaintiff’s investments called her standing into question, the burden shifted to plaintiff to adduce competent proof that standing existed. The court then held that plaintiff failed to meet that burden because she offered no proof that she was injured.

Second, with respect to plaintiff’s excessive fee argument, Infinity provided evidence that the one fund in which plaintiff invested did not pay any recordkeeping fees. The court noted that to survive a motion to dismiss her fee claims, plaintiff needed to provide competent proof that she paid recordkeeping fees. Plaintiff failed to satisfy this burden with mere speculation and reliance on the allegations in her complaint.

The case is Lange v. Infinity Healthcare Physicians, S.C., 20-cv-737-jdp (W.D. Wis. July 16, 2021).

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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