On March 31, 2012, the U.S. District Court for the Western District of Missouri awarded plaintiffs more than $35 million in a class action suit over certain breaches of duty related to 401(k) plan expenses.
The case was brought on behalf of participants in two 401(k) plans sponsored by a major manufacturer of power and automation equipment with operations in around 100 countries and more than 135,000 employees.
In Tussey v. ABB, Inc., the District Court held that ABB, Inc. and its benefit and investment committees (collectively, “ABB”) violated their fiduciary duties to the plans when they failed to monitor record-keeping costs, failed to negotiate rebates from investment companies on the plans’ investment platform, selected mutual fund share classes that were more expensive than necessary, and replaced a mutual fund with a fund offered by an affiliate of the record keeper for the plans. In addition, the District Court found that the employer and its benefits committee violated their fiduciary duties to the plans by agreeing to pay the record keeper above market record-keeping fees in order to subsidize other corporate services provided to the employer by the record keeper, such as payroll and record keeping for other employee benefit plans.
Please see full publication below for more information.