Here’s a story straight from the trenches of the 401(k) world: the parties in a long-running excessive-fee lawsuit over the $2.6 billion Ferguson Enterprises LLC 401(k) plan have reached a settlement for $1.8 million.
What Happened
Back in 2022, plan participants Tera Bozzini and Adrian Gonzales alleged that their employer’s plan:
· Didn’t use its size to negotiate lower investment and recordkeeping fees.
· Allowed higher-priced investment options when cheaper institutional shares were available.
· Permitted conflicted providers to collect unreasonable compensation for plan services.
The court eventually dismissed many of the claims for lack of specific factual detail and rejected an attempt to expand the case to include forfeiture-related allegations. But before the next round of motions, both sides agreed to settle.
The Settlement
· Settlement amount: $1,800,000
· Estimated maximum damages: ~$7.37 million
· Recovery rate: about 24 percent of potential losses
· Named-plaintiff awards: $7,500 each
· Attorneys’ fees requested: about $600,000 (one-third of the settlement)
Why It Matters for Plan Providers and TPAs
1. Fee vigilance matters. Even billion-dollar plans can get hit with “you should have paid less” lawsuits. Size doesn’t grant immunity. 2. Document reasonableness. Benchmark, negotiate, and document every step. The court noted the plaintiffs’ failure to include specific facts — a reminder that your records are your defense. 3. Settlements are business decisions. The plaintiffs chose a sure $1.8 million over the risk of chasing a larger but uncertain verdict. For providers, it shows that even if you believe you’re right, litigation costs can outweigh pride. 4. Distraction costs real money. Even when you “win,” discovery, expert witnesses, and reputational damage can drain far more than the check you write to close the case.
My Take
In the 401(k) world, we don’t just manage plans — we manage risk perception. If a plan is big enough to demand institutional pricing but doesn’t, that silence can look like negligence in court. Whether you’re an advisor, TPA, recordkeeper, or ERISA counsel, the question to ask is simple: Can you prove you acted prudently if someone looks under the hood?
This $1.8 million settlement isn’t about scandal — it’s about process. It’s a reminder that documentation beats memory, prudence beats guesswork, and, as always, time is undefeated.
