Trader Joe’s has successfully defended itself against another lawsuit involving the company’s 401(k) plan, with a federal judge dismissing a suit brought against the firm in the U.S. District Court for the Central District of California.
In a suit filed in June, plaintiffs accused the retail giant of breach of fiduciary duties of loyalty and prudence and failure to adequately monitor other fiduciaries, according to a court document published by the district court. The plaintiffs claimed that Trader Joe’s' retirement plan was stuffed with several funds that “have been in place for at least a decade” for the benefit of the recordkeeper rather than the participants; the plan’s investment menu wasn’t diversified; the plan’s revenue sharing arrangement meant that participants paid above-market recordkeeping fees; that that fee was unreasonable; and Trader Joe's failed to conduct a request for proposal at reasonable intervals, according to the document.
At the end of November, U.S. District Judge Percy Anderson dismissed the suit, ruling that there were enough changes made in the fund selection; there was nothing imprudent in the plan’s investment offerings, and that its offerings offered a diversified range of investment options; and the plan’s expense ratios fell within a reasonable range, according to the court document.
Trader Joe’s had prevailed in another class action 401(k) suit earlier this year. In April, a judge dismissed a suit accusing the firm of overcharging its retirement plan participants.
But this year saw several multimillion-dollar settlements over 401(k) suits, including Mutual of Omaha’s agreement, reached in September, to pay $6.7 million, as well as the $39.5 million settlement consulting firm McKinsey & Co. agreed to pay in August and Fidelity’s $28.5 million settlement, reached in July.
Meanwhile, a recent analysis by Bloomberg Law concluded that 401(k)-related lawsuits could increase fivefold this year compared to 2019.
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