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Compliance August 28, 2020
Law Firm Continues Its Roll With ERISA Excessive Fee Suits
The complaint against B. Braun Medical reads like a copy of many suits Capozzi Adler has filed since December.
Reported by Rebecca Moore
Law firm Capozzi Adler has filed an Employee Retirement Income Security Act (ERISA) lawsuit on behalf of former participants of the B. Braun Medical Inc. Savings Plan alleging plan fiduciaries failed in their duties to ensure investment fees were reasonable and not excessive.
B. Braun Medical told PLANSPONSOR it does not comment on ongoing litigation.
As with other lawsuits filed by the same law firm, the complaint also alleges that during the class period—defined as August 26, 2014, through the date of judgment—the defendants violated their ERISA fiduciary duties by “maintaining certain funds in the plan despite the availability of identical or similar investment options with lower costs and/or better performance histories.” Defendants in the lawsuit include B. Braun Medical Inc., the Board of Directors of B. Braun Medical and its members during the class period, and the retirement committee and its members.
The lawsuit claims that, in many instances, the defendants failed to utilize the lowest cost share class for mutual funds offered in the plan, and failed to consider certain collective investment trusts (CITs) available as alternatives to the mutual funds, despite their lower fees and materially similar investment objectives. The complaint notes that in July 2019, the plan switched to collective trust versions of the T. Rowe Price target-date funds (TDFs), but says this “was too little too late as the damages suffered by plan participants to that point had already been baked in.” The use of actively managed funds versus passive funds is also called out.
The complaint reads like a copy of many suits the law firm has filed since December. One of the first was Hawkins v. Cintas Corporation. Parties in that lawsuit are currently awaiting a judge’s decision on a motion to compel arbitration.
Retirement plan sponsors have received relatively little helpful legal insight from the courts, due to the fact that many ERISA cases end with settlements, while others are dismissed early on for pleading deficiencies.