Car Parts Manufacturer Magna Denied 401(k) Lawsuit Exit

Global car parts manufacturer Magna International was substantially denied its motion for summary judgment in an ERISA lawsuit by a federal judge in Michigan, according to court filings.

U.S. District Judge Nancy G. Edmunds, presiding in U.S. District Court for the Eastern District of Michigan, Southern Division, granted the defendants motion on one count alleging failure to adequately monitor other fiduciaries, but the other motion for summary judgment was denied, permitting the plaintiffs to proceed.

The plaintiffs “do not identify any evidence as to who has the power to appoint or remove or to otherwise exercise control over the committee members or the conduct alleged in the complaint,” Edmunds wrote in granting summary judgment on one count.

The defendants had moved for summary judgment on the plaintiff’s claims on March 3 and the court heard the matter on March 7.

Filed in 2020, the lawsuit alleged fiduciaries for the automotive supplier’s retirement plan failed to reduce plan fees and failed to scrutinize each investment option offered in the plan to ensure it was prudent.

The plaintiffs alleged counts of fiduciary breach under the Employee Retirement Income Security Act against the investment committee defendants for breaches of the fiduciary duties of loyalty and prudence, and against Magna, its board and the committee for failure to adequately monitor fiducaries.

The complaint against the Magna Group of Companies Retirement Savings Plan was brought by former employees at Magna International of America, based in Troy, Michigan.

The recordkeeper for the plan is Principal Financial Group; the trustee is Principal Trust Company; and the plan’s investment lineup was only Principal proprietary collective investment trusts, the record shows. As of the last data available, December 31, 2018, the plan had $1.6 billion in assets under management for all funds.

The 2018 Form 5500 filed with the Department of Labor listed 26,898 plan participants with account balances as of the end of the plan year.

The complaint accused plan fiduciaries of taking “actions … contrary to actions of a reasonable fiduciary and cost the plan and its participants millions of dollars.”

The plaintiffs previously asked the court to certify a class period, applying to all persons except defendants and their immediate family members who were participants in or beneficiaries of the plan at any time, as April 30, 2014, through the date of judgment.

The plaintiffs in Melvin Davis et al. v. Magna International of America Inc. et al. are Melvin Davis, Wayne Anderson, Shawnetta Jordan and Dakota King, and the named defendants in the lawsuit are Magna International of America Inc.; the Board of Directors of Magna International of America Inc.; the Magna International of America Inc. Investment Committee; the Unites States Pension and Retirement Savings Committee; and 30 unnamed individuals.

Magna representatives did not return a request for comment.

The plaintiffs are represented by attorneys from the law offices of Capozzi Adler PC, based in Harrisburg, Pennsylvania, and the law offices of Anthony DeLuca PLC, based in Gross Pointe Park, Michigan. The defendants are represented by attorneys from the law offices of Sidley Austin LLP, based in Chicago.