Get more! Sign up for PLANSPONSOR newsletters.
A former employee and retirement plan participant of the Waters Employee Investment Plan 401(k), David Daggett, has alleged Waters Technology Corp. and parent company Waters Corp. committed four counts of fiduciary breach under the Employee Retirement Income Security Act.
The case, Daggett v. Waters Corporation et al., was filed July 7 in U.S. District Court for the District of Massachusetts.
Daggett’s complaint alleges fiduciaries for the 401(k) retirement plan violated the ERISA duty of prudence by charging excessive fees for total retirement plans services paid to recordkeeper Fidelity Investments and other service providers; for maintaining underperforming investments in-plan; and for failure to monitor fiduciaries on the plan committee with regard to plan total RPS fees and underperforming investments.
The Waters Technologies board of directors and the employee benefits administration committee of Waters Technologies Corporation, are additional defendants in the lawsuit, the complaint shows.
“As a result of defendants’ actions, participants invested in subpar investment vehicles and paid additional unnecessary operating expenses and fees with no value to the participants and resulting in a loss of compounded returns,” the complaint states. “These breaches of fiduciary duty caused plaintiff and class members tens of millions of dollars of harm in the form of lower retirement account balances than they otherwise should have had in the absence of these unreasonable Plan fees and imprudent investment options.”
Daggett held serval positions at Waters from 1984 to 2019. Daggett was employed at the Waters facility in Milford, Massachusetts, the complaint shows.
In 2021, the plan held approximately $1.2 billion in retirement assets for 3,983 participants. Because of its size, the fiduciaries should have had the bargaining power to negotiate lower fees, the complaint claims.
However, the defendants “did not regularly monitor Fidelity to ensure that Fidelity remained the prudent and objectively reasonable choices to provide total RPS services, nor did it effectively monitor the underperforming active suite of the Fidelity Freedom Funds.”
From 2017 to 2022, the plan paid an effective average annual total RPS fee of $135 per participant, according to the complaint. A “reasonable” fee for the Waters plan, based on the services provided by existing service providers and the plan’s features, would have been $55 per participant, the plaintiff claims.
Based on Form 5500s filed to the Department of Labor. Fidelity has served as the recordkeeper for the plan since 2010.
Daggett requested to be appointed as representative of a class, the lawsuit be certified as a class action, plaintiffs’ counsel to be designated counsel for the class and for the court to certify the putative class period as applying to all participants and beneficiaries of the Waters Employee Investment Plan—excluding defendants or any participant/beneficiary who is a fiduciary to the plan—from July 7, 2017, through the date of judgement.
The plaintiff asked the court to enter a judgement against the defendants and require them to restore to the plan all losses to the plan resulting from their breaches of fiduciary duty and to surrender all profits received from, or in respect of, the plan, in the form of an accounting for profits, imposition of constructive trust or surcharge against Waters.
A Waters Corp. representative declined to comment on the lawsuit.
The plaintiff is represented in the lawsuit by attorneys with the law firm Walcheske & Luzi LLC, based in Brookfield, Wisconsin, and the law offices of Jonathan Feigenbaum, based in Boston.