ERISA Lawsuit Against Advance Publications Dismissed, Pending Amended Complaint

An ERISA lawsuit against Advance Publications accusing the company of offering a poor-performing suite of BlackRock target-date funds was dismissed on Tuesday in the U.S. District Court for the Southern District of New York decision. The plaintiff, however, was afforded a second opportunity to amend the complaint. 

In Anderson v. Advance Publications Inc., Jermaine Anderson, a former participant of Advance Publications’ 401(k) plan, sued the privately held media company and its plan fiduciaries, claiming Advance Publications made “an imprudent decision that deprived plan participants of significant growth in their retirement assets.” 

U.S. District Judge Analisa Torres granted Advance Publications’ motion to dismiss all three of Anderson’s alleged breaches under the Employee Retirement Income Security Act: the duty of loyalty, the duty of prudence and the duty to comply with the provisions of the plan. She did, however, also deny Advance Publications’ request to dismiss Anderson’s amended complaint with prejudice, giving Anderson until June 27 to amend the complaint. 

Anderson’s complaint is centered on the BlackRock LifePlan Index Funds, a suite of 10 passively managed exchange-traded funds that have been offered by Advance Publications’ 401(k) plan since its April 2011 adoption. Anderson argued that the company elected to retain the BlackRock TDFs instead of choosing from a wide range of alternative TDF families offered by competing providers. The complaint stated that Advance Publications “employed a fundamentally irrational decision-making process … [and] breached their fiduciary duties under ERISA.” 

As of December 31, 2020, Advance Publications’ 401(k) plan had 12,027 participants, with account balances and assets totaling approximately $1.5 billion, placing it in the “top 0.1% of all defined contribution plans by plan size,” according to the court filing. 

The case is one of a slew of ERISA lawsuits filed in 2022 in which plaintiffs, often represented by law firm Miller Shah LLP, complained about the BlackRock TDFs, which are used as default investments in several firms’ defined contribution retirement plans. Other defendants included employers such as Cisco, CitiGroup, Microsoft and Wintrust. 

Anderson filed the initial complaint in August 2022. Advance Publications filed a motion to dismiss the complaint on January 6, and in response, Anderson filed an amended complaint on January 27. Advance Publications again filed a motion to dismiss the amended complaint on February 16, arguing that Anderson “assert[ed] a breach of loyalty [cause of action] without any supporting facts.”  

Torres agreed with the media company that the amended complaint did not contain “sufficient factual allegations to state a claim of breach of loyalty under ERISA” and granted the motion to dismiss that count. 

Anderson also argued a claim for breach of the duty of prudence under ERISA, alleging that the BlackRock TDFs underperformed. Advance Publications argued that Anderson “offer[ed] no direct allegations of an imprudent fiduciary process,” and Torres concluded that the allegations of underperformance were insufficient to support Anderson’s claim for breach of the duty of prudence.  

Torres also dismissed Anderson’s claim that Advance Publications did not comply with plan documents. 

Advance Publications requested that the amended complaint be dismissed with prejudice—which would prevent Anderson from filing an amended complaint—and argued that Anderson had multiple chances to amend and should not be afforded another. But Torres wrote that the complaint’s deficiencies “might be cured by amendment” and dismissed the complaint without prejudice, giving Anderson one final chance. 

Advance Publications did not respond to a request for comment.