Financial Services Company CoreLogic Targeted in ERISA Suit

A former CoreLogic employee and current retirement plan participant has alleged in a new lawsuit seeking class action status that fiduciaries of the CoreLogic Inc. 401(K) Savings Plan breached the fiduciary duties of prudence and loyalty to the plan and its participants.

The complaint, Danny Sabana et al. v CoreLogic Inc. et al., was filed in U.S. District Court for the Central District of California.  

Plaintiff Danny Sabana’s complaint alleges plan fiduciaries breached their duties under the Employee Retirement Income Security Act by overpaying for service providers, including maintaining in-plan investments with higher-cost share classes when identical, lower-cost share classes were available and by retaining funds within the plan that failed to meet or exceed industry benchmarks.

“As a direct and proximate result of these breaches of the duty to monitor the plan, plaintiff and members of the class suffered millions of dollars of losses,” the complaint states. “Had defendant complied with its fiduciary obligations, the plan would not have suffered these losses, and plan participants would have had more money available to them for their retirement.”

CoreLogic did not respond to a request for comment.

Plan recordkeeper Fidelity Investments and plan investment adviser NFP Retirement Inc. are not named defendants, but “certain service providers are relevant non-parties to this litigation,” according to the complaint. The purported class period runs from January 1, 2017, through the date of judgment.

Plaintiffs’ Claims

CoreLogic’s fiduciaries included within the plan’s investment offerings mutual funds that paid annual revenue-sharing fees based on a percentage of the total plan assets invested in the funds, according to the lawsuit.

Retirement plan fiduciaries are not barred from using revenue-sharing agreements—variable direct and indirect compensation fees to a covered service provider—to offset investment funds’ expenses.

Although revenue-sharing arrangements are not prohibited, the complaint argues the amounts of direct and indirect compensation fees the CoreLogic plan paid to Fidelity and NFP Retirement “were in excess of reasonable fees and not tethered to the services provided” and therefore comprised an ERISA breach, the complaint states.

“Defendants chose and continued to maintain a pool of investment options, including those offered by Fidelity and NFP, at the expense of participants and beneficiaries of the plan by routinely offering higher cost share classes rather than readily available lower cost options,” the plaintiffs’ attorneys wrote. “The unreasonable fees paid to Fidelity through revenue sharing arrangements directly resulted from the defendants’ choice of improper mutual fund share classes and failing to monitor the fees paid to Fidelity.”

The plaintiff and purported class seek to hold the defendants and any non-fiduciary “which knowingly participated in these breaches … liable to disgorge all profits made as a result of defendant’s breaches of the duties of loyalty and prudence, and such other appropriate equitable relief as the Court deems proper,” the complaint states.

Additionally, the plaintiff requested that the court find that a fiduciary breach occurred and that defendants are liable for all plan losses resulting from the breach. CoreLogic is a diversified financial and information services company based in Irvine, California.

The Court Record

The plaintiff brought two fiduciary breach counts against all defendants: for breach of the fiduciary duty of prudence and for abrogating the duty to investigate and monitor investments and covered service providers.

The CoreLogic plan’s most recent data available, as of December 31, 2021, shows the plan had 7,161 participants or beneficiaries and $741,898,999 in assets.

The purported class of plaintiffs is represented by attorneys with the law offices of Christina Humphrey Law PC, based in Santa Clara, California, and Bradley/Grombacher LLP, based in Westlake Village, California.