Genworth Can Appeal Class Action Regarding BlackRock TDFs

The U.S. 4th Circuit Court of Appeals will hear Genworth Financial Inc.’s appeal of a decision to give class action status to a group of participants who were invested in BlackRock Inc. target-date funds through their Genworth retirement plan. 

Plan sponsor Genworth had requested the chance to appeal the class action certification granted by the U.S. District Court for the Eastern District of Virginia. In that ruling, U.S. District Judge Judge Robert Payne gave class action status to all participants enrolled in the BlackRock LifePath Index Funds at any time on or after August 1, 2016, without giving a ruling on the plaintiffs’ allegations that Genworth’s retirement plan committee had failed in its fiduciary duty by not shopping for alternatives to those funds. The Genworth 

The granting of class action status in the case, Trauernicht et al. v. Genworth Financial Inc. et al., stood out after numerous lawsuits filed by the same law firm, Miller Shah, had been dismissed by other courts. 

In its appeal filed August 30, Genworth argued that the plaintiffs had not sufficiently argued for class action status in the lawsuit. The firm, represented by Gibson, Dunn & Crutcher LLP, made the case that many of the “thousands of participants and beneficiaries” that would make up the class may in fact have “fared worse under Plaintiffs’ preferred alternative investments, depending on different individuals’ choices of when and how to invest.”  

Genworth also argued that granting class status would have far-reaching consequences for Employee Retirement Income Security Act fiduciary-breach cases, making such class certification a “fait accompli,” according to the appeal. 

“That includes cases like this that are manifestly unfit for mandatory classes because they purport to resolve the rights of unharmed class members who will never even receive notice and the chance to opt out of the wasteful, attorney-driven litigation prosecuted in their names,” Genworth’s attorneys wrote in the request for appeal. 

Genworth also accused the district court of erring when it did not decide if “any, let alone all” of the class members had standing for the allegations of fiduciary breach. 

In his class certification ruling, Payne had not made a judgement on the merits of the complaint, finding only that there was enough to provide class status.  

“Demonstrating financial injury in the context of standing is different than in the context of the merits,” he wrote. “Plaintiffs do not have to prove that they have suffered financial injury to establish standing. … Rather, standing is a threshold inquiry to determine whether the court may proceed to the merits.”  
 
The 4th Circuit, in its order Friday, wrote that Genworth made enough of a case for the appeals court to review the class certification status before allowing the case to move ahead. 

The Genworth 401(k) plan held assets of $847.34 million as of December 31, 2023, according to its most recent Form 5500 filing.