Oilfield Services Company Baker Hughes Faces ERISA Lawsuit  

A class action complaint, Jesus Espinoza et al. v. Baker Hughes Holdings LLC, claims the Baker Hughes Co.’s 401(k) plan did not adhere to fiduciary best practices to control plan fees and expenses, alleging one count of breaches of the fiduciary duty of prudence under the Employee Retirement Income Security Act. 

The lawsuit, filed in U.S. District Court for the Southern District of Texas, Houston Division, claims the Baker Hughes Co. caused the plan to pay excessive fees and unreasonable compensation to the plan’s recordkeeper—specifically by allowing the recordkeeper to receive compensation via “float” on plan participant money—resulting in high costs to plan participants, according to the complaint.

“Defendant did not adhere to fiduciary best practices to control Plan fees and expenses,” the complaint states. “To the extent that Defendant made any prudent attempt to control the Plan’s expenses and to ensure the expenses were not excessive, Defendant employed flawed and ineffective processes, which failed to ensure that: (a) the fees and expenses charged to Plan participants were reasonable, and (b) that the compensation the recordkeeper received from the Plan was reasonable.”

The lawsuit asks the court to certify the class, to approve the plaintiff’s requested class period and for compensation to retirement plan participants, the court filing shows.

“The Plan suffered millions of dollars in losses caused by Defendant’s fiduciary breaches and remains exposed to harm and continued losses, and those injuries may be redressed by a judgment of this Court in favor of Plaintiff,” attorneys for the plaintiff wrote in the complaint.  

The plaintiff asked the court to find and declare that the defendant breached its fiduciary duties to participants; to find the defendant personally liable to restore all losses to the plan resulting from the breach of fiduciary duties; to determine the method for calculating plan losses and to order the defendant to provide all accounting necessary to determine the amounts the defendant must make good to the plan under ERISA, among other relief requested.

“Plaintiff and the putative class members are entitled to receive benefits in the amount of the difference between the value of their individual Plan accounts currently, or as of the time their accounts were distributed, and what their accounts are or would have been worth, but for Defendant’s breaches of fiduciary duty,” the complaint states.

The complaint asks for the court to certify the class period between April 30, 2017, and the present, applying to all persons except the defendants’ fiduciaries and their immediate family members, who were participants or beneficiaries of the plan, the filing shows.

The Baker Hughes Co. 401(k) retirement plan held $3,815,191,486 in assets for 24,098 participants with account balances at the end of 2021, the court filing shows.

“Instead of leveraging the Plan’s assets and tremendous bargaining power to benefit Plan participants, Defendant caused the Plan to pay unreasonable and excessive compensation for recordkeeping and other administrative services to the Plan’s recordkeeper, Empower Retirement,” the complaint states. “[The] Defendant agreed to compensate the Plan’s recordkeeper by allowing the recordkeeper to receive compensation via “float” on Plan participant money.”

Float is money in transit in or out of the plan. Baker Hughes agreed that anytime plan participants deposited or withdrew money from their individual accounts in the plan, that money would first pass through the recordkeeper’s clearing account, according to the complaint.

“Defendant breached its fiduciary duty of prudence by permitting Empower and/or Alight Solutions to receive excessive compensation via float,” the complaint states.

Empower has served as the recordkeeper for the plan, with Alight Solutions in the role from 2017 to 2020, according to the complaint.

Baker Hughes is an oilfield services company that provides products and services for oil well drilling, formation, evaluation, completion, production and reservoir consulting. The company is organized as a corporation in Delaware and headquartered in Houston. 

A request for comment to Baker Hughes was not retuned.

The class of plaintiffs is represented by the law office of Chris Miltenberger PLLC, based in Southlake, Texas; attorneys from Wenzel Fenton Cabassa PA, based in Tampa Bay, Florida; and McKay Law LLC, based in Scottsdale, Arizona. The complaint did not include an attorney for the defendant.