Trial Date Set for Boeing 401(k) Fee Case

The trial date has been set for the long-pending 401(k) excessive fee case, Spano v. Boeing. According to the plaintiffs in the case, arguments in the trial will be heard August 26, 2015, before the U.S. District Court of Southern District of Illinois.

Plaintiffs allege that Boeing violated the Employee Retirement Income Security Act (ERISA) by permitting excessive fees to be charged to 401(k) plan participants. They also claim that Boeing engaged in self-serving conflicts of interest, and permitted imprudent funds to be included in the company retirement plan.

The news comes about eight months after a district court denied Boeing’s request for summary judgment on the merits of Spano vs. Boeing. The court granted in part and denied in part Boeing’s motion for summary judgment based on ERISA’s six-year statute of repose. It also denied plaintiffs’ motion to strike certain reply briefs filed by Boeing—moving the case one step closer to resolution.

The case arose nearly a decade ago as part of the first wave of defined contribution plan fee litigation. At the heart of the case is a familiar challenge: plaintiffs allege that Boeing plan fiduciaries failed to adequately monitor and disclose fees assessed against participants’ 401(k) accounts, while simultaneously spending more than necessary on plan investments and services. The workers alleged that the excessive fees were imposed on the plan through a combination of both hard dollar payments and revenue-sharing transfers.  

The case has already resulted in a series of important rulings, following initial class action certification in 2008. A subsequent appeals court ruling from Circuit Judge Diane Wood, writing for a three-judge panel of the 7th U.S. Circuit Court of Appeals, confirmed that situations in which a retirement plan as a whole is injured at the same time as an individual employee can arise when the entity responsible for investing the plan’s assets charges fees that are too high or when the plan has been reckless in its selection of investment options for participants—and thus that class action suits can be leveled against employers in such circumstances.

Given the consideration of ERISA’s repose period, the case could be impacted by a May 2015 decision by the U.S. Supreme Court, widely interpreted to have strengthened the ongoing fiduciary duty to monitor and remove imprudent funds, even if the funds were first put in the plan beyond ERISA’s six-year period of repose.