Whole Foods 401(k) Plan Sued

Whole Foods Market 401(k) retirement plan participants brought a complaint against fiduciaries of the multinational supermarket chain in federal court, alleging the plan’s recordkeeper caused retirement plan investors to pay excessive fees for recordkeeping and administrative services.

Fidelity Investments has served as the recordkeeper for the plan since 2017, and the complaint says Fidelity caused plan participants to pay $31 per participant for recordkeeping and administrative services in 2021.

In the 2022 plan year, the Whole Foods Market Growing Your Future 401(k) Plan held more than $1.68 billion in assets for 109,864 participants, as of the most recent available data from the plan’s Form 5500.

“The plan had substantial bargaining power to negotiate favorable recordkeeping and administration fees,” the plaintiffs’ attorneys wrote in the complaint, Winkelman v. Whole Foods Market Inc., filed this week in U.S. District Court for the Western District of Texas, Austin Division.

Plans with a significant number of participants and assets under administration can use the bargaining power that comes with their size to negotiate lower fees.

“Defendants, however, did not try to reduce the plan’s expenses to ensure they were prudent,” the plaintiffs’ attorneys wrote in the complaint.

Plaintiffs Shauna Winkelman, Michael Lenon, Scott Cenna, Kalea Nixon, Robert Goldorazena, Chad Diehl and Ross Nanfeldt alleged two counts of a fiduciary breach—the duty of prudence and the failure to monitor fiduciaries—and are seeking class certification against Amazon Subsidiary Whole Foods Market Inc.; its board of directors; the Whole Foods Market Inc. Employer Committee; the Whole Foods Market Inc. 401(K) Committee; the Whole Foods Market Inc. Benefits Administrative Committee; and up to 50 additional defendants, according to the complaint.  

The filing sets the class as applying to all persons, except defendants and their immediate family members, who were participants in or beneficiaries of the plan at any time between November 6, 2017, through the date of judgement.

Representatives for Whole Foods did not respond to a request for comment. The plaintiffs and putative class are represented by attorneys with the law firm Capozzi Adler PC, based in Harrisburg, Pennsylvania, and the law offices of Kell A. Simon in Austin. The court docket does not show legal representation for the defendants.