A federal judge has denied Edward Jones’ second motion to dismiss a case alleging ERISA violations by the company’s own retirement savings plan participants.
On March 27, U.S. District Judge John A. Ross once again refused to throw out the lawsuit, citing a lack of new evidence in support of dismissal. Ross explained that the defendants were largely using the same arguments used in the original motion one year prior, and therefore he’d reached the same conclusion.
Among the allegations, 401k plan participants claim the “Defendants ran the Plan to benefit Edward Jones and its corporate partners, rather than in the interests of participants and beneficiaries.” Investment options available within the plan included three managed by Edward Jones and over 40 managed by “Partners” or “Preferred Product Partners.”
The complaint goes on to say, “Plaintiffs contend Defendants breached their fiduciary duties by failing to negotiate a more favorable fee arrangement with Mercer [HR Services, Inc.] for administrative services.”
The suit alleges excessive fees to the tune of tens of millions of dollars were paid to the recordkeeper despite the availability of nearly identical, lower-cost options.
Edward Jones contended that arguments in support of its motion for dismissal are based on a precedent established by a similar suit, Meiners v. Wells Fargo & Co.
However, Ross’ ruling outlined several differences between the cases, including the fact that the Edward Jones 401k savers were right to “raise an inference of disloyalty and imprudence” on their employers’ part in light of “allegations that Mercer’s fees nearly tripled over the class period” despite the fact that “market rates for recordkeeping services declined throughout the class period.”
In addition, the judge cited Tussey v. ABB, Inc., among several other cases, in which motions to dismiss were denied based on the Plaintiffs’ assertion that the Defendants “failed to act with prudence” by neglecting their duty “to solicit bids and to monitor and control recordkeeping fees.”
Jessa Claeys is a writer, editor and graphic designer.
