DOL Celebrates Withdrawal of Supreme Court Petition in Home Depot 401(k) Case
In a statement today, the U.S. Department of Labor welcomed yesterday’s decision by the plaintiffs in the Pizarro v. Home Depot 401(k) case to withdraw their petition for certiorari from the U.S. Supreme Court, ostensibly bringing the case to a close.
The move in the case, dating back to 2018 challenging Home Depot’s 401(k) plan fees and investment options, happened just two days before the Supreme Court was slated to decide whether to use the dispute to hear oral arguments and review a circuit court split on the issue under ERISA.
“This outcome should provide reassurance to the regulated community that the Department of Labor is committed to ending regulation by litigation…”
EBSA’s Daniel Aronowitz
The plaintiffs, participants in the Home Depot FutureBuilder 401(k) defined contribution retirement plan that had roughly $9 billion and 230,000 participants as of the end of 2019, had pursued a class action lawsuit challenging the plan’s administration. Home Depot prevailed at both the district court and court of appeals levels. Undeterred, plaintiffs’ counsel sought Supreme Court review.
Last April, the Supreme Court asked the U.S. solicitor general whether it should consider hearing the case and in December, the DOL now under the Trump administration reversed its earlier stance on which party carries the burden of proof in alleged fiduciary breach cases.
The DOL advised the court in an amicus brief that the case warranted review, but only to reaffirm settled legal principles and reject the plaintiffs’ position. The department also warned that the plaintiffs’ proposed expansive reading of ERISA would fuel meritless litigation and impose unnecessary costs on plan sponsors—outcomes fundamentally at odds with ERISA’s goals of efficiency, predictability, and encouragement of employer-sponsored retirement plans.
In Friday’s statement, the DOL said the plaintiffs’ decision to withdraw their petition speaks volumes.
“The plaintiffs chose to abandon their petition rather than risk Supreme Court review after the Department of Labor urged the Court to hear the case and reject the plaintiffs’ legal theory,” said Solicitor Jonathan Berry. “The department made the facts clear: ERISA does not impose a special burden-shifting framework requiring defendants to disprove loss causation. Consistent with Supreme Court precedent, plaintiffs bear the burden of proving the essential elements of their claims, including loss causation.”
With both parties both parties to the suit moving to dismiss the case, each party agreed to bear their own costs, with no further explanation.
“This outcome should provide reassurance to the regulated community that the Department of Labor is committed to ending regulation by litigation and to defending ERISA as Congress intended,” said Assistant Secretary of Labor for Employee Benefits Security Daniel Aronowitz. “This result reflects a victory for common sense, sound legal doctrine, and the millions of American workers who rely on employer-sponsored retirement plans.”
The original Complaint, filed by Sanford Heisler Sharp McKnight in the U.S. District Court for the Northern District of Georgia in April 2018, alleged that Home Depot breached ERISA and cost plan participants millions of dollars by failing to divest from multiple poorly performing funds; allowing investment advisors to charge unreasonable fees; and turning a blind eye to a kickback scheme between an investment advisor and the plan’s recordkeeper.
SEE ALSO:
• Home Depot Accused of Shoddy 401(k) Construction
• Record-Breaking $69 Million Settlement in UnitedHealth 401(k) Case Finalized
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.