Call it the Tibble v. Edison of union retirement plans. A new front has opened in the retirement plan litigation battle, this one involving the 27,178-member Supplemental Income 401(k) Plan, a union-sponsored multiemployer plan with almost $1 billion assets.
The plaintiffs’ claims are by now familiar. According to the lawsuit, filed in the United States District Court for the Central District of California on November 30:
The Board of Trustees and its individual members breached their fiduciary duties of prudence and loyalty to the Class by:
- Offering retail class mutual fund shares when identical lower cost institutional class shares were available. This resulted in the Class paying additional unnecessary expenses with no value to the Class; and
- Overpaying for record keeping by paying the Plan record keeper, John Hancock Retirement Plan Services (“John Hancock”) and its predecessor, New York Life Insurance Company, excessive fees through revenue sharing arrangements with the mutual funds offered as investment options under the Plan.
“Since 2011, Defendants have offered only retail class mutual fund shares as investment options for the Plan even though at all times lower cost institutional class shares of those exact same mutual funds were readily available to the Plan,” it adds.
Unions are the latest targets to face such charges. Beginning in August 2016, Duke University, John Hopkins, The University of Pennsylvania, Vanderbilt, Massachusetts Institute of Technology, New York University, Yale and Columbia all became the subject of similar lawsuits.
Spearheaded by Jerome Schlichter, managing partner of the law firm Schlichter, Bogard, and Denton, the suits mostly claim a breach of fiduciary duty under ERISA to plan participants.
Schlichter represented plaintiffs in the aforementioned Tibble v. Edison, a case that made its way to the Supreme Court due to power-utility Edison International’s use of more expensive retail shares, rather than the lower-cost institutional shares for which its 401k-plan qualified due to its large size and asset base.
In September, luxury clothing and apparel brand Gucci America Inc. was sued over the fees associated with its retirement plan.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
