The latest big 401(k) excessive fee lawsuit was filed this week against Tyson Foods Inc. in the U.S. District Court for the Western District of Arkansas, where three employees brought a proposed class action accusing the Arkansas-based meat-processing giant of mismanaging its $3.2 billion 401(k) plan by overpaying for recordkeeping.
These breaches of fiduciary duty, the complaint notes, caused plan participants millions of dollars of harm in the form of lower retirement account balances than they otherwise should have had in the absence of the unreasonable plan fees.
According to the complaint (as reported by Bloomberg Law), plaintiffs Randall W. Ruebel, Mario Hudson and Tammy L. Johnson, individually and as representatives of a class of participants and beneficiaries of the Tyson Foods, Inc. Retirement Savings Plan allege plan fiduciaries violated ERISA from Nov. 30, 2017 through the date of the judgment by failing to negotiate a better deal on these fees and charging plan participants excessive total RKA fees, and failing to look for a less-expensive service provider.
The plaintiffs are represented by Walcheske & Luzi, LLC, of Brookfield, Wis., and Carney Bates & Pulliam, PLLC, of Little Rock Ark.
The suit says Tyson 401(k) plan’s annual recordkeeping fees were between $40 and $46 per participant based on Plan 5500 Forms between 2017 and 2022, which is more than 75% higher (or an “unreasonable disparity of $18 per participant”) than they should have been.
“Defendants should have lowered its Total RKA fees by soliciting bids from competing providers and using its massive size and correspondent bargaining power to negotiate for fee rebates, but it did not do so, or did so ineffectively, during the Class Period,” the complaint notes.
It goes on to say that “prudent plan fiduciaries can easily receive a quote from other recordkeepers to determine if their current level of Total RKA fees is reasonable in light of the level and quality of record-keeper fees. It is not a cumbersome or expensive process.”
The complaint says that had Defendants been acting prudently, the Plan actually would have paid significantly less than an average of approximately $2,726,967 per year in Total RKA fees, which equated to an effective average of approximately $42 per participant per year.
Citing Hughes v. Northwestern (Hughes II), the complaint continues to say although “a fiduciary need not constantly solicit quotes for recordkeeping services to comply with its duty of prudence, . . . fiduciaries who fail to monitor the reasonableness of plan fees and fail to take action to mitigate excessive fees—such as by adjusting fee arrangements, soliciting bids, consolidating recordkeepers, negotiating for rebates with existing recordkeepers, or other means—may violate their duty of prudence.”
Through the lawsuit, plaintiffs are seeking the defendants make good to the plan all losses resulting from these alleged fiduciary breaches.
Tyson Foods is a multi-national food company based in Springdale, Ark., producing approximately 20% of the beef, pork and chicken in the U.S., in addition to foods under the Tyson, Jimmy Dean, Hillshire Farm, BallPark, Wright, Aidell’s and State Fair brands.
The complaint notes that with 67,276 participants in 2022, the Tyson 401(k) plan had more participants than 99.98% of the defined contribution plans in the United States that filed 5500 forms for the 2022 Plan year. Similarly, with $3,240,139,798 in assets in 2022, the Plan had more assets than 99.97% of the defined contribution plans in the U.S.
SEE ALSO:
• Most ERISA Excessive Fee Cases Surviving Motions to Dismiss
• Hughes v. Northwestern: A Missed Opportunity to Establish a Workable Pleading Standard
• The Dramatic Rise in Excessive 401k Fee Litigation—And Who’s Fighting It