PLANADVISER - July/August 2019 - 13

to satisfy Section 416 with respect
to employees of one participating
employer means that all participating
employers are maintaining a plan that
is not qualified.
The agency notes that last
August 31, President Donald Trump
issued Executive Order 13847, titled
" Strengthening Retirement Security
in America. " The order directs the
secretary of the Treasury to " consider
proposing amendments to regulations
or other guidance, consistent with
applicable law and the policy set forth
in ... this order, regarding the circumstances
under which a MEP may
satisfy the tax qualification requirements
..., including the consequences
if one or more employers that sponsored
or adopted the plan fail to take
one or more actions necessary to meet
those requirements. "
SunTrust Wins
Long-Running ERISA Suit
The U.S. District Court for the
Northern District of Georgia's Atlanta
Division has ruled once again in an
Employee Retirement
Income Security
Act (ERISA) lawsuit filed against
SunTrust Bank.
The underlying lawsuit alleges
that the bank's 401(k) plan engaged in
corporate self-dealing at the expense
of plan participants. The lead plaintiff
suggests that plan officials violated
their fiduciary duties of loyalty and
prudence by selecting a series of proprietary
funds that were more expensive
and performed worse than others they
could have chosen-and by repeatedly
failing to remove or replace them.
In 2014, the 11th U.S. Circuit Court
of Appeals had previously ruled in this
matter. Although it had disagreed with
the District Court's initial dismissal
of certain claims based on ERISA's
three-year statute of limitations, it
found all of the claims were nonetheless
time-barred by the act's six-year
statute of limitations.
The latest ruling out of the Georgia
District Court comes on the defendants'
motion for summary judgment
on Count VIII of the plaintiffs' second
amended consolidated class-action
complaint. In its ruling, the District
Court granted summary judgment on
behalf of the defense.
Case documents show that Count
VIII alleges certain defendants " were
aware that their predecessor fiduciaries
had breached their duties in
selecting funds and thus breached their
own duties by failing to take adequate
steps to remedy, within the class
period, their predecessors' breaches in
selecting the funds at issue. "
Although it ultimately sides with the
defense, the decision goes into significant
detail about the lack of specifics
included in committee meeting
minutes with respect to genuine deliberation
over the investment menu
during the class period. The decision
also includes substantial details from
the depositions of numerous individual
fiduciary defendants.
Adidas Suit Focuses
On Passive Funds
Participants in the Adidas Group 401(k)
Savings and Retirement Plan have filed
a proposed class-action lawsuit against
Adidas America over the plan's administrative
and investment fees.
According to the complaint, from
2013 through 2017, the administrative
fees charged annually to plan participants
were greater than approximately
75% of
the plan's
The lawsuit contends that the
plaintiffs had no knowledge of how
the fees charged to and paid by Adidas
plan participants compared with
market norms. The participants also
allege that the plan's fees were excessive
when held up against comparable
mutual funds not offered by the plan.
A chart in the complaint shows how
the three-year return of investments
in the Adidas plan lineup compared
with similar investments.
Plaintiff's Attorney Predicts
Victory in Thole v. U.S. Bank
The U.S. Supreme Court (SCOTUS) has
agreed to take up Thole v. U.S. Bank, a
pension-focused case arising under the
Employee Retirement Income Security
Act (ERISA). Oral argument is expected
to occur late this year.
As one of the lead plaintiffs' attorneys
in the case, Karen Handorf, a
partner at Cohen Milstein and chairwoman
of the firm's employee benefits
and ERISA practice group, says she is
gratified to see the Supreme Court take
up this matter. She says she believes the
case will help determine whether the
millions of Americans whose pensions
are held in defined benefit (DB) plans
have the right to sue their plans' fiduciaries
for mismanaging assets.
Presently, participants cannot
fees per
participant when those were calculated
as cost per participant. And for
each of the years cited but two, the
fees were greater than 80% of perparticipant
fees when calculated as a
percent of total assets.
The complaint includes tabular
depictions of the Adidas plan's fees
calculated in two ways: as cost per
401(k) plan participant/beneficiary
and as a percentage of total plan
assets. In the latter, the percentage
was compared with a representative
group of plans having 5,000 to 9,999
participants and plans having assets
that exceed $500 million. The difference
between Adidas' fees and the
average of its peer benchmarks for
those years, based on total participants,
is $6,242,659. The difference
based on plan assets is $6,078,234.
establish that they have suffered an
actionable harm unless the pension
faces severe funding issues making it
likely to face insolvency.
U.S. Bank declined to comment on
the matter, noting it is the firm's policy
not to publicly discuss active litigation.
Specifically, the Supreme Court has
been asked to weigh: " 1) Whether an
ERISA plan participant or beneficiary
may seek injunctive relief against
fiduciary misconduct under 29 U.S.C.
[U.S. Code] Section 1132(a)(3) without
demonstrating
individual
financial
loss or the imminent risk thereof;
and 2) whether an ERISA plan participant
or beneficiary may seek restoration
of plan losses caused by fiduciary
breach under 29 U.S.C. Section 1132(a)
(2) without demonstrating individual
financial
loss or the imminent risk
thereof. " -PA
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PLANADVISER - July/August 2019

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