Bank of America's fee case dismissal is affirmed by the Fourth Circuit - the plaintiffs lack standing, and the statute of limitations bars the remaining claims
There have been many lawsuits filed against Fortune 500 companies alleging that the fees charged by some of the investment options in their 401(k) plans were excessive, and thereby cost participants millions of retirement dollars. One of these "fee cases" was filed against Bank of America. But the case against BoA claimed that not only were the fees charged by funds in the 401(k) plan excessive, but that the investments within BoA's traditional defined benefit pension plan charged excessive fees as well.
The district court dismissed the claims regarding the funds within the 401(k) plan, concluding that the claims were barred by the statute of limitations. The Fourth Circuit affirmed, concluding that the pertinent issue was the date the funds were selected by the plans. The date the funds were selected for inclusion in the plan's offerings - and not the date it became clear that the funds should have been removed, the date a participant chose to invest in that fund, or whether the plan's fiduciaries had a duty to monitor the funds' performance - started the statute of limitations. Because all of the funds at issue had been selected for inclusion within the 401(k) plan more than six years before the lawsuit was filed, the six-year ERISA statute of limitations barred the claims.
Even more notable is the district court's decision that the claims against the DB plan were barred as a matter of law because the plaintiffs did not have Constitutional (Article III) standing to bring the claims. The Fourth Circuit affirmed that dismissal as well, concluding that the relief sought by the plaintiffs - that the allegedly excessive fees should be repaid to the plan - would not benefit the plaintiffs in any manner. The participants receive whatever benefit they are entitled to receive under the plan's benefit formula; if the plan is underfunded, BoA is responsible for any funding shortfall, and if the plan is overfunded (as the BoA plan was) the plan keeps the excess. Over the objections of the plaintiffs, the PBGC and the Secretary of the DOL, the Fourth Circuit concluded that under these circumstances, the plaintiffs did not suffer any "injury" sufficient to give them Constitutional standing to bring claims regarding the DB plan. The "Secretary [of Labor] always remains empowered" under ERISA to bring such claims, but individual participants cannot.
This case calls into question any ERISA breach of fiduciary duty claim asserted by participants against a defined benefit plan (regardless of whether the subject is allegedly excessive fees or any other alleged breach), and whether the decision would be the same if the plan was underfunded rather than overfunded. This case will therefore be worth watching for future developments. Here's the link to the decision -