Ninth Circuit Reverses AT&T ERISA Summary Judgement

On August 4th, 2023, the Ninth Circuit reversed a district court summary judgement in favor of the defendant AT&T Benefit Plan Investment Committee (AT&T), regarding a class action alleging Employee Retirement Income Security Act (ERISA) violations from prohibited fees. The Plaintiffs are being represented by Schneider Wallace Cottrell Konecky LLP. 

Schneider Wallace attorney John Nestico welcomed the ruling, calling it a “”thorough, well-reasoned and definitive” decision. 

A summary of the ERISA class case by the Ninth Circuit: 

Plaintiffs brought this class action against the Plan’s administrator, AT&T Services, Inc., and the committee responsible for some of the Plan’s investment-related duties, the AT&T Benefit Plan Investment Committee (collectively, “AT&T”).  Plaintiffs alleged that AT&T failed to investigate and evaluate all the compensation that the Plan’s recordkeeper, Fidelity Workplace Services, received from mutual funds through BrokerageLink, Fidelity’s brokerage account platform, and from Financial Engines Advisors, L.L.C.  Plaintiffs alleged that (1) AT&T’s failure to consider this compensation rendered its contract with Fidelity a “prohibited transaction” under ERISA § 406, (2) AT&T breached its fiduciary duty of prudence by failing to consider this compensation, and (3) AT&T breached its duty of candor by failing to disclose this compensation to the Department of Labor. 

The Ninth circuit reversed summary judgement on three claims: 

  1. Prohibited-transaction claims 
  2. Duty-of-prudence claims 
  3. Reporting claims (in part) 

Ninth Circuit Opinion 

The Ninth Circuit opinion stated: 

“ERISA imposes a duty of prudence upon those who manage employee retirement plans, prohibits plans from engaging in transactions that could harm participants’ interests, and mandates disclosures to the United States Department of Labor. … 

Plaintiffs allege that AT&T failed to investigate and evaluate all the compensation that the Plan’s recordkeeper, Fidelity Workplace Services (“Fidelity”) … 

Because we conclude that AT&T was required to consider this compensation and report a portion of it, we affirm in part, reverse in part, and remand for further proceedings.” 

ERISA Law Firm 

We represent employees whose 401(k) investments have suffered losses due to corporate misrepresentations or other wrongdoing.  

The providers of 401(k) plans earn legitimate revenues off the fees they charge for making wise, lucrative investments for participants, but excessive fees are unfair to participants. Fees may be considered excessive if: 

  1. The plan engages in excessive transactions that generate unreasonable total commissions. 
  2. The plan charges high fees to manage and operate the plan. 
  3. The plan’s revenue sharing agreement pays high costs for daily operations. 

Pensions are generally treated as conservative investments that tend to be lower yield, low-risk, and long-term. Often a 401(k) plan’s participants will sustain similar losses from excessive fees under similar circumstances, making them candidates for class action litigation.  

Our firm represents classes of participants that have been charged excessive fees or lost money due to imprudent investments by 401(k) plan sponsors. This allows the class to share the costs of litigation and to speed up the process of recovery. To learn more about ERISA and 401(k) benefits disputes and remedies, schedule an assessment with our employee benefits lawyers at Schneider Wallace. Our attorneys are able to schedule meetings online, over the phone, or at our offices in California, Texas and Puerto Rico. 

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