After a lot of comings and goings, filings and amended filings, an excessive fee suit brought against a $7.9 billion multiple employer plan has faded into the sunset…
The suit was filed in May 2020 in the U.S. District Court for the District of New Jersey by McCaffree Financial Corp.,[i] individually as a participating employer co-sponsor and a fiduciary of the ADP TotalSource Retirement Savings Plan, which has filed suit “on behalf of the Plan and a class of similarly-situated participating employer co-sponsors or other fiduciaries, against ADP, Inc., ADP TotalSource Group, Inc., as well as the administrative committee of the ADP TotalSource Retirement Savings Plan and its members. The suit also names the plan’s investment advisor (401K Advisors, Inc. n/k/a NFP Retirement) for breach of their fiduciary duties.
U.S. District Judge Esther Salas tossed the suit in March 2022 for lack of standing (apparently McCaffree failed to allege that he invested in any of the challenged funds). But, according to Law360—gave McCaffree a chance to amend its case, which it did by adding Mark McCaffree as a named plaintiff. However, Salas again rejected McCaffree Financial’s standing in her latest order—noting that the ability of an employer to join or leave a multiple employer retirement plan doesn’t transform that employer into a plan fiduciary with standing to sue under ERISA, according to Bloomberg Law.
Since then, Law360 notes that Judge Salas sent the case to mediation on May 26—though that apparently didn’t happen. Then on June 1, ADP told the court in a letter that it was unclear if the plaintiffs sought to proceed with the litigation—and Judge Salas set June 9 as a new deadline for amendments to the suit—but the McCaffrees' counsel did not object to the court administratively terminating the case, according to court filings.
But now, in a “stipulation of dismissal,” “Plaintiffs, McCaffree Financial Corp. and Mark McCaffree (‘Plaintiffs’), and Defendants, ADP, Inc., ADP TotalSource Group, Inc. and the Administrative Committee of the ADP TotalSource Retirement Savings Plan, hereby stipulate through their counsel of record that Plaintiffs’ claims shall be dismissed without prejudice, with each party to bear its own attorneys’ fees and costs.”
And so, that is apparently …that.
What This Means
Any conclusions drawn at this point would be wholly speculative. Suffice it to say that time and money was spent—with apparently nothing to show for it.
[i] Which, interestingly enough came out a loser in a 2016 decision, by the U.S. Court of Appeals for the 8th Circuit in McCaffree Fin. Corp. v. Principal Life Ins. Co., No. 15-1007, which affirmed the lower court’s rejection of a class action lawsuit brought by McCaffree Financial Corp. on behalf of participating employees in the McCaffree Employee Retirement Program against Principal Financial Group, with which McCaffree had contracted to provide the plan’s investment options. McCaffree had alleged that Principal had charged McCaffree’s employees excessive fees in breach of a fiduciary duty Principal owed to plan participants under ERISA. The district court granted Principal’s motion to dismiss for failure to state a claim.
