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Persistent Participant Plaintiff Pursues Stable Value Suit – Again

It’s said that if at first you don’t succeed, try again. And apparently, when it comes to at least one stable value fund suit, you try again. And again.

The persistent plaintiff here is one Darlene Dezelan, a participant of the Cedars-Sinai Medical Center 403(b) Retirement Plan, who initially (August 2016) filed suit against Voya Retirement Insurance and Annuity Co. on behalf of that plan, and on behalf of “all other similarly situated employee pension benefit plans covered under the Employee Retirement Income Security Act of 1974,” claiming that Voya “collects hundreds of millions of dollars annually in undisclosed compensation from the retirement plans and participants to whom it owes the highest duties known to law and certain statutory disclosure obligations.”

More specifically the suit, initially filed in 2016 in the U.S. District Court for the District of Connecticut, alleged that in setting and resetting the crediting rates applicable to the stable value accounts offered by Voya, and setting the amount of and keeping the Income, and in thus determining its own compensation, Voya has breached its fiduciary duties to the plans and their participants.

Now the U.S. Court of Appeals for the 2nd Circuit has reinstated the appeal which was dropped last month subject to reversal upon the parties’ agreement, though as recently as August, Judge Victor Bolden of the U.S. District Court for the District of Connecticut, noted that “because the Court has given Ms. Dezelan leave to amend her Complaint once, the Court will not grant further leave to amend her Complaint and will dismiss this case with prejudice,” after she had failed to establish that Voya was an ERISA fiduciary with regard to its role in the stable value pricing.

n similar actions in different venues, Principal and Great-West have had suits challenging their stable value practices certified as class actions. Similar suits have also been filed against New York Life, MassMutual, and Mutual of Omaha.

Indeed, stable value funds have proven to be a prime target of litigation in recent months, and for a variety (and sometimes contradictory) plaintiff rationales; from being too risky to not being risky enough, and for plans that offered stable value, rather than money market options – and plans that offered only money market, and didn’t include a stable value option.

The Voya case is Dezelan v. Voya Ret. Ins. & Annuity Co., 2d Cir., No. 18-2732, 12/6/18.