Plaintiff Drops Blackrock TDF Suit

As a number of similar suits have failed to gain traction in federal court, the participant-plaintiff in one of those suits has dropped his suit.

The notice of voluntary dismissal (Anderson v. Advance Publications Inc. et al., case number 1:22-cv-06826, in the U.S. District Court for the Southern District of New York) was filed in the U.S. District Court for the Southern District of New York by Jermaine Anderson, a former worker at Advance Publications Inc., and a participant in the firm’s $1.5 billion 401(k) plan.

In a suit that had been filed in August 2022, Anderson (represented in this action by Miller Shah LLP) had alleged that “the BlackRock TDFs are significantly worse performing than many of the mutual fund alternatives offered by TDF providers and, throughout the Class Period, could not have supported an expectation by prudent fiduciaries that their retention in the Plan was justifiable.” The suit also alleged—as have the roughly dozen[i] other such suits filed in multiple jurisdictions around the country—that “Defendants appear to have chased the low fees charged by the BlackRock TDFs without any consideration of their ability to generate return.”

Anderson walks away from this suit after the court dismissed an amended complaint in June—even though, as has been the result in a number of these cases—he was provided an opportunity to amend his suit to correct the shortfalls. 

At that time U.S. District Judge Analisa Torres described the arguments as “conclusory allegations”—and that, in order to survive the motion to dismiss, Anderson would need to speak to shortcomings in the process of selecting/retaining those funds. "…the amended complaint invites the court to speculate about, e.g., 'performance woes and other issues with the BlackRock TDFs,'" Judge Torres said. "These deficiencies pervade other allegations in the amended complaint, including those based on comparators and other performance metrics."

Other Cases

The suits have not fared well in federal courts. A similar suit filed against the Marsh & McLennan Companies 401(k) Savings and Investment Plan was dismissed in October, and one filed against Cisco Systems 401(k) met a similar fate in August, and the case filed against Microsoft was tossed in April, after initially being found insufficient to defeat a motion to dismiss in February and given an opportunity to address those shortcomings (and again coming up “short”). Suits targeting Capital One Financial Corp. and Booz Allen Hamilton[ii] were both dismissed by U.S. District Judge Michael S. Nachmanoff following oral arguments last December, rejecting the arguments that the BlackRock funds could be compared with the so-called “comparator” funds without considering different strategies, glidepaths and investments.   

The one exception to date was a September decision by U.S. District Court Judge Robert Payne who drew different conclusions based on similar arguments made in the Booz Allen Hamilton decision (albeit in a different Virginia federal court), allowing the case to proceed past the motion to dismiss finding the arguments made by the Genworth plaintiff “provides ample detail on the underperformance of the BlackRock TDFs and how the underperformance would have signaled the need for a change to a prudent fiduciary.”  

What This Means

While not quite a perfect record in these actions, multiple courts in multiple jurisdictions have clearly had trouble finding enough in the plaintiffs’ arguments to establish a “plausible” case of fiduciary imprudence based on the allegations made—even with accepting the arguments presented in the light most favorable to the plaintiffs, and even after—in pretty much every case so far—giving the plaintiffs an opportunity to “fix” their arguments to do so. 

And that should tell you something about the merits of the case(s).