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Two BlackRock TDF Suits Seek to Appeal Federal Court Losses


Plaintiffs in two of the recently dismissed suits involving the BlackRock LifePath target-date funds have announced their intentions to appeal those losses.

The plaintiffs here are those related to the Booz Allen Hamilton Inc. Employees’ Capital Accumulation Plan (Tullgren v. Booz Allen Hamilton Inc., E.D. Va., No. 1:22-cv-00856, notice of appeal 3/31/23) and the Capital One Financial Corporation Savings Plan (Hall v. Capital One Fin. Corp., E.D. Va., No. 1:22-cv-00857, notice of appeal 3/31/23). Both, separately, have now filed notice of their appeal of those decision(s) to the United States Court of Appeals for the Fourth Circuit.

You’ll doubtless recall that these were two of the dozen or so suits[i] filed in federal courts across the country alleging the same basic breaches of fiduciary duty, simplistically characterized as “imprudently selecting, retaining, and failing to appropriately monitor the clearly inferior BlackRock TDFs.” Somewhat ironically, considering the focus of the recent spate of excessive fee suits, these claimed that the plan fiduciaries elected to chase low fees, alleging that they did so sacrificing performance. Representing the plaintiffs in each of these suits is the law firm of Miller Shah LLP.

Late last year these two suits were dismissed for failing to present a “plausible” case, but were allowed two weeks to right those shortcomings. Here these plaintiffs (separately) “fixed” their suit by adding as comparator benchmarks “data regarding the S&P Target Date Indices and Sharpe ratio.” U.S. District Judge Michael S. Nachmanoff (who ruled in both these cases — separately — described as “a composite of the disparate strategies and styles present in the broad universe of investable alternative TDFs,” commenting further that “the S&P Indices ‘include a separately calculated index for each target date,’ each of which measures the performance of sub-indices purporting to represent a ‘consensus of the opportunity set available in the U.S. universe of target date funds.’”

As for the latter, at the time he noted that “the Sharpe ratio is a measurement of investment performance that considers ‘risk-adjusted return[s],’” and in so doing purportedly “accounts for differing levels of risk by measuring the performance of an investment, such as a TDF, compared to the performance of similar investments, after adjusting for risk.”

That said, and after a recitation of the history of the suit and responses in this case, Judge Nachmanoff then summed up the current (re) arguments thusly; “Plaintiff alleges in conclusory fashion that the ‘fiduciaries here employed a fundamentally irrational decision-making process (i.e., inconsistent with their duty of prudence)’” — and then went on to comment that the Amended Complaint “is completely devoid of facts about the particular decision-making process undertaken by Defendants with respect to the Plan at issue here.”

We’ll see if the appellate court has a different take. Stay tuned.


[i] The suits have also been filed on behalf of participants in in the 401(k) plans of Citigroup Inc., Cisco Systems Inc., Genworth, Stanley Black & Decker Inc., Microsoft, Marsh & McLennan Cos., Advance Publications, and Wintrust Financial Corp. — all holders of the BlackRock LifePath Index Funds. Representing the plaintiffs in each of these suits is the law firm of Miller Shah LLP — which has also targeted the Fidelity Freedom funds in a series of suits (albeit on different grounds).