Chalk up another 401(k) excessive fee suit—the fifth for a relatively unknown set of litigants.
Those litigants—more precisely the attorneys representing the litigants—are Greg Coleman Law, Jordan Lewis PA, and Crueger Dickinson LLC. Their targets are smaller than have been the norm in such actions—but in less than a year they have filed suit against the 401(k) plans of Adidas America Inc., telecommunications provider West Corp., a subsidiary of Greystar Real Estate Partners LLC, and Cincinnati’s TriHealth Inc.
This time (Kurtz v. Vail Corp., D. Colo., No. 1:20-cv-00500, complaint 2/24/20) the target is the 401(k) plan of Vail Resorts, which as of 12/31/18 had 8,276 participants with account balances, and $309,822,304 in assets. The issue raised here (by plaintiff Debra Kurtz) involves the 27 different investment options in that plan, more specifically that, “for at least 18 of the 27 mutual fund share classes available within the Plan, the same issuer offered a different share class from that selected by the Plan that charged lower fees, and consistently achieved higher returns; the Plan, however, inexplicably failed to select these lower fee-charging and better-return producing share classes.”
The suit references the application of “a benchmarking analysis of the type often employed by fiduciaries and financial advisors shows that the administrative fees charged to Plan participants is greater than over 90 percent of its comparator fees when fees are calculated as cost per participant, or as a percent of total assets.” More specifically, they claim that in 2017, the Plan’s expenses amounted to .73% of assets under management, which they compute to being $314 per participant—and that, they claim is “nearly double those of the mean among 19 comparator plans with 5-10,000 participants of $179 per participant, and .2% of assets under management.” The suit also references a “per (one assumes they mean peer) group of 21 Plans with an asset range between $250 million and $500 million, the mean expenses were .43% of assets under management,” which they also state compares “unfavorably with the Plan’s fees representing .73% of assets.” This benchmarking tool contains “validated financial information from more than 55,000 financial plans of all types,” according to the suit.
“Their presence confirms more than simply sloppy business practice,” the plaintiffs argue, “their presence is the result of a breach of the fiduciary duties owed by Vail to Plan participants and beneficiaries. Prudent fiduciaries of 401(k) plans continuously monitor administrative fees against applicable benchmarks and peer groups to identify unreasonable and unjustifiable fees.
“The excessive fees led to lower net returns than participants in comparable 401k plans enjoyed,” the plaintiff argues, going on to claim that, “Vail is not a prudent fiduciary because it failed to continuously monitor the investment performance of its plan options against applicable benchmarks and peer groups, and it failed to identify and replace underperforming investments with better-performing and reasonably priced options.”
So—for this group of plaintiffs’ attorneys, anyway—the targeted plans are smaller (though not exactly small) than the customary targets. Their suits are also considerably shorter (this one a mere 24 pages), and to this writer’s eyes, less substantive than others of this genre. That doesn’t mean it won’t be well-received by a judge, of course. Time will tell.
