While many of us in the retirement plan world were publicizing a class action lawsuit against a $9 million, apparently the plaintiffs had a change of heart.
The case was Damberg et al v. LaMettry’s Collision Inc. and the plaintiffs had alleged that the fiduciaries of their plan breached their duties under the ERISA by allowing excessive fees to be charged for plan investments, record keeping and administration.
Why was the case voluntarily dismissed? Beats me, maybe the plaintiff’s attorney figured there wasn’t much of a recovery for a $9 million 401(k) plan or maybe the plaintiffs had a change of heart. It really doesn’t matter if you think about it.
Why isn’t it important? Regardless of whether the plaintiffs would have recovered against the 401(k) plan, all that matters is that a small 401(k) plan was sued by plan participants. The headache of having to go through litigation takes enough time and money that it doesn’t matter when the defendant 401(k) plan fiduciaries wins or not. I once knew a union that won a class action 403(b) lawsuit. They had $1 million in legal fees which was paid by a fiduciary liability policy with a $100,000 deductible. The union won, but at what cost? I’m sure they regret every minute of it.
So the point is that it doesn’t matter that the plaintiffs had a change of heart, what matters is that a small 401(k) plan was sued because if one small 401(k) plan can get sued, there will be other small plans that will be too.