Chalk up another win for plan fiduciaries in the ongoing wave of forfeiture reallocation suits — and this time, the plaintiffs didn’t even get the courtesy of a do-over.
The Case
Roughly a year ago, participant Guadalupe Cano sued Home Depot and the administrative committee of its FutureBuilder Plan. The allegations? Breach of fiduciary duty, violation of ERISA’s anti-inurement provision, and engaging in prohibited transactions.
But the heart of the complaint was about how forfeitures were used. Cano argued that Home Depot consistently failed to use forfeited funds to pay plan administrative expenses — money that, in her view, should have reduced the amounts charged to participant accounts. Instead, forfeitures were reallocated to offset employer contributions.
She claimed millions of dollars in contributions between 2018 and 2022 were reduced because of this practice. Cano further argued that Home Depot failed to investigate alternatives or consult independent experts, painting the company’s actions as disloyal and imprudent.
The Decision
Judge Tiffany R. Johnson of the Northern District of Georgia was not persuaded. While she acknowledged that forfeitures are plan assets and that Home Depot was acting in a fiduciary role when deciding how to allocate them, she found no breach of duty.
Why? Because the plan document itself allowed the company to use forfeitures either for administrative costs or for employer contributions. That choice is not prohibited by ERISA. Judge Johnson went further, emphasizing that ERISA doesn’t require fiduciaries to eliminate participant expenses entirely or to maximize participant benefits at all costs. The law requires prudence under the circumstances and adherence to plan terms — and Home Depot checked those boxes.
On the anti-inurement charge, the court was blunt: forfeited funds never left the plan, so there was no self-dealing. As for prohibited transactions? No transaction, no claim.
Finally, when plaintiffs asked for another shot at reframing their arguments, the judge shut the door. Amendment would be futile, she said, given the clear language of the plan and decades of regulatory guidance supporting this type of forfeiture use.
What This Means
Forfeiture suits have been cropping up all over the country, and while outcomes have varied, this ruling fits the emerging trend: if the plan document permits reallocating forfeitures and the practice aligns with long-standing IRS and Treasury regulations, fiduciaries are on solid ground.
Home Depot’s win underscores a basic but crucial point for plan sponsors: document terms matter. As long as you follow the plan and the regulations, courts are increasingly unwilling to stretch ERISA to create new obligations.
And in this case, the judge also made clear she wasn’t going to let plaintiffs keep rolling the dice until they finally hit a sympathetic ear. That’s an important message for the litigation environment going forward.
For fiduciaries, the takeaway is reassuring: consistency with plan terms and regulatory history remains the strongest defense against these creative — but ultimately unsuccessful — forfeiture claims.