The latest chapter in the wave of forfeiture reallocation lawsuits comes from Armenta v. WillScot \/ Mobile Mini. The good news: most of the claims were dismissed. The caution: one prudence claim survived, and the court gave the plaintiff a chance to amend.<\/p>\n
What Happened<\/p>\n
The lawsuit challenged how plan forfeitures were used, arguing they should have been applied first to pay administrative expenses instead of reducing employer contributions. The court dismissed most counts, noting the plan document gave discretion by saying forfeitures \u201cmay\u201d be used for admin costs \u2014 not \u201cmust.\u201d Claims of disloyalty and prohibited transactions didn\u2019t stick.<\/p>\n
But one claim remains: whether fiduciaries acted prudently in their process. The court is allowing the plaintiff to try again, focusing on how decisions were made rather than what outcome occurred.<\/p>\n
Why It Matters<\/p>\n
This case reflects a broader pattern. Many forfeiture suits are getting tossed, but courts are open to claims that target the decision-making process. Judges aren\u2019t as interested in second-guessing outcomes as they are in whether fiduciaries engaged in a thoughtful, documented process.<\/p>\n
Lessons for Fiduciaries and Plan Sponsors<\/p>\n
\u00b7 Plan language matters. Words like \u201cmay\u201d versus \u201cmust\u201d can be the difference between discretion and liability. Review your documents and know what flexibility you have.<\/p>\n
\u00b7 Process is everything. Keep records of how decisions are made around forfeitures. Meeting minutes, comparisons, and documented alternatives can make or break a case.<\/p>\n
\u00b7 Dismissal isn\u2019t final. Plaintiffs often get another chance, as here. Even when claims are weak, expect persistence.<\/p>\n
\u00b7 Be proactive. Don\u2019t wait for a lawsuit to review your forfeiture provisions and fiduciary practices. A little preparation now is cheaper than defense later.<\/p>\n
Bottom Line<\/p>\n
The court\u2019s ruling is encouraging for fiduciaries \u2014 most of the claims didn\u2019t stick. But the fact that a prudence claim survived is a reminder: outcomes matter less than process. If you\u2019re making discretionary decisions about forfeitures, make sure the \u201cpaper trail\u201d shows a prudent, deliberate process.<\/p>\n
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