Allegations that Oracle Corp. did not do enough to monitor their retirement plan’s investment fiduciaries led to ERISA suit v. Oracle. Evolving since 2016, the ERISA lawsuit was recently granted class action status – potentially benefitting thousands.
Allegations included in the suit:
Fiduciaries acting on behalf of Oracle Corp. (Defendant) failed in their duties by investing in funds/investments that did not maintain the best interests of plan participants/investors. ERISA (the Employee Retirement Income Security Act) requires that fiduciaries maintain/manage investments in the best interests of investors. Plaintiffs were participants in the company’s 2016 benefit plan. They allege that the company failed to make prudent investment decisions and incurred tens of millions of dollars of excessive fees – effectively breaching their fiduciary duties.
According to the ERISA suit, Oracle paid a number of fees for record-keeping to Fidelity, Plan trustee, on a revenue sharing model that was calculated on Plan assets instead of the number of participants. Without a fixed fee per participant, the expenses were inflated and resulted in unreasonable fee amounts. With drastic increases in the fund assets, Fidelity’s revenue skyrocketed as well without any increase in the services they were providing.
In addition to failing to adequately monitor fiduciaries, plaintiffs allege that Oracle also kept poorly-performing funds that caused plan participants to suffer significant losses: Artisan, PIMCO and TCM.
Oracle argued that Fidelity was compensated with reasonable fees for the services provided and moved to have the suit dismissed. This motion to dismiss was denied in March 2017. In June 2017, plaintiffs moved for class certification and the judge approved class certification in January 2018.
The judge did specify that class certification reserved was to be reserved for claims related to excessive fees. The Judge found the original class definition to be too broad. The judge created two other classes for plan participants that invested in the “under-performing” funds (Artisan and TCM), but did not create a third for the allegedly under-performing PIMCO fund because there was not class representative available.
If you have questions or concerns about ERISA suit class certification or fiduciary duty violations, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.