U.S. District Judge Claudia Ann Wilken refused to rethink the certification of a class of Franklin Templeton retirement plan participants. Plaintiffs allege the investment management company favored its own funds over cheaper and more efficient outside funds – in violation of the Employee Retirement Income Security Act (ERISA).
The company, Franklin Resources, Inc. filed a motion that the court amend the order to deny lead plaintiff Marlon H. Cryer’s motion for class certification. The motion was denied with the judge ruling that a class action waiver in a severance agreement signed by Cryer cannot be used against him since claims he brought were in accordance with ERISA Section 502(a)(2) and on behalf of the plan. She specifically stated that the decision regarding such a claim’s filing under that particular section of code couldn’t be bargained away without the consent of the plan.
Preventing individual plan participants from bringing Section 502(a)(2) claims as a class action could effectively prevent fiduciaries from being held accountable in court in the event that they are involved in wrongdoing. The judge previously ruled that the claims Cryer made were typical of the proposed class and that the common issues of law were appropriately identified. It was also noted that if each of the thousands of proposed class members were forced to litigate individually, it would result in a significant risk of inconsistent judgments.
The class members include plan participants from July 28, 2010 through the date of an eventual judgment.
The lead plaintiff, Cryer, is a former Franklin Templeton employee. He was terminated from his position in February 2016 and filed the lawsuit the following July alleging the company violated its fiduciary duty to its plan participants. Specifically, he claims that the company invested in in-house funds with unreasonable fees that were, in fact, paid to the company itself and some of its subsidiaries. The fees associated with the in-house funds were significantly higher than the fees that were being charged by other, similar mutual funds that were available.
Cryer alleges that retirement plan participants were offered a Franklin Templeton money market funds in the place of a stable value fund, which is not the norm and resulted in higher fees that were routed back to the company.
If you have similar allegations or need to ask questions about ERISA violations, please get in touch with one of the experienced California employment law attorneys at Blumenthal, Nordrehaug & Bhowmik.