ERISA Class Action Review – 2025

put forfeited plan contributions toward current employees’ accounts rather than defraying the plan’s administrative expenses. Id. at *1. The court found multiple plausible claims in this challenge and accordingly denied the defendants’ motion to dismiss. Id. at *2. First, the court noted that the plaintiff plausibly claimed a breach of fiduciary duty because this choice of defendant-employers allegedly put their interests above the interests of plan participants. Id. at *8. Next, the court determined that the plaintiff plausibly claimed a breach of the duty of prudence because this choice allegedly harmed the participants by letting the administrative expense charge fall on them rather than the employer. Id. at *9. Additionally, the court ruled that the plaintiffs stated a viable claim under § 1103(c)(1)’s anti-inurement principle, which provides that “the assets of a pension plan shall never inure to the benefit of any employer and shall be held for the exclusive purposes of providing benefits to the participants in the plan and their beneficiaries and defraying reasonable expenses of administering the plan.” Id. (quoting 29 U.S.C. § 1103(c)(1)). The court also found a plausible claim under § 1106, which prohibits transactions with parties-in-interest and transactions benefitting fiduciaries involving a plan’s “property” or “assets.” Id. at *15-16. Finally, the court noted that because the plaintiff sufficiently alleged all of these violations, the plaintiff’s derivative claim for violation of duty to monitor also stated a plausible claim for relief and survived the motion to dismiss. Id. at *23. In Rodriguez, et al. v. Intuit Inc. , 2024 U.S. Dist. LEXIS 143105 (N.D. Cal. Aug. 12, 2024), the court denied a motion to dismiss on a similar challenge that the defendants used forfeited non-vested accounts to reduce its own matching contributions to a pension benefits plan. Id. at *1-2. The plaintiff also sufficiently alleged a breach of fiduciary duty by plausibly alleging that the plan did not authorize the defendants’ decisions with respect to the use of forfeited matching contributions. Id. at *16. The court noted, however, that even if the defendants had complied with the terms of the plan document, it would still be possible to find that they breached their fiduciary duties of loyalty and prudence by making decisions that were not in the best interest of plan participants. Id. at *16-18. The court also opined that the plaintiff presented plausible claims for unlawful inurement under § 1103(c)(1) and for prohibited transactions under § 1106. Id. at *24, *29. In Middleton, et al. v. Amentum Government Services Parent Holdings, LLC , 2024 U.S. Dist. LEXIS 144709 (D. Kan. Aug. 14, 2024), the court granted the plaintiffs leave to amend a pending class action complaint to add allegations and claims related to the defendants’ use of forfeited funds to reduce company contributions to plans. Id. at *3-6. The defendants argued that the amendment would be futile because these claims could not withstand a motion to dismiss. Id. at *14. However, the court found that it would be most efficient for the plaintiffs to file an amended complaint and for the defendants to challenge the sufficiency of the allegations at that time. Id. at *16-17. Even in cases where defendants’ motions to dismiss were granted, courts acknowledged that these types of ERISA claims are viable in specific circumstances. For example, in Naylor, et al. v. BAE Systems, Inc. , 2024 U.S. Dist. LEXIS 160188 (E.D. Va. Sep. 5, 2024), the court granted the defendant’s motion to dismiss specifically because the plan gave “unambiguous, mandatory directions” that forfeitures would be used to reduce future employer contributions. Id. at *10-13. The court distinguished this conclusion from the conclusions reached in Perez-Cruet and Rodriguez by pointing out that the plan fiduciaries in those cases had discretionary authority over forfeited funds. Id. at *18, n.8. Furthermore, in Hutchins, et al. v. HP Inc. , 2024 U.S. Dist. LEXIS 107306 (N.D. Cal. June 17, 2024), the court granted the defendants’ motion to dismiss, but allowed the plaintiff leave to amend the complaint. Id. at *2. The court found the plaintiff’s allegations to be too broad, explaining that, “as pled, Plaintiff’s theory would require any fiduciary to use forfeited amounts to pay administrative costs regardless of any such context or circumstances.” Id. at *18. However, the court recognized the possibility for the plaintiff to allege disloyalty or imprudence based on “more particularized facts or special circumstances present in this case,” and so it granted the plaintiff leave to amend to narrow these claims. Id. at *21-22. On the § 1103(c)(1) anti-inurement issue, the court granted leave to amend to allege more specific facts showing that forfeited amounts were reverted or diverted to the defendants and/or that forfeited amounts were used to offset outstanding and unpaid obligations. Id. at *30. Similarly, on the § 1106 prohibited transaction issue, the court allowed leave to amend to allege more particular facts that might show a prohibited transaction. Id. at *34. Overall, the court recognized that plan sponsors’ use of forfeited funds could give rise to claims under the ERISA. 2. The Application Of The ERISA To Socially And Environmentally Conscious Investment Practices

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