NVIDIA 401(k) lawsuit swatted down, for now
The court granted a motion to dismiss the claims against the company, although the plaintiffs have 30 days to amend their complaint to address its shortcomings.
Technology firm NVIDIA this week received a temporary win in a lawsuit it has faced over alleged fiduciary breaches tied to its 401(k) plan.
On Monday, a judge in U.S. District Court in the Northern District of California granted a motion to dismiss the claims against NVIDIA, although the plaintiffs have 30 days to amend their complaint to address its shortcomings.
The case is one of many brought recently by law firm Capozzi Adler.
The plaintiffs alleged that NVIDIA, the sponsor to the nearly $1.5 billion plan, ran afoul of the Employee Retirement Income Security Act by allegedly failing to opt for lower-cost share classes of mutual funds, failing to choose collective investment trusts, not including passively managed funds rather than active ones, selecting higher-cost funds in general and paying excessive fees to the plan’s record keeper, Fidelity.
The defendants raised several issues with the complaint — including that allegations that the plan did not include a K share class of Fidelity’s Contrafund were bogus, as the plan did include it until 2018, when it replaced the fund with a lower-cost commingled fund, according to the order.
The judge also noted that comparisons the plaintiffs made between share classes within the plan and lower-fee varieties were not ideal. The higher-cost share classes in the plan included revenue sharing, which was used to pay for administrative expenses, while the comparator funds did not.
Similarly, comparisons between the mutual funds used in the plan and CITs that were available were inappropriate as the products’ features are different, the court noted.
And while the plaintiffs cited excessive fees paid for record keeping, they did not show how the fees paid in relation to the services provided to the plan were out of line, according to the order.
The complaint had also alleged a fiduciary failure for not regularly soliciting competitive bids for record keeping, but the judge noted that fiduciaries are not obligated to do so.
According to a court filing Wednesday, the plaintiffs are planning to file an amended complaint.
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