Add Clean Harbors to the list of companies embroiled in ERISA litigation.
A former employee enrolled in the environmental services giant’s 401(k) plan sued the company and the plan fiduciaries earlier this month, alleging violations of the Employee Retirement Income Security Act pertaining to the selection and retention of certain investments, as well as higher-than-necessary investment fees.
The participant, Adam Kruzell, is seeking class-action status, arguing that the ERISA violations began on April 9, 2016.
"At all relevant times, the plan's investment fees, specifically its share classes and its stable value fund offerings, were objectively unreasonable and excessive when compared with other materially identical investment options offered by other sponsors that had similar numbers of plan participants," said the complaint in Kruzell vs. Clean Harbors Environmental Services Inc.
The complaint was filed April 10 in U.S. District Court in Boston. Clean Harbor Savings and Retirement Plan, based in Norwell, Massachusetts, had $814 million in assets as of Dec. 31, 2020, according to the plan's latest Form 5500.
"During the entirety of the class period, [the] defendants did not conduct an impartial and objectively reasonable review of the plan's investments on a quarterly basis [and] did not identify the prudent share classes available to the plan," the complaint said, adding that the plan's fiduciaries "did not transfer the plan's investments into this prudent share class at the earliest opportunity."
Under ERISA, plan fiduciaries must discharge their duty of prudence “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.”
The plaintiff’s suit also maintains that Clean Harbors pushed plan members into pricey stable-value funds without a “viable methodology for monitoring the costs” even when fact sheets at competing funds were readily available had the company “exercised a minimal amount of due diligence."
The Clean Harbors suit arrives in the wake of a number of high-profile ERISA complaints over the past 12 months.
Last week, a federal court judge in Los Angeles rejected a request by VCA Inc. to dismiss an ERISA complaint filed by 401(k) plan participants blaming the plan's fiduciaries of mismanagement.
The plaintiffs in Smith et al. vs. VCA, who are also seeking class-action status, sued the veterinary hospital chain in November 2021, alleging that plan participants had no choice but to pay "excessive" management fees between November 2015 and July 2020.
U.S. District Judge George H. Wu rejected the motion to dismiss on April 7, saying the "plaintiffs' allegations are sufficient to state a claim for breach of the fiduciary duty of prudence."
The plan represented more than 11,600 participants as of the end of 2019 and had more than $563 million in assets. However, the plan was merged last year with the larger Mars Veterinary Health 401(k) Savings Plan, which according to data from the Department of Labor represented about $859 million among 2,400 participants. That followed Mars’ 2017 acquisition of VCA.
Meanwhile, up the coast in San Francisco, a federal appeals court in San Francisco last week overturned a lower court's dismissal of an ERISA complaint against Trader Joe's Co. and the company's 401(k) plan fiduciaries.
In the Trader Joe’s case, current and former participants in the grocery chain's retirement plan alleged the sponsor of the $1.7 billion 401(k) “did not try to reduce the plan’s expenses or exercise appropriate judgment to scrutinize each investment option that was offered in the plan to ensure it was prudent.”
"The district court erred in dismissing plaintiffs' claim for breach of fiduciary duty," a three-judge panel of the 9th U.S. Circuit Court of Appeals ruled in the case of Kong et al. vs. Trader Joe's Inc. et al., sending it back to U.S. District Court in Los Angeles.
"Here, the operative complaint plausibly alleges a failure to provide cost effective investments with reasonable fees," the appeals court judges wrote.
A private partnership, Edward Jones is a giant in the retail brokerage industry with more than 20,000 financial advisors.
Meanwhile, Raymond James and Tritonpoint Partners separately welcomed father-son teams, including a breakaway from UBS in Missouri.
Paul Atkins has asked staff to solicit public comment on novel ETFs, pausing the clock on as many as 24 filings linked to the booming event contracts market.
From 401(k)s to retail funds, Deloitte sees private equity and credit crossing into mainstream investing on two fronts at once.
Big-name defections from Morgan Stanley, UBS, and Merrill Lynch headline a busy two weeks of recruiting for the wirehouse.
Wellington explores how multi strategy hedge funds may enhance diversification
As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management
