Vail 401(k) lawsuit dismissed

Vail Resorts on Wednesday won dismissal of a lawsuit over the Colorado-based skiing company’s 401(k) plan.

The company, which owns and operates numerous ski resorts and retail businesses, was sued in February 2020.

The law firms representing one plaintiff and a proposed class alleged that Vail did not prudently select and monitor the plan’s investment options. Many of the mutual funds within the plan menu were not of the lowest-cost share class available, and the fiduciaries allegedly failed to consider cheaper, passively managed options, the complaint noted.

In a Jan. 6 order, U.S. District Court Judge R. Brooke Jackson approved a motion to dismiss. The case was dismissed with prejudice, meaning that the plaintiffs cannot file an amended complaint at the district court level to address the problems in their case.

The plan had about $384 million in 401(k) plan assets among more than 33,000 participants as of the end of 2019, according to data from the Department of Labor.

The defendant sought dismissal based on the plaintiff's having personally invested in only five of the 15 funds called out in the complaint. However, Jackson found that that issue would be better addressed through class certification and did not dismiss the case based on the plaintiff’s own lack of investment.

But that finding was irrelevant, given that the case could be dismissed for other reasons, the judge wrote. The plaintiff’s claims for breaches of fiduciary duties of prudence and loyalty failed, largely because the complaint did not successfully point to any problems with Vail’s procedure for selecting and monitoring funds.

“Much of plaintiff’s complaint is taken up by statements explaining what ERISA requires, or providing generic background about performance of different types of investment funds,” Jackson wrote. “The deceptively long complaint can thus be boiled down to a few factual allegations.”

Plaintiffs can have difficulty gathering the information necessary to show problems with a fiduciary’s procedures, and some courts have recognized that, allowing cases to proceed based on “circumstantial factual allegations that the process was flawed.”

But “nowhere in the complaint does plaintiff allege anything imprudent about defendant’s process. In fact, it does not address at all Vail’s process for selecting or retaining fund options, monitoring expenses, or managing the overall plan,” the judge wrote. “The allegations related to three-year investment returns depend on hindsight and say nothing about the information defendant had available to it at the time it was making decisions regarding the plan.”

Further, there were no allegations about self-dealing, kickbacks or inappropriate influence that would have hinted at fiduciary violations, according to the order.

A law firm representing the plaintiff did not respond to a request for comment on whether it planned to appeal the order. The case was brought by law firms Baird Quinn, Greg Coleman Law, Crueger Dickinson and Jordan Lewis.