Critics of the trial bar have suggested for years that the rash of lawsuits against sponsors of mega 401(k) plans, which began in earnest about a decade ago, would ultimately encourage claims targeting sponsors of small plans.

That prospect could usher the unintended consequence of deterring small businesses from sponsoring retirement plans, critics of the trial bar claim.

To date, sponsors of micro and small 401(k) plans have been largely spared from lawsuits brought under the Employee Retirement Income Security Act, which makes any sponsor of a workplace retirement plan a fiduciary, regardless of its size.

Related: California judge says no quid pro quo between Chevron plan and Vanguard

But the allegations in Alana Schmitt v. Nationwide Life Insurance Co. introduce a new wrinkle in the prospect of small employers' liability under ERISA. The plaintiff is not suing her employer, but rather is asking the court to certify a class of claimants extending to the 37,000 plans and 2.4 million participants whose retirement assets use the Nationwide Retirement Flexible Advantage Retirement Plans Program as recordkeeper. The program offers services to plans with as little as $50,000 in assets. According to the claim, $114 billion in retirement assets are managed on Nationwide's small plan platform.

When asked to comment, Nationwide's representative issued this statement:  "We are aware of the recent fee allegation that has been made against us, and we are assessing the complaint. We are confident in the value of the services that we offer, and we will respond to the allegation accordingly."

In 2015, the Andrus Wagstaff plan was charged an asset-based fee of 1 percent for record-keeping services, amounting to $11,000, or $500 per the 22 participants at the time.

That cost amounts to a breach of ERISA's reasonable compensation requirement, according to the claim. "Nationwide's fees are almost 10 times more than the reasonable amount of compensation that should have been charged" to the plan.

Related: CalPERS loses as SCOTUS tightens investor suit deadlines

The plaintiff's attorneys use data from a 2016 plan survey published by NEPC, a fiduciary consultant to plan sponsors, to back their claim. NEPC showed the median per-participant record-keeping costs for the 117 plans it surveyed was $57.

What the lawsuit does not say is that the average size of the plans in NEPC's survey was $1.1 billion.

Nor does the lawsuit establish what specific services were delivered to participants in the Andrus Wagstaff plan, but provides only a general description of the services available to plans on Nationwide's platform, per language included on the recordkeeper's website.

In an attempt to establish a pattern of unreasonable fees, the claim cites data from several other plans for which Nationwide acted as recordkeeper, on Nationwide's small plan platform. One plan with $20.4 million in assets and 431 participants paid $134,000 in record-keeping fees, or 0.64 percent. Another plan with $21 million in assets paid $127,000, or 0.60 percent.

The lawsuit says Nationwide "unscrupulously" added charges of 75 to 100 basis points to the expense ratios on each of the 40 funds offered on the Andrew Wagstaff plan menu.

That net asset fee is charged to "recover expenses that may include compensation to financial advisors, administrative service fee payments, and any expense credits issued to the plan," and also "pays for services provided by Nationwide including access to a variety of investment options, the record keeping platform, customer service, etc.," the complaint says.

But the added costs on both proprietary and non-proprietary funds in the plan go beyond reimbursing Nationwide for expenses incurred by the firm, the complaint alleges, and provided Nationwide with "a substantial profit measured as a percentage of a plan's assets."

Is 1 percent abnormally high?

Larger defined contribution plans are able to leverage size to negotiate lower plan fees.

Several independent third-party providers offer fee benchmarking data.

According to the most recent edition of the 401(k) Averages Book, which collects data on 70 plan providers from fee schedules, industry requests for proposals, and fee disclosure forms, it shows the total plan costs for plans with $1.25 million in assets and 25 participants ranges from 66 basis points, or 0.66 percent, to 215 basis points, or 2.15 percent.

According to the most recent BrightScope/ICI Defined Contribution Plan Profile study, the average asset-weighted total plan cost for plans with $1 million to $10 million in assets in 2014 was 1.14 percent.

The lawsuit against Nationwide is unclear as to whether the 1 percent charged to the Andrus Wagstaff plan represents the total plan costs, or just the cost for record-keeping services.

Several inquiries for clarification to the lead law firm for the suit, Dyer, Garofalo, Mann, and Schultz, a Dayton, Ohio-based firm with 18 attorneys that specializes in personal injury claims, were not returned.

A reasonable fee for record-keeping services charged to the Andrus Wagstaff plan would have been $1,728, or about 16 basis points, according to the claim.

Brooks Herman, vice president for data and research at Strategic Insight, which recently acquired BrightScope, said record-keeping fees can be comprised of investment management fees, and investment management fees are often rebated to plans to pay for the plan administrative costs.

"What accounts for administrative costs in record-keeping fees, and what accounts for investment costs is often a murky line," Herman told BenefitsPRO.