Old Dominion Freight gets sued (again) by employees over its 401(k) plan
Just weeks after a federal judge dismissed an ERISA lawsuit against the company over allegations of excessive fees, another employee suit has been filed, claiming the 401(k) plan offered funds that performed worse than alternatives.
It must feel like déjà vu for Old Dominion Freight Line. The company faces a new ERISA lawsuit alleging excessive recordkeeping and investment fees just three weeks after a federal judge dismissed a similar case.
The new case, filed on behalf of a proposed class of 26,000 people on Sept. 27, said the Old Dominion retirement plan paid more than $10 million in excessive record-keeping and investment fees over the past six years.
“Old Dominion selected more-expensive share classes than identical less-expensive share classes of the same investments,” according to the new lawsuit, which was field in late September in Winston-Salem, N.C. “Except for the extra fees, the share classes are/were identical.” The employees accuse the defendant of breaching fiduciary duties to plan participants by offering a suite of J.P. Morgan target date funds that, according to the suit, perform worse than many similar mutual fund alternatives. The suit also alleges that Old Dominion allowed recordkeeper Empower Retirement to charge unreasonable recordkeeping fees to plan participants.
Three plan participants filed the complaint seeking class-action status in the case of Sealy et al. vs. Old Dominion Freight Line Inc. One participant, Harvey L. Wheeler, was the sole defendant in the lawsuit that was dismissed Sept. 6.
In the previous case, U.S. District Court Judge Thomas D. Schroeder ruled that “the complaint contains no factual support for the conclusory allegations that he personally invested in any of the imprudent investment options, nor that he suffered any other type of specific financial loss.”
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The law firms representing the three plaintiffs are the same as three of the four law firms that represented Wheeler in his lawsuit.
For certain investments, “Old Dominion failed to prudently monitor the plan to determine whether the plan was invested in the lowest-cost share class available for the plan’s mutual funds, which are identical to the mutual funds in the plan in every way except for their lower cost,” the latest lawsuit said.
The plaintiffs also allege that record-keeping payments to Empower Retirement are “grossly excessive,” adding that Old Dominion “should have done more to investigate, monitor, request, negotiate and secure reasonable fees for the plan.” Empower is not a defendant.
The Old Dominion retirement plan had $1.79 billion in assets at the end of 2022.