The news comes trickling in for 401(k) plan providers and plan sponsors beating back class action lawsuits.
Many plan providers win their case as defendants because the plan participants fail to convince a judge that the provider serves in a fiduciary capacity. Plan sponsors often win, just because the plan participants showed that a certain decision like using revenue sharing funds was a clear breach of the sponsor’s fiduciary duty.
While plan providers and plan sponsors win their case, they have still lost. The news about them winning is far less public than the new about them getting sued in the first place. In addition, the cost of litigation is burdensome even if the providers and sponsors have fiduciary liability insurance.
There is no champagne celebration for winning a case on summary judgment because of the huge cost in publicity, time, and cost. Even if the plan provider and plan sponsor did nothing wrong, something they did suggest that there was impropriety that an ERISA litigator that was good enough in order to commence litigation.
So if a plan provider and plan sponsor have won their case, they’ve really won a hollow victory.
