Recently, in Davis v. Salesforce.com, a California district court dismissed for the second time claims alleging that the defendant 401(k) plan fiduciaries breached their ERISA fiduciary duties by retaining overpriced and underperforming investment options on the plan’s investment menu. Our previous post on that dismissal is available here.

That decision is one in a deluge of similar, recent rulings setting forth differing and sometimes discordant opinions on what is required to state a plausible ERISA fiduciary breach claim challenging defined contribution plan investment menus and recordkeeping fees.  Some, like Salesforce.com, have declined plaintiffs’ invitation to second-guess ERISA fiduciaries’ decision-making and have dismissed the claims on the grounds that allegations that cheaper or better performing, but dissimilar investments were available on the market does not raise an inference that the fiduciaries breached any fiduciary duty by retaining the plan’s investments.  Other courts have sustained the claims, allowing plaintiffs to seek discovery on the fiduciaries’ processes for selecting investment options and service providers.

Although the majority of Circuit courts that have addressed these issues have affirmed dismissal,  some have reversed dismissal and remanded for further consideration.  Thus, the noticed appeal in Salesforce.com joins the list of anticipated decisions that could provide clarity on this issue. The Second Circuit is queued to address similar issues in Cunningham v. Cornell University, et al. and Sacerdote v. New York University, and the U.S. Supreme Court has requested the views of the Acting Solicitor General on the pending petition for certiorari of the Seventh Circuit’s decision in Hughes v. Northwestern University.  Jackson Lewis’ ERISA Complex Litigation Group is closely monitoring these matters.

The referenced cases are: Davis v. Salesforce.com, Inc., No. 20-cv-01753 (N.D. Cal.); Cunningham v. Cornell University, et al., No. 21-88 (2d Cir.);  Sacerdote v. New York University, No. 18-2707-cv (2d Cir.); and Hughes v. Northwestern University, et al., No. 19-1401 (U.S.).

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Photo of Stacey C.S. Cerrone Stacey C.S. Cerrone

Stacey C.S. Cerrone is a principal and office litigation manager of the New Orleans, Louisiana office of Jackson Lewis P.C. and a core member of the Employee Benefits and the ERISA Complex Litigation practice teams. Her nationwide practice focuses on the defense of…

Stacey C.S. Cerrone is a principal and office litigation manager of the New Orleans, Louisiana office of Jackson Lewis P.C. and a core member of the Employee Benefits and the ERISA Complex Litigation practice teams. Her nationwide practice focuses on the defense of complex ERISA class actions filed against public and private single employer ERISA plan sponsors and fiduciaries, as well as multi-employer plans and fiduciaries and ERISA plan services providers. Stacey litigates a wide variety of class action claims, including 401(k) fee claims, stock drop claims, “church plan” and “government plan” claims, health and welfare plan claims, and ERISA Section 510 claims.  She also litigates ERISA benefit claims and claims involving non-ERISA plans.

Photo of Lindsey H. Chopin Lindsey H. Chopin

Lindsey H. Chopin is a principal in the New Orleans, Louisiana, office of Jackson Lewis P.C. and a member of the firm’s ERISA Complex Class Action, Employee Benefits and Class Action groups.

Lindsey focuses her practice on the defense of complex ERISA class-actions…

Lindsey H. Chopin is a principal in the New Orleans, Louisiana, office of Jackson Lewis P.C. and a member of the firm’s ERISA Complex Class Action, Employee Benefits and Class Action groups.

Lindsey focuses her practice on the defense of complex ERISA class-actions filed against public and private single employer ERISA plan sponsors and fiduciaries, as well as multi-employer plans and fiduciaries and ERISA plan services providers. She has litigated a wide variety of class action claims, including 401(k) fee claims, stock drop claims, defined benefit mortality assumption claims, “church plan” and “government plan” claims, health and welfare plan claims, and ERISA Section 510 claims. Lindsey also litigates ERISA benefit claims and claims involving non-ERISA plans.