The Fourth Circuit affirmed Aon Hewitt Investment Consulting’s trial victory in a 250,000-member class action suit alleging that Aon breached ERISA’s fiduciary duties.

Aon was initially the Lowe’s 401(k) plan’s investment advisor and later was engaged as the plan’s 3(38) delegated fiduciary. The plaintiffs’ fiduciary breach claims alleged that, after being retained as a delegated fiduciary, Aon transferred plan assets to an Aon fund with an unproven track record that underperformed. Plaintiffs also claimed that Aon’s sales efforts to acquire delegated fiduciary work and their recommendation to streamline the Lowe’s 401(k) plan’s investment menu were self-motivated and not in the plan’s best interest. After a five-day trial, the district court ruled in favor of Aon.

The Fourth Circuit affirmed. Regarding Aon’s sales efforts, the Court held that this conduct was not investment advice and could not violate the duty of loyalty. As for Aon’s recommendation to streamline the plan’s investment menu, the recommendation was not motivated by self-interest: Lowe’s requested the meeting to discuss a potential structural change before Aon decided to pursue becoming a delegated fiduciary of the Lowe’s plan, Aon consistently recommended a plan structure that was less likely to lead to the engagement of a delegated fiduciary, and the plan’s committee chose the structural changes after determining that the structure was more straightforward for Plan participants to understand.   The Court agreed with the district court that Aon may have received an incidental benefit from the engagement, but their recommendations were not motivated by self-interest.

Concerning Aon’s selection and monitoring of their proprietary fund after its retention as a delegated fiduciary, the Court found that Aon engaged in a reasoned decision-making process when reviewing comparable funds and continued monitoring the fund upholding their duty of prudence. The Court reiterated that the duty of prudence is based on “process, not results.”

With this decision, the Fourth Circuit reiterates that, despite many plaintiffs’ successes in earlier litigation stages, a prudent process for selecting and monitoring investments can win the day for fiduciary breach claims. In addition, the opinion is noteworthy for delegated fiduciaries – and the plan sponsors and fiduciaries that engage them – because the Fourth Circuit declined to hold that a plan service provider that is a fiduciary retains that fiduciary status when cross-selling a new product or service to the plan. Other circuits had held that initial contract negotiation and sales efforts were not fiduciary conduct, but applying those conclusions to an existing fiduciary relationship is novel. 

If you have any questions, the Jackson Lewis ERISA Litigation Practice Group members are available to assist. Please contact a Jackson Lewis ERISA Litigation team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.

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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.

Lindsey is the author of several ERISA-related articles, including an article focusing on ERISA fee litigation that appeared in the Benefits Law Journal, and is a frequent speaker on ERISA and class action litigation issues, including e-discovery best practices and ethics and professionalism when using social media in litigation. She is a senior editor of Chapter 15 of Bloomberg BNA’s Employee Benefits Law treatise and a contributing author to the ERISA Fiduciary Answers Book and Chapter 39 of the sixth edition of Bloomberg BNA’s ERISA Litigation treatise published in November 2017.

Prior to joining Jackson Lewis, Lindsey practiced complex ERISA litigation for five years at a large, national firm and served as a one-year term clerk for the Honorable Carl J. Barbier in the United States District Court for the Eastern District of Louisiana.

While attending Loyola University School of Law, Lindsey was the articles and symposium editor of the Loyola Law Review and received the “Best Casenote Award” for her casenote analyzing the impact of Kasten v. St. Gobain Performance Plastics Corp., 563 U.S. 1 (2011), an FLSA matter decided by the U.S. Supreme Court.

Prior to attending law school and practicing law, Lindsey was a teachNOLA fellow and taught high school French in New Orleans’ public schools.