On August 2, 2021, a District Judge in the United States District Court for the Southern District of New York ruled that the motion to dismiss the ERISA class action lawsuit against Omnicom Group, Inc. (“Omnicom”), the Administrative Committee of the Omnicom Group Retirement Savings Plan (“Administrative Committee”), and individual members of the Administrative Committee (collectively, “Defendants”) was granted in part and denied in part. All claims were allowed to proceed except allegations concerning two funds in which the plaintiffs did not participate.
Omnicom offers the Omnicom Group Retirement Savings Plan (the “Plan”), a defined contribution 401(k) savings plan monitored by the Administrative Committee. The Plan, with over 36,000 participants and nearly $2.8 billion in assets, is in the top 0.1% of all 401(k) plans by size. Participants can direct their contributions into various preselected investment options or allow their account balance to be automatically invested in the Plan’s qualified default investment alternative.
Plaintiffs, represented by Miller Shah LLP, alleged that Defendants breached their fiduciary duties under the Employee Retirement Income Security Act (“ERISA”) by selecting and maintaining underperforming and unreasonably expensive funds in the Plan and by allowing participants to be charged excessive recordkeeping and administrative fees.
In October of 2020, Defendants filed a motion to dismiss the case, arguing that (1) Plaintiffs lack Article III standing to bring any claim because they do not allege losses to their individual accounts, (2) Plaintiffs’ allegations fail to state a claim for breach of fiduciary duty, and (3) further allegations that rest on the breach of fiduciary duty claim should accordingly be dismissed. The motion was largely unsuccessful.
The Court only dismissed allegations related to funds in which the named Plaintiffs did not invest, reasoning that because the Plaintiffs could not have suffered any injury-in-fact from mismanagement of these funds, they lack Article III standing to bring those claims.
While many courts have maintained that plaintiffs injured by plan mismanagement may bring claims on behalf of other participants even if they were not invested in every challenged fund, the District Judge in this decision relied upon a distinction between defined benefit and defined contribution retirement plans in establishing injury-in-fact, holding that because Plaintiffs did not have a “concrete stake” in the funds in which they did not participate, they lacked Article III standing to bring such claims.
Updates will be posted to this blog as the matter progresses. A class has not yet been certified in this action. The case caption for this lawsuit is Carol Maisonette et al. v. Omnicom Group, Inc. et al., Case No. 1:20-cv-04141-CM, filed in the Southern District of New York.
The legal team at Miller Shah LLP has significant experience representing class action ERISA matters. If you have any questions regarding this subject or this post, please contact Alec Berin (ajberin@millershah.com) or Jonathan Dilger (jadilger@millershah.com). The firm can also be reached toll-free at (866) 540-5505.
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