Omnicom ERISA Class Action Defeats Motion to Dismiss

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.

Miller Shah LLP is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, and Pennsylvania. The firm is an active member of Integrated Advisory Group (www.iaginternational.org), which provides clients access to excellent legal and accounting resources around the globe. For more information about the firm, please visit https://www.millershah.com.

Member IAG Global

Telephone: 866-540-5505 • Fax: 866-300-7367 | Se habla Español

California – Los Angeles Area

19712 MacArthur Boulevard, Suite 222
Irvine, CA 92612
Map and Directions

California – San Diego

1230 Columbia Street, Suite 1140
San Diego, CA 92101
Map and Directions

California – San Francisco

456 Montgomery Street, Suite 1900
San Francisco, CA 94104
Map and Directions

Connecticut

65 Main Street
Chester, CT 06412
Map and Directions

Florida

1625 N. Commerce Pkwy, Suite 320
Fort Lauderdale, FL 33326
Map and Directions

New Jersey

2 Hudson Place, Suite 100
Hoboken, NJ 07030
Map and Directions

New York

225 Broadway, Suite 1830
New York, NY 10007
Map and Directions

Pennsylvania

1845 Walnut Street, Suite 806
Philadelphia, PA 19103
Map and Directions

Affiliate Office –  Milan, Italy