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Court Denies Motion to Dismiss in L Brands ERISA Lawsuit

On September 16, 2021, a district judge for the United States District Court for the Southern District of Ohio determined that a proposed class action lawsuit against L Brands, Inc., L Brands Service Company, LLC, and its Retirement Plan Committee, (collectively, “L Brands,” the “Company,” or “Defendants”) was fit to proceed, denying the Company’s attempt to dismiss the action. The lawsuit was brought on behalf of participants and beneficiaries of the plan, who allege that the company mismanaged its defined contribution plan (the “Plan”).

L Brands, otherwise known as Bath & Body Works, Inc., is a Fortune 500 company. Like many employers, L Brands offers a defined contribution 401(k) retirement plan, the L Brands Inc. 401(k) Savings and Retirement Plan (the “Plan”), to its employees. Defined contribution plans, such as 401(k) plans, have largely replaced defined benefit plans, such as pension plans, as the most popular form of retirement for private sector workers in the United States. [1] In fact, employer-provided defined benefit plans have become rare as an offered and meaningful employee benefit. Consequently, the importance of defined contribution plans to the U.S. retirement system has become increasingly pronounced.

Defined contribution plans are governed by the Employee Retirement Income Security Act of 1974 (“ERISA”), a federal statute establishing standards, known as fiduciary duties, for plan administrators to ensure that investments offered to employees are prudently selected and monitored. ERISA Section 502(a)(2), 29 U.S.C. § 1132(a)(2), authorizes any plan participant, fiduciary, or the Secretary of Labor to bring suit as a representative of a plan to recover damages resulting from a breach of those fiduciary duties.

Plaintiffs, represented by Miller Shah LLP, allege that L Brands breached its fiduciary duties under ERISA by: (1) allowing Plan participants to pay unreasonably excessive administrative and investment management fees; and (2) selecting and retaining high-cost investments instead of offering more prudent alternative investments when such prudent investments were readily available.

Specifically, Plaintiffs challenge the inclusion of the higher-cost Artisan International Investor share class instead of the lower-cost Artisan International Institutional share class, alleging that this fund was and continues to be an imprudent investment that should not be offered to Plan participants.

On February 12, 2021, L Brands filed two separate motions to dismiss the lawsuit, arguing that the District Court lacked subject matter jurisdiction over Plaintiffs’ claims and that Plaintiffs failed to state a claim upon which relief may be granted.

The District Court denied both of Defendants’ motions to dismiss on September 16, 2021. Citing precedent established in similar ERISA cases, such as In re Omnicom ERISA Litig., Case No. 1:20-CV-04141-CM, the Court held that Plaintiffs’ allegations challenging L Brands’ imprudent investments and excessive administrative and investment management fees were sufficient at this stage of the litigation. The parties will now proceed to discovery and prepare for summary judgment or trial.

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 the lawsuit is Allison v. L Brands, Inc. et al., Case No. 2:20-cv-06018-EAS-CMV, filed in the United States District Court for the Southern District of Ohio.

The legal team at Miller Shah LLP has significant experience representing 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.

[1] As of March 2021, 53% of private sector workers had access to defined-contribution plans, 3% had access to defined-benefit plans, and 12% had access to both. U.S. Bureau of Lab. Stat., Nat’l Compensation Survey: Employee Benefits in the United States 195 (2021), https://www.bls.gov/ncs/ebs/benefits/2021/employee-benefits-in-the-united-states-march-2021.pdf.

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