Judge Denies Motion to Dismiss – PNC ERISA Class Action

On March 31, 2022, the Honorable Christy Wiegand, a Judge for the United States District Court in the Western District of Pennsylvania, granted in part and denied in part Defendants’ motion to dismiss a class action claiming PNC Financial Services Group Inc. (“PNC” or the “Company”) mismanaged its 401(k) retirement plan.

The PNC Financial Services Group Inc. Incentive Saving Plan (the “Plan”) serves as a vehicle for PNC employees to contribute funds as a deduction of their paychecks to different investments, including mutual funds and PNC common stock.

Defined contribution 401(k) plans, like the Plan, are governed by the Employee Retirement Income Security Act of 1974 (“ERISA”), a federal statute establishing standards for plan administrators to ensure that investments offered and fees charged to employees are diligently selected and monitored. Section 502(a)(2) of ERISA, 29 U.S.C. § 1132(a)(2), authorizes plan participants to bring suit as representatives of a plan to recover any damages caused by violation of the statute.

Plaintiffs, represented by Miller Shah LLP, argue that PNC’s Administrative Committee (“Committee”) breached its fiduciary duties under ERISA. The lawsuit specifically alleges that the Committee mismanaged the Plan by allowing unreasonable recordkeeping and administrative expenses to be charged to Plan participants, thereby reducing their investment income. Plaintiffs also allege that PNC failed to monitor the actions of the Plan administrators, and, lastly, that if the Plan administrators are not deemed fiduciaries of the Plan, they should be held liable for cooperating with or otherwise ignoring the mismanagement of the Plan.

Defendants moved to dismiss the case, arguing that Plaintiffs failed to demonstrate any concrete injuries and therefore lacked standing to bring suit. Defendants also argued that Plaintiffs failed to adequately allege sufficient facts about the process PNC employed to select Plan service providers to pleasurably infer that the Plan fiduciaries breached their duties to the Plan.

On March 31, Judge Wiegand sustained Plaintiffs’ claim that Defendants breached the fiduciary duty of prudence, as well as Plaintiffs’ failure to monitor co-fiduciaries and non-fiduciary liability claims. The Court explained that Plaintiffs’ allegations comparing PNC’s high annual recordkeeping fee of more than $50 per participant to similar plans with lower fees created a plausible inference that PNC “failed to scrutinize the prevailing rates” for 401(k) plan recordkeeping services.

The parties will now progress through document discovery towards 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 Johnson et al v. PNC Financial Services Group, Inc. et al, Case No. 20-cv-01493, filed in the United States District Court for the Western District of Pennsylvania.

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 Berlin (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 www.millershah.com.

Leave a Comment

Member IAG Global

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

California – Los Angeles Area

19712 MacArthur Boulevard
Irvine, CA 92612
Map and Directions

California – San Diego

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

California – San Francisco

3 Embarcadero Center, Suite 1650
San Francisco, CA 94111
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