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.
An update to this blog can be found here. 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).
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