On April 5, 2022, Deborah Locascio and David Summers (“Plaintiffs”) filed an amended complaint against their former employer, Fluor Corporation (“Fluor”), and Mercer Investments (“Mercer”) in the United States District Court for the Northern District of Texas.
Fluor is the plan sponsor for the Fluor Corporation Employees’ Savings Investment Plan (the “Plan”). As of December 31, 2020, the Plan had more than 15,000 participants with account balances and assets totaling nearly $3.5 billion, placing it in the top 0.1% of all defined contribution plans by plan size.
Plaintiffs, represented by Miller Shah LLP and Fee Smith Sharp and Vitullo LLP, allege that Fluor, a Texas-based construction and engineering company, breached its fiduciary duties under the Employee Retirement Income Security Act of 1974 (“ERISA”) by: (1) failing to fully disclose the expenses and risk of the Plan’s investment options to participants; (2) allowing unreasonable expenses to be charged to participants; and (3) selecting, retaining, and otherwise ratifying high-cost and poorly-performing investments, instead of offering more prudent alternative investments readily available at the time and throughout the Class Period.
Plaintiffs specifically contend that twelve of the Plan’s funds, including the nine actively managed Fluor Target Date Funds (“TDFs”) managed by BlackRock, Inc., The Custom Large Cap Equity Fund, The Custom Small/Mid Cap Equity Fund, and The Custom Non-U.S. Equity Fund were and continue to be imprudent investments that should not have been offered to Plan participants.
Plaintiffs allege that the Fluor TDFs, which were and are nearly identical to the BlackRock LifePath Index Funds, consistently underperformed their peer TDFs available in the marketplace. Plaintiffs allege that The Custom Large Cap Equity Fund (0.30% expense ratio), The Custom Small/Mid Cap Equity Fund (0.46% expense ratio), and The Custom Non-U.S. Equity Fund (0.39% expense ratio) all were more expensive than and significantly underperformed their respective index counterparts: the S&P 500 Index (0.05% expense ratio), the Small/Mid Cap Equity Index Fund (0.06% expense ratio), and the Non-U.S. Equity Index Fund (0.11% expense ratio).
Furthermore, Plaintiffs allege that Mercer breached its fiduciary to the Plan by failing to replace the challenged investments mentioned above. Mercer became the Plan’s ERISA section 3(38) investment advisor in 2017, meaning it had the discretion to replace these investments.
Defendants have until June 13, 2022 to file a motion to dismiss the amended complaint.
Updates will be posted to this blog as the matter progresses. The case caption is Locascio et al v. Fluor Corporation et al., No. 3:22-cv-00154-X, filed in the Northern District of Texas.
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 Jonathan Dilger (jadilger@millershah.com) or Jacob Levin (jrlevin@millershah.com). The firm can also be reached toll-free at (866) 540-5505.
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