On May 25, 2022, a District Judge for the District of Connecticut certified a class of over 11,000 current and former participants of the Eversource 401(k) Plan (“Plan”) in an ERISA lawsuit against Eversource Energy Services Company (“Eversource”), the Board of Directors of Eversource Energy Service Company, the Eversource Plan Administration Committee, and the Eversource Investment Management Committee (collectively, “Defendants”), alleging mismanagement of the Plan.
Eversource is the plan sponsor for the Eversource 401(k) Plan (the “Plan”). With assets totaling over $3 billion, the Plan is in the top 0.1% of all defined contribution plans by size. Importantly, large plans like the Plan have substantial leverage to negotiate for lower fees and expenses charged against plan participants’ investments.
Defined contribution plans 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 to employees are prudently selected and monitored.
Plaintiffs, represented by Miller Shah, allege that Eversource violated 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/or otherwise ratifying high-cost and poorly-performing investments, instead of offering more prudent alternative investments when such prudent investments were readily available at the time that they were chosen for the Plan and throughout the relevant period. Notably, the named Plaintiffs, who moved to be the class representatives, invested in 14 out of the 19 investment options available to Plan participants.
Specifically, Plaintiffs contend that the actively managed Fidelity Freedom Funds, the Morgan Stanley Institutional Fund Emerging Markets Portfolio I, the Frank Russell Small Cap Collective Trust, and the Morgan Stanley Institutional Fund Small Company Growth Portfolio I were—and continue to be—imprudently offered to Plan participants.
In November 2020, Eversource moved to dismiss the lawsuit, arguing that the class representatives did not personally claim to have been harmed by the allegedly imprudent investment options and therefore lacked constitutional standing to pursue claims relating to those 14 investments. Plaintiffs opposed the motion.
Plaintiffs subsequently moved to certify the lawsuit as a class action, thereby combining the claims of “all participants and beneficiaries in the Plan at any time on or after June 30, 2014 to the present” into one lawsuit. Defendants opposed the motion.
In May 2022, the District Court granted Plaintiffs class action status, finding that they had satisfied each of the four principal requirements of class actions: numerosity, commonality, typicality, and adequacy of representation for both imprudent investments claims and recordkeeping fee claims. Since Plaintiffs are no longer participants in the Plan, the class is certified only as to the plaintiffs’ claims for relief from past losses.
An update to this lawsuit can be found here. The caption for the lawsuit is Kimberly Garthwait et al v. Eversource Energy Company et al., Case No. 3:20-cv-00902(JCH), filed in the District of Connecticut.
The legal team at Miller Shah LLP has significant experience representing class action matters. If you have any questions regarding this subject or this post, please contact Jacob Levin (firstname.lastname@example.org) or Alec Berin (email@example.com). The firm can also be reached toll-free at (866) 540-5505.
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