Miller Shah LLP Appeals Quest ERISA Dismissal to Third Circuit

On December 4, 2024, Plaintiffs Lawanda Lasha House Johnson, Rebecca A. Rice, and Shalamar Curtis (“Plaintiffs”) filed an appeal with the Third Circuit on behalf of Quest Diagnostic Inc. (“Quest”) employees to revisit their lawsuit alleging mismanagement of the Profit Sharing Plan of Quest Diagnostics (“Plan”). The proposed class, comprising of current and former employees, claims the District Court prematurely ruled in Quest’s favor without properly addressing significant factual disputes regarding the company’s fiduciary duties under the Employee Retirement Income Security Act (“ERISA”).

The lawsuit originated in 2020, when Plaintiffs alleged that Quest, along with its benefits administration and investment committees, failed to promptly remove high-cost and underperforming investment options from the $5 billion Plan. This alleged breach of fiduciary duty caused millions of dollars in losses for the Plan’s more than 57,000 participants.

In September 2024, U.S. District Judge Julien Xavier Neals granted Quest summary judgment, concluding that the company’s investment committee had prudently managed and monitored the 401(k) Plan’s investment options. The decision also denied class certification and dismissed the case with prejudice.

In their appeal, Plaintiffs argued that the District Court erred in its analysis of Quest’s fiduciary monitoring process. They contended that the Court improperly weighed evidence at the summary judgment stage and failed to recognize key factual disputes.

Plaintiffs highlighted two primary errors in the District Court’s ruling. First, they argued that the Court disregarded “material factual evidence” indicating deficiencies in Quest’s fiduciary monitoring process. They asserted that the Court’s analysis began and ended with the determination that formal procedures and the presence of an investment advisor foreclosed any possibility of imprudence, which was improper on summary judgment.

Second, the brief criticized the District Court’s failure to address “material expert evidence” that outlined specific shortcomings in Quest’s monitoring practices. Plaintiffs argued that the District Court improperly assessed the persuasiveness of this evidence, which is inappropriate on summary judgment.

Plaintiffs concluded that either of these errors alone would justify reversing the summary judgment decision. Taken together, they leave no doubt the Court’s decision cannot stand.

The case caption is Lawanda House Johnson et al. v. Quest Diagnostics Inc. et al., Case No. 24-2866, filed in the U.S. Court of Appeals for the Third Circuit.

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.

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