Court Grants Class-Action Status to ERISA Lawsuit
Los Angeles, CA: A California District Court judge has granted class certification to a California ERISA lawsuit filed against Transamerica Life Insurance Company. The lawsuit, filed by Jaclyn Santomenno and others, alleged Transamerica charged excessive fees, in violation of the Employee Retirement Income Security Act (ERISA).
According to court documents, Transamerica sells a 401(k) plan that is geared to small- and medium-size employers. That plan consists of a bundle of investment alternatives and administrative services. Employers who selected the plan package had 170 investment options from which the employers were able to select a smaller number to offer employees in their benefits package. They could either choose their own investments à la carte, or choose a pre-selected lineup.
That pre-selected lineup would qualify for Transamerica’s “Fiduciary Warranty,” according to court documents, which promises the investments meet ERISA’s “broad range of investments” requirement as well as its “prudent man standards.” Furthermore, if employers face a breach of fiduciary duty lawsuit from employees related to the plan, Transamerica reportedly promised to indemnify the employer and make the plan whole.
Each investment option in the plan is a separate account, the lawsuit states, and each separate account is linked to an underlying investment. Some of those accounts are traded by investment managers who are not affiliated with Transamerica. Transamerica, the lawsuit alleges, charges fees for most of the accounts, even accounts the company does not provide any services for.
Plaintiffs allege fees charged by Transamerica are excessive and, in some cases, unnecessary, breaching fiduciary duty under ERISA. Further breaching fiduciary duty, the lawsuit claims, Transamerica did not use its considerable weight to invest in the lowest price share class of mutual funds. Finally, the lawsuit alleges that Transamerica affiliates knowingly made transactions that are prohibited under ERISA.
In the first motion for class-action status, Judge Dean D. Pregerson denied class certification. Plaintiffs submitted a second motion for class certification, which the judge granted. In granting the motion, the judge noted that the class potentially includes 300,000 participants in around 7,400 plans, and found there were similar questions of law faced by each of the proposed class members.
“What makes the fees excessive, Plaintiffs explain, is the rates charged by TIM [Transamerica Investment Management] and TAM [Transamerica Asset Management] to outside clients, which are considerably lower than the fees charged to TLIC plans,” Judge Pregerson wrote in his decision.
The lawsuit is Jaclyn Santomenno et al v. Transamerica Life Insurance Company, et al., Case number 2:12-cv-02782, filed in US District Court, Central District of California.
According to court documents, Transamerica sells a 401(k) plan that is geared to small- and medium-size employers. That plan consists of a bundle of investment alternatives and administrative services. Employers who selected the plan package had 170 investment options from which the employers were able to select a smaller number to offer employees in their benefits package. They could either choose their own investments à la carte, or choose a pre-selected lineup.
That pre-selected lineup would qualify for Transamerica’s “Fiduciary Warranty,” according to court documents, which promises the investments meet ERISA’s “broad range of investments” requirement as well as its “prudent man standards.” Furthermore, if employers face a breach of fiduciary duty lawsuit from employees related to the plan, Transamerica reportedly promised to indemnify the employer and make the plan whole.
Each investment option in the plan is a separate account, the lawsuit states, and each separate account is linked to an underlying investment. Some of those accounts are traded by investment managers who are not affiliated with Transamerica. Transamerica, the lawsuit alleges, charges fees for most of the accounts, even accounts the company does not provide any services for.
Plaintiffs allege fees charged by Transamerica are excessive and, in some cases, unnecessary, breaching fiduciary duty under ERISA. Further breaching fiduciary duty, the lawsuit claims, Transamerica did not use its considerable weight to invest in the lowest price share class of mutual funds. Finally, the lawsuit alleges that Transamerica affiliates knowingly made transactions that are prohibited under ERISA.
In the first motion for class-action status, Judge Dean D. Pregerson denied class certification. Plaintiffs submitted a second motion for class certification, which the judge granted. In granting the motion, the judge noted that the class potentially includes 300,000 participants in around 7,400 plans, and found there were similar questions of law faced by each of the proposed class members.
“What makes the fees excessive, Plaintiffs explain, is the rates charged by TIM [Transamerica Investment Management] and TAM [Transamerica Asset Management] to outside clients, which are considerably lower than the fees charged to TLIC plans,” Judge Pregerson wrote in his decision.
The lawsuit is Jaclyn Santomenno et al v. Transamerica Life Insurance Company, et al., Case number 2:12-cv-02782, filed in US District Court, Central District of California.
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