ERISA, which is properly the Employee Retirement Income Security Act (as amended, 1974), provides that investment fiduciaries must conduct and maintain investments and management thereof in the best interests of the investors. However, plaintiffs in their 2016 benefit plan lawsuit assert that Oracle breached its fiduciary duties when it failed to make prudent investment decisions, together with incurring on behalf of Plan members what has been described as tens of millions of dollars' worth of excessive fees, or so it is alleged.
Plaintiffs cite needless losses due to high fees, and poor performance of funds
The pension plan lawsuit says that Oracle paid various fees for record-keeping to Plan trustee Fidelity Management Trust Co. on a revenue-sharing model based upon Plan assets, rather than the number of participants. It was alleged there was no fixed fee per participant, thus inflating expenses and causing unreasonable fees. Fund assets grew from $3.6 billion in 2009 to more than $11 billion by the end of 2014. "Fidelity's revenue skyrocketed even though the services it provided to the Plan remained the same," the lawsuit says.
The plaintiffs also say that Oracle not only failed to properly monitor their fiduciaries, but also retained poorly-performing funds that caused significant losses to the Plan.
Those funds were identified as Artisan, PIMCO and TCM.
Oracle moved to have the retirement plan lawsuit dismissed, based on its position that Fidelity was reasonably compensated for its services, amongst other arguments. However Oracle's motion to dismiss was denied in March of last year. Plaintiffs moved for class certification in June, and US District Judge Robert E. Blackburn approved class certification on the last day of January 2018.
However, there were some caveats.
Tens of thousands of class members could benefit from excessive fees class
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As for Plan participants who invested in the allegedly under-performing Artisan and TCM funds, Judge Blackburn created two other classes for them, but declined to create a third class designed for PIMCO fund claimants, given that there was no class representative available.
The retirement plan lawsuit is Troudt et al. v. Oracle Corp. et al., Case No. 1:16-cv-00175, in the US District Court for the District of Colorado.