The District Court for the Northern District of Georgia dismissed an excessive fee ERISA lawsuit against Delta Air Line’s Delta Family Care Savings Plan in December.
The proposed class action lawsuit, which was filed a year ago by two Delta Air Lines employees, accused the 401(k) plan’s fiduciaries of breaching their fiduciary duty to participants by not searching for lower cost investment options. In their filing, plaintiffs pointed out that the defendants selected certain funds that had higher expense ratios when equivalent lower cost funds were available. One of the examples used was that the plan selected the Janus Forty S, with an expense ratio of 1.00, as an investment option, when the equivalent Janus Forty I, with an expense ratio of 0.60, was available. The complaint alleged that these decisions cost plaintiffs millions of dollars in excessive fees and costs.
The lawsuit also accused Delta of paying excessive administrative costs to the 401(k) plan’s record keeper.
Delta Air Lines filed a motion to dismiss due to the lack of subject matter jurisdiction, stating that “the person seeking to invoke the court’s jurisdiction must establish the requisite standing to sue” and that to qualify as a case or controversy, “the plaintiff must have suffered an injury in fact that is fairly traceable to the challenged conduct of the defendant and is likely to be redressed by a favorable judicial decision,” according to the motion to dismiss the Plaintiffs’ amended class action complaint.
The defendants in the case argued that the plaintiffs “failed to demonstrate that they suffered a ‘concrete and particularized’ injury because the amended complaint does not allege that they were invested in the criticized investment funds or paid the recordkeeping fees they contend were excessive.”
The court agreed and dismissed the case, saying that the “plaintiffs have not alleged that they were invested in the criticized funds or paid the allegedly excessive fees. Therefore, plaintiffs do not have standing.”
According to the lawsuit, filed Dec. 20, 2016, Delta’s 401(k) plan had nearly $5.7 billion in net assets and 83,012 participants as of Dec. 31, 2012. The plan is among the largest defined contribution plans in the country.
