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The Watered-Down Benchmark in the U.S. Bancorp Excess Fee Case

"A meaningful benchmark in an excess recordkeeping fee case would be a reliable, national benchmark of what all similarly-sized plans pay for services -- not fees from a few random plans. And any such benchmark would show that $29 is a reasonable recordkeeping for a jumbo defined contribution plan. The U.S. Bancorp case is yet another excess imprudence fee case against a plan with a low-cost investment and administrative fee structure. It is an excess fee case against a plan without excess fees." [Dionicio v. U.S. Bancorp, No. 23-0026 (D. Minn. March 21, 2024)]

Harris, Hecker, Excessive Fees and Marketplace Discipline

"Yesterday, the Supreme Court effectively rejected the idea that mutual fund fees, in the non-ERISA context, are not actionable if consistent with the market as a whole, in response to a Seventh Circuit decision finding that a fund did not pay excessive fees to its investment advisor in light of marketplace discipline ... Shrewd observers of ERISA excessive fee case law, or even most casual ones, will likely quickly note that, in the ERISA context, the Seventh Circuit essentially applied the exact same thesis to an ERISA excessive fee claim in its highly influential decision in Hecker, finding, in part, that fees were not excessive if consistent with the market as a whole."

Second Circuit Requires Apples-to-Apples Comparison in Excessive Fee Complaints

"This case importantly lays out what plaintiffs must plead in an excessive fees case to survive a motion to dismiss. That is, an apples to apples comparison of fees spent for similar services in similar plans demonstrating the fees for the Plan in question are excessive." [Singh v. Deloitte LLP, No. 23-1108 (2d Cir. Dec. 10, 2024)]

Second Circuit Raises the Pleading Bar for Excessive Fee Claims

"The court explained that in order to survive a motion to dismiss, a plaintiff must specifically allege how the fees at issue are excessive in relation to the services rendered. After all, a higher-than-average fee might still be prudent if the plan receives additional services that warrant a higher fee. As a result, a plaintiff cannot simply compare price; an examination of the services being purchased for that price must also be conducted." [Singh v. Deloitte LLP, No. 23-1108 (2d Cir. Dec. 10, 2024)]

Recent Trends in Excessive Fee Litigation

"In evaluating the plausibility of excessive fee claims, courts have held plaintiffs to pleading standards focused on [1] the requisite specificity of alleged excessive fees; [2] whether comparisons used of such fees are appropriate 'apples-to-apples' comparisons; and [3] whether fees are truly excessive compared to the services rendered. In addition, lack of standing remains an important ground for potential dismissal."

Flipping the Script on the New Excess Health Plan Fee Case Against Johnson and Johnson

"The highly detailed and lengthy complaint represents a groundbreaking attempt to turn plan sponsors into guarantors of the lowest possible fees for every drug or medical service offered by the plan.... If there is any victim of excess fees in health plans, the victim is the plan sponsor. If there is an culprit in health plan excess fees, it is the PBM or other service provider. Consequently, if there is any liability for excess fees, the liability should be borne by health care providers. And any liability damage recoveries should be returned to plan sponsors -- not to plaintiff lawyers or even participants." [Lewandowski v. Johnson & Johnson, No. 24-0671 (D.N.J. complaint filed Feb. 5, 2024)]

A Popular Benchmark for Excessive Fee Cases Makes a Big Change

"In its new 2024 24th edition of the small-plan recordkeeping fee survey, the 401k Averages Book changed how it documents the recordkeeping fee for smaller plans by including indirect, asset-based recordkeeping fees from investments in the fee benchmark. This should eliminate the deceptive claims used in many excessive fee lawsuits that mispresent the 401k Averages Book benchmarks by excluding the substantial indirect fees paid by smaller plans."

Tenth Circuit Rejects Claims of Excess Investment Fees Contradicted by Plan Documents, and Comparison to 401(k) Averages Book as a 'Meaningless' Benchmark

"First, the Court allowed documentary evidence from plan documents that contradicted the false share class investment fee claims ... Some courts do not allow plan sponsors to defend with the actual plan fees, and this is the key difference in the disparate rulings on the ERISA excessive fee pleading standard across the county. ... Second, the Court required a meaningful benchmark to allege that plan investment and recordkeeping fees were too high. ... Until we have a reliable national benchmark of what large plans actually pay in recordkeeping fees, courts must require meaningful comparisons to justify claims of fiduciary imprudence." [Matney v. Barrick Gold of N. Am., No. 22-404 (10th Cir. Sept. 6, 2023)]

Debunking the 'Excess' Recordkeeping Fee Claims in the U.S. Bancorp Case

"The initial complaint asserted a false recordkeeping fee that was easily rebutted by plan fee disclosures. The amended complaint then asserted the correct fee, but with lower purported benchmarks to allege fiduciary imprudence.... [The] motion to dismiss is worth studying, as it exposes the con game of the plaintiffs' excess fee bar, particularly when they sue low-fee plans like the U.S. Bancorp plan." [Dionicio v. U.S. Bancorp, No. 23-0026 (D. Minn. motion to dismiss filed May 2, 2023)]

Latest Victim of 'Excessive' Investment Fee Case Has Low-Cost Vanguard Target Date Funds

"[T]he complaint fails to inform the court that the plan is filled with low-cost index funds in which the majority of the plan is invested ... Perspective has been lost in these cases as to whether a plan has low-fee investments versus a plan that offers high-fee investments, and what could be a plausible excessive fee claim.... [W]ith perspective and a detailed analysis of actual plan fees, it is easier to judge prudence.... This is not taking place in most excessive fee cases, and it is leading to inconsistent decisions that make little sense in the broader scheme." [Kruzell v. Clean Harbors Environmental Serv., Inc., No. 22-10524 (D. Mass. complaint filed Apr. 10, 2022)]