Wal-Mart Suit Over |401(k) Fees Revived

     (CN) – The 8th Circuit reinstated a class action accusing Wal-Mart and its executives of turning a blind eye while mutual funds charged millions of dollars in unnecessary fees for Wal-Mart’s employee retirement plans.




     According to the complaint, a committee overseeing Wal-Mart’s profit-sharing and 401(k) plan routinely selected mutual funds that shared their fees with trustee Merrill Lynch.
     As a result, some or all of the plan’s investment options charged excessive fees, to the tune of $20 million a year, the plaintiffs claimed.
     The class members added that the high fees couldn’t be justified by greater returns on investment, because most of the mutual funds underperformed lower-cost alternatives.
     Lead plaintiff Jeremy Braden estimated that the funds’ higher fees and lower returns cost around $140 million by the end of 2007.
     The district court granted Wal-Mart’s motion to dismiss, concluding that the plaintiffs lacked standing to challenge how the plan was managed before they began contributing to it.
     “In reaching this conclusion, the district court mixed two distinct issues,” the St. Louis-based appeals court ruled.
     “Whether Braden may pursue claims on behalf of the Plan at all is a question of constitutional standing which turns on his personal injury,” Judge Diana Murphy wrote for the three-judge panel. “Whether relief may be had for a certain period of time is a separate question, and its answer turns on the cause of action Braden asserts.”
     Braden established standing for the alleged injury to his own plan, the court ruled, and the Employee Retirement Income Security Act allows him to “seek relief for the entire Plan.”
     “The relief that may be appropriate, should Braden succeed, is not necessarily limited to the period in which he personally suffered injury,” Judge Murphy added.
     The court reversed and remanded for further proceedings.

%d bloggers like this: