Last year, a string of cases were filed against fiduciaries of large 401(k) plans that offer the BlackRock target-date funds (TDFs) as investment options to plan participants. All of the complaints, filed by the same law firm, were nearly identical and alleged that the plan fiduciaries breached their fiduciary duties under ERISA by choosing the lower-fee BlackRock funds, despite what plaintiffs alleged was the funds’ underperformance relative to other target date funds.
Litigation against plan fiduciaries of 401(k) plans is nothing new. But in most cases, plaintiffs allege that the plan sponsor imprudently invested the plan in high-fee investment options. Here, plaintiffs instead challenged plan fiduciaries’ selection of the concededly low-cost BlackRock TDFs, leading many fiduciaries to feel they were between a rock and a hard place in selecting a TDF option for their 401(k) plans.
The months since the wave of initial filings have shed some light on how plaintiffs’ newfound theory will fare. Thus far, three district courts have dismissed BlackRock complaints with prejudice, in cases againstand In all three cases, the district court held that the plaintiffs had failed to allege any facts about the plan fiduciaries’ process for selecting and monitoring the BlackRock TDFs and that plaintiffs’ reliance on the BlackRock TDFs’ alleged underperformance alone was insufficient to state a claim for breach of fiduciary duty. The courts uniformly rejected the plaintiffs’ reliance on comparisons between the BlackRock TDFs and other comparator TDF suites, the S&P Index, and the Sharpe And in all three cases, the district court ultimately dismissed the plaintiffs’ complaint with prejudice, meaning that the plaintiffs were not allowed to amend their complaints in response to the dismissal.