Class Action Over 401(k) Forfeitures and Fees Against Energy Co. Survives Dismissal

September 30, 2025
Hall Benefits Law, LLC

A Florida federal district court judge recently denied NextEra Energy’s motion to dismiss a proposed Employee Retirement Income Security Act (ERISA) class action filed by John Stewart, an employee who participates in the company’s 401(k) plan. The participant claims that the energy company misappropriated forfeited funds and a recordkeeper illegally profited from plan earnings. 

The case is Stewart v. NextEra Energy Inc., Case Number 9:23-cv-81314, U.S. District Court for the Southern District of Florida.

Stewart first filed his ERISA breach of fiduciary duty suit in September 2023, claiming that the company’s $5 billion 401(k) plan charged millions in excessive fees from more than 20,000 participants. The fees allegedly went to compensate Fidelity, the plan’s recordkeeper. Stewart also claimed that the company should have applied forfeited funds, or nonvested employer contributions to workers’ accounts who terminated employment, toward plan expenses. Instead, NextEra used the forfeited funds to reduce other employer-side contributions. 

In her opinion, the district court judge said that both of Stewart’s ERISA claims were sufficiently detailed to overcome the company’s motion to dismiss. The ruling rejected NextEra’s argument that plan documents authorized how they applied forfeited funds, stating that the company’s interpretation of plan documents was only one possible interpretation. In so ruling, the judge adopted a California district court’s June 2025 ruling that dismissed a proposed class action against JPMorgan Chase & Co. concerning forfeited 401(k) funds, as language in the plan prevented JPMorgan from using the funds to decrease plan expenses. 

The district court judge also rejected arguments from NextEra that the plan terms gave full discretionary authority to its committee to interpret its terms. As a result, the company claimed that a fiduciary breach claim alleging forfeiture misspending was non-viable. Still, the judge disagreed, stating that plan document compliance doesn’t always equate to properly carrying out a fiduciary duty.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

The following two tabs change content below.

Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

Latest posts by Hall Benefits Law, LLC (see all)