A California federal district court judge has denied Monster Beverage Corp.’s motion to dismiss a proposed class action in which Monster employees claim that their employer violated its fiduciary duties in failing to properly monitor Transamerica Retirement Solutions, the third-party administrator of its employee 401(k) plan. Transamerica reportedly charged unreasonable recordkeeping fees, which are based on a fixed share of plan revenue, regardless of the services provided.
The employees also contend that Monster wasted an excessive amount of funds from the plan to maintain an unreasonably large balance in its Employee Retirement Income Security Act (ERISA) benefit account. Finally, Richard Hollien and the other two named plaintiffs amended their complaint in November 2024, claiming that Monster also violated ERISA in imprudently retaining high-cost, low-performing classes of funds for the plan.
The employees are seeking to represent a proposed class consisting of all individuals who participated in and benefited from Monster’s retirement plan between June 26, 2018, and the date the court enters judgment in this case. The case is Richard Hollien et al. v. Monster Beverage Corp. et al., Case Number 8:24-cv-01467, U.S. District Court for the Central District of California.
The plaintiff employees claim that plan participants paid, on average, just over $100 per year in recordkeeping fees, which is three times as much as paid in comparable plans, such as those maintained by Dropbox, Pinterest, Granite Retirement Savings, Verint Systems, Destination XL Group, and AWG Inc. They argue that Fidelity, Vanguard, and Great-West could provide similarly high levels of service to the plan at a significantly lower cost, as Transamerica has previously provided no unique services.
Monster filed its motion to dismiss the employees’ first amended complaint in December, arguing that it made reasonable decisions concerning the retirement plan. The company also unsuccessfully argued that the plaintiffs lacked standing because they did not include specific allegations in their complaint that they had paid excessive fees, such as the amounts paid, the calculation of those amounts, or how the amounts were excessive compared to other plans. Monster also stated that no misconduct affecting some or all plan participants was alleged in the complaint and that entities may choose to pay higher recordkeeping fees through a revenue-sharing agreement without violating ERISA.
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