Federal Court Tosses 401(k) Plan Mismanagement Suit Against Old Dominion

November 27, 2023
Hall Benefits Law, LLC

A federal court judge in North Carolina dismissed a lawsuit in which a former employee alleged that Old Dominion Freight Line had violated its fiduciary duty under ERISA by mismanaging its workers’ 401(k) plan. Specifically, ex-employee Harvey Davis claimed that Old Dominion failed to substitute cheaper investment funds for more expensive options, thus violating the duty of prudence under ERISA and failing to monitor the plan adequately.

The case is Davis v. Old Dominion Freight Line Inc., case number 1:22-cv-00990, U.S. District Court for the North Carolina Middle District.

Davis sued the freight company in November 2022, attacking eleven share classes in the company retirement plan that he classified as higher-priced, actively managed funds. According to his lawsuit, plan administrators should have substituted lower-priced, blended-management funds available on the market. He claimed that he and other workers were injured by this mismanagement, which caused them to suffer $3 million in losses dating back to 2016. As of 2021, the Old Dominion plan had about 24,000 participants and about $2 billion in assets.

However, Old Dominion pointed out that Davis did not invest in any of the funds he targeted, instead choosing to invest in the plan’s stable value funds, which were not at issue in this suit. As a result, the judge dismissed Harvey’s suit for lack of standing, as he could present no evidence that he invested in any of the allegedly imprudent funds or that he suffered any losses or direct harm due to Old Dominion’s claimed mismanagement of the funds.

The judge also rejected Davis’s claims that the overall mismanagement of the fund adversely impacted him and that Old Dominion allowed plan participants to be charged excessive record-keeping fees. Finding no details in the complaint sufficient to support these allegations, the judge declined to extend its standing analysis to those issues.

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.

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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.

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