Former Employee Dismisses ERISA 401(k) Suit Concerning BlackRock Funds

January 18, 2024
Hall Benefits Law, LLC

A former employee of Advance Publications, Inc., the holding company for Conde Nast, voluntarily dismissed his proposed class action ERISA 401(k) suit over poorly performing BlackRock funds. Ex-worker Jermaine Anderson had the opportunity to raise ERISA claims in a second amended complaint following the dismissal of his amended complaint but instead chose to dismiss the lawsuit. The dismissal comes as similar lawsuits alleging that companies have unlawfully offered the underachieving funds as an investment option in their retirement plans have struggled to survive nationwide.

Anderson filed suit in August 2022, claiming that Advance’s selecting and retaining the underperforming BlackRock LifePath Index Funds in its 401(k) plan breached its fiduciary duties under ERISA. Anderson also claimed Advance failed to oversee, monitor, and manage the fund properly.

A New York federal district court dismissed the case in June, denying a motion for class certification. U.S. District Judge Analisa Torres ruled that a mere claim of underperformance by the BlackRock fund was insufficient to state a claim under ERISA. Likewise, the fact that a fund underperformed was inadequate to sustain a fund mismanagement claim. Instead, Anderson needed to show actual deficiencies in Advance’s management process.

ERISA suits challenging the prudence of companies offering BlackRock’s target-date funds as an investment option in 401(k) plans have not been overly successful nationwide. Recently, a California federal court dismissed a suit against Cisco involving BlackRock funds. Microsoft dodged a BlackRock suit in Washington, and a Virginia court dismissed a BlackRock suit against Booz Allen in March. Nonetheless, an ERISA suit involving BlackRock funds against Genworth Financial Inc. is moving forward after surviving dismissal in September.

The case is Anderson v. Advance Publications Inc. et al., case number 1:22-cv-06826, U.S. District Court for the Southern District of New York.

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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