Kroger Demands Dismissal of Proposed ERISA Class Action Over Record-Keeping Fees

Kroger asked an Ohio federal court to dismiss a proposed class-action lawsuit in which workers claim that they paid excessive, unreasonable, and undisclosed annual record-keeping fees to participate in the employer’s retirement savings plan. According to Kroger, employees paid reasonable yearly fees in line with federal law and received annual fee disclosures stating the yearly expense ratios. 

Kroger employee Lisa Sigetich filed suit against Kroger in November 2021 under Sigetich v. The Kroger Co. et al., case number 1:21-cv-00697, U.S. District Court for the Southern District of Ohio. In her case, Sigetich alleges that the 92,000 Kroger employees paid an average of $30 per year in record-keeping fees for their participation in their employer’s retirement savings plan. Sigetich claims that the employees should have paid $20 per year or less, relying on data from the U.S. Department of Labor (DOL) stating that participants of other employers’ plans paid less than $30 per year in record-keeping fees. In her suit, Sigetich argues that Kroger’s excessive fees violate its duty of prudence under ERISA. As a result, Kroger should return the profits incurred from imprudent investments to the plan. 

Sigetich also claims that Kroger further breached its ERISA duty of prudence by inaccurately disclosing record-keeping fees to plan participants. Sigetich additionally brought forth ancillary claims of breach of “loyalty” and “failure-to-monitor” duties, based on the same facts. 

Kroger contends that Sigetich paid only $5 per year in record-keeping fees to participate in the plan, as shown by her quarterly account statements, reinforcing the argument that she suffered no injury and had no standing to bring her claim. DOL data shows that while employees of some employers do pay less than $30 per year in record-keeping, others pay more than $30 per year in record-keeping. 

Kroger states that it fully discloses all record-keeping fees to employees annually, and Sigetich states in her complaint that she was aware of the fees she paid. Therefore, Sigetich suffered no injuries because she received disclosure of the fees annually and has no standing to pursue this claim or her ancillary claims.

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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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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