LinkedIn 401(k) Plan Latest Target in Lawsuit Alleging Fiduciary Breach

A class action lawsuit has been filed in the U.S. District Court for the Northern District of California against LinkedIn Corporation, its Board of Directors, and its 401(k) Committee, for breach of fiduciary duty under the Employee Retirement Income Security Act (ERISA).

Under ERISA, plan fiduciaries must act “solely in the interest of the participants and beneficiaries. The complaint alleges that the defendants failed to fulfill their fiduciary duties by neglecting to consider lower cost alternative funds or certain collective investments trusts (CITs) “as alternatives to mutual funds in the plan, despite their lower fees and materially similar investment objectives.”

In addition, plaintiffs allege that the defendants did not take advantage of the $817 million LinkedIn 401(k) plan’s leverage as a large plan in the defined contribution plan marketplace. “As a large plan, the Plan had substantial bargaining power regarding the fees and expenses that were charged against participant’s investments. Defendants, however, did not try to reduce the Plan’s expenses or exercise appropriate judgment to scrutinize each investment option that was offered in the Plan to ensure it was prudent.”

The suit also identifies LinkedIn’s use of the Fidelity Freedom Funds target-date fund (TDF) series as another example of fund mismanagement. According to the complaint, LinkedIn used the more risky Freedom Funds when a substantially less costly and less risky option – Freedom Index Funds – was available and also did not offer the CIT version offered by Fidelity. Plaintiffs allege that these actions resulted in the loss of millions of dollars to the LinkedIn 401(k) plan.

The plaintiffs also contend that the plan structure was “rife with potential conflicts of interest” since Fidelity is trustee of the LinkedIn plan and one of its affiliates administers the recordkeeping function for the plan. 

The class for this action includes all plan participants and their immediate family members that were beneficiaries of the plan between August 14, 2014, through the date of judgment in the case. 

The ERISA attorneys at HBL help our clients manage legislative and regulatory changes to employee benefit plans. To get help with your plans, call 678-439-6236 today.

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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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