Investigation Type: ERISA
Company Name: Walgreens
Sanford Heisler Sharp, LLP filed a class complaint today in the U.S. District Court of Northern Illinois alleging the ways in which the Walgreen Co. breaches basic fiduciary duties under ERISA and violates its employees’ trust by mismanaging their retirement funds. The complaint alleges Walgreens failed to remove from its employee retirement plan a suite of ten target retirement date funds that have underperformed their investment benchmarks and other similar collective investment funds significantly for nearly a decade. The consequences to employees are substantial: the Walgreen Profit-Sharing Retirement Plan has cost its employees millions of dollars in retirement savings.
Plaintiffs Chandra V. Brown-Davis, Yolanda Brown, Ronald Dinkel, Siobhan E. Fannin, Daphne G. Jacob, Kristie Kolacny, Dianna J. Martin, Sherri Nelson, Becky S. Ray, Timothy M. Renaud, Lisa Smith, and Susan Weeks each filed the case individually and as representatives of approximately 130,000 Plan participants in Walgreen’s $10 billion 401(k) Plan (“Plan”). Named as Defendants are the Walgreen Co. and the Plan committees and their members that provide investment advice and services to the Plan.
David Sanford, chairman of Sanford Heisler Sharp and counsel for Plaintiffs and the proposed class, noted, “ERISA’s fiduciary standards are strict and exacting. Since 2013, Walgreen has offered its employees these poor-performing target retirement date options which have been highly detrimental to the retirement savings of Plan participants. Walgreen and the Plan committees should be held to the highest standard as fiduciaries.”
The complaint describes how Walgreen employees invest billions of dollars in the company’s Plan. Given the company’s sophistication and extensive assets, employees trust Walgreen to construct a stellar retirement plan. Yet, according to the complaint, Walgreen failed to prudently monitor the investment performance of the Plan options as required by ERISA. As a result, Walgreen kept funds despite chronic underperformance, causing the Plan, and hence participants, to suffer staggering losses.
Charles Field, a partner at Sanford Heisler and counsel for Plaintiffs and the proposed class, added, “Plan participants have invested over $3 billion in these ten target retirement date funds. As a fiduciary to the Plan, Walgreen is obligated to monitor the Plan to ensure these investments are prudent. This obligation is especially critical where these ten funds make up almost a third of the Plan’s assets. We believe Walgreen neglected their sacrosanct duties.”
As relief, Plaintiffs and the class seek (1) approximately $300 million for financial losses to Plan participants and beneficiaries resulting from the Plan’s underperforming investments; (2) divestiture of imprudent investments; and (3) the removal of the fiduciaries who have violated their duties to the Plan’s participants and beneficiaries under ERISA.