Posted March 26th, 2020.
By Adam Lidgett
Law360 (March 26, 2020, 2:16 PM EDT) — An Iowa federal judge has certified a class of 17,000 current and former Transamerica Corp. employees in an Employee Retirement Income Security Act suit accusing the financial services company of stuffing its 401(k) plan with underperforming proprietary funds.
U.S. District Judge C.J. Williams on Wednesday granted a bid for class certification in the suit against Transamerica, although the company didn’t oppose a class of 401(k) plan participants and beneficiaries who invested in six challenged funds since Dec. 28, 2012.
The judge said common issues pertained to all the class members, such as if the defendants were fiduciaries of the plan and whether they breached their ERISA-imposed fiduciary duties. Additionally, the judge said a class of 17,000 easily met the numerosity requirement for certification.
The suit was originally filed in December 2018 and accused Transamerica of sitting by and watching as its funds underperformed their benchmarks.
The workers claimed Transamerica breached its ERISA-imposed fiduciary duty of prudence by failing to remove six funds, and that it failed to monitor the 401(k) plan’s investment committee and 20 unnamed individuals expected to oversee the fund.
Calling the alleged underperformance “neither modest nor temporary,” the now-certified class claimed to have lost hundreds of millions of dollars due to Transamerica’s alleged failure to properly manage their retirement savings.
Transamerica tried to dismiss the suit about a year ago, but Judge Williams ruled in August that a prior $3.8 million settlement in a separate suit over excessive fees didn’t bar the claims in the instant case.
“Plan participants allege that Transamerica wasted millions of its employees’ retirement savings by failing to remove poorly performing Transamerica funds from the plan,” Charles Field of Sanford Heisler Sharp, who represents the class, said in a statement, adding, “Now that the court has certified the class, Sanford Heisler can proceed to the merits of the case.”
A Transamerica representative said in a statement to Law360 that it complies with all federal and state laws and regulations.
“The allegations of wrongdoing against Transamerica in the recently filed lawsuit — which focuses on six ‘proprietary investment portfolios’ in the plan — are false and we will vigorously oppose the case,” the statement said.
The class is represented by Charles Field, David Sanford, Alexandra Harwin, David Tracey, Paul Blankenstein and Robert Van Someren Greve of Sanford Heisler Sharp LLP.
Transamerica is represented by Wilford H. Stone of Lynch Dallas PC and Brian D. Boyle, Randall W. Edwards and Catalina J. Vergara of O’Melveny & Myers LLP.
The case is Karg et al. v. Transamerica Corp. et al., case number 1:18-cv-00134, in the U.S. District Court for the Northern District of Iowa.
–Additional reporting by Emily Brill and Emily Brill. Editing by Stephen Berg.