Walgreen sued for $300 million in DC plan fiduciary breach

Posted August 9th, 2019.

As It Appeared On
Pensions and Investments

ROB KOZLOWSKI

A group of Walgreen Co. profit-sharing plan participants have filed a fiduciary lawsuit against the Deerfield, Ill.-based company seeking $300 million in damages for offering an “underperforming” target-date fund lineup managed by Northern Trust Asset Management as an investment option in the plan.

The lawsuit, filed Friday in U.S. District Court in Chicago against the drugstore company, alleges the profit-sharing plan violated Walgreen’s fiduciary duties under the Employee Retirement Income Security Act of 1974 in adding and continuing to offer a target-date fund lineup managed by Northern Trust Asset Management “despite a market teeming with better-performing alternatives,” the filing said. The filing alleges the funds have underperformed their benchmarks since 2010 and have performed worse than 70% to 90% of peer funds.

“Plan participants have invested over $3 billion in these 10 target retirement date funds. As a fiduciary to the plan, Walgreen is obligated to monitor the plan to ensure these investments are prudent,” said Charles Field, partner at Sanford Heisler, attorney for the plaintiffs, in a news release. “This obligation is especially critical where these 10 funds make up almost a third of the plan’s assets. We believe Walgreen neglected (its) sacrosanct duties.”

Along with the $300 million in damages, plaintiffs are seeking divestiture of the target-date funds and “removal of the fiduciaries who have violated their duties to the plan’s participants and beneficiaries under ERISA,” the news release said.

The company’s most recent Form 5500 filing shows the Walgreen Profit-Sharing Retirement Plan had $10.5 billion in assets as of Dec. 31, 2017, with $3.1 billion in target-date funds.

A Walgreen spokeswoman said the company cannot comment on pending litigation. Doug Holt, Northern Trust spokesman, could not be reached immediately to provide comment.

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