Posted August 9th, 2019.
By Lauraann Wood
Law360 (August 9, 2019, 3:52 PM EDT) — Walgreens workers say in a proposed class action they’ve lost nearly $300 million in retirement savings because the company has failed to remove a suite of underperforming funds from its plan.
In an Illinois federal court suit on behalf of current and former workers who are beneficiaries of the plan, the proposed class says Walgreen Co. loaded its profit-sharing retirement plan with a group of poorly performing target-date retirement funds in 2013 and has refused to remove them “despite a market teeming with better-performing alternatives.” That has caused the plan’s participants to lose out on nearly $300 million in retirement savings since 2014, according to the suit.
The participants claim the target-date funds, called the Northern Trust Focus Target Retirement Trusts, have performed worse than 70% to 90% of its peer funds for nearly a decade. The funds have also consistently failed to meet their benchmark indexes since Northern Star launched them in 2010, according to the suit, which alleges violations of the Employment Retirement Income Security Act.
“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,” David Sanford of Sanford Heisler Sharp LLP, a lawyer for the plaintiffs, said in a statement. “Walgreen and the plan committees should be held to the highest standard as fiduciaries.”
The participants are represented by David Sanford, Charles Field and Paul Blankenstein of Sanford Heisler Sharp LLP and Mark E. Maddox of Maddox Hargett & Caruso PC.
Counsel information for Walgreen was not immediately available.
The case is Chandra V. Brown-Davis et al. v. Walgreen Co. et al., case number 1:19-cv-05392, in the U.S. District Court for the Northern District of Illinois.