Just a week before a bench trial was scheduled to begin, Salesforce reached a settlement with as many as 50,000 of its employees in a class action lawsuit over its 401(k) plan. The San Francisco-based software company faced claims of breach of its fiduciary duties under ERISA for failing to replace costly and underperforming investment options in the 401(k) plan. The workers had sought over $5 million in damages, plus prejudgment interest, to be divided among the plan participants in proportion to their account losses.
A group of former workers initially filed suit against Salesforce, its board of directors, investment committee, and executives in March 2020, claiming breaches of fiduciary duties under ERISA concerning their 401(k) plan. They claimed that Salesforce acted imprudently in retaining higher-cost versions of certain investment funds instead of investigating lower-cost, better-performing options.
The trial court judge dismissed the lawsuit in October 2020, but the U.S. Court of Appeals for the Ninth Circuit reinstated the lawsuit on appeal. The Ninth Circuit ruled that the former workers had made sufficient allegations that Salesforce had abdicated its fiduciary responsibilities to plan participants and remanded the case to the trial court.
The trial court certified the class in February 2023, including between 10,000 and 50,000 plan participants. Salesforce again attempted to end the litigation via a summary judgment motion in November 2023, but the judge denied the motion in March 2024, setting the case up to proceed to trial.
The case is Miguel et al. v. Salesforce.com Inc. et al., case number 3:20-cv-01753, U.S. District Court for the Northern District of California.
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