A media company has settled a class action lawsuit in which its workers alleged that it failed to negotiate lower investment expenses or properly monitor investment options. Workers at Aegis Media Americas Inc., which Japanese international marketing firm Dentsu owns, accused it of violating its fiduciary duty under the Employment Retirement Income Security Act (ERISA) concerning the workers' $540 million 401(k) plan. The case is Kennedy et al. v. Aegis Media Americas Inc. et al., case number 1:20-cv-03624, U.S. District Court for the Southern District of New York.
According to Aegis workers, the company retained mutual funds with larger cost shares than similar offerings in the market, failing to discard them until late 2018. Workers also alleged that they paid excessive fees for T. Rowe Price funds that the plan offered. The workers accused the plan's governing committee of focusing on plan performance rather than completing due diligence on the accompanying management fees.
The Court paused the suit in September 2021 pending the U.S. Supreme Court's decision in Hughes v. Northwestern University, in which the high Court ruled that plan administrators must act prudently in all – not just some – plan decision-making to avoid liability under ERISA.
Following the Hughes ruling, Aegis dismissed the suit, arguing that the workers failed to state a claim in enough detail. More specifically, they claimed the workers failed to show that cheaper investment options were better. However, the workers countered that the Hughes decision supported their case.
The federal district court judge denied Aegis' bid to dismiss the case and certified the class as requested by the workers, which led to the recent settlement.
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