The U.S. Court of Appeals for the Second Circuit confirmed that Goldman Sachs’s Retirement Plan Committee did not breach its fiduciary duties in an ERISA class action brought on behalf of the company’s 401(k) plan. The Goldman Sachs 401(k) plan is one of the largest in the country, with between $6.3 billion and $7.5 billion in assets under management during the class period.
In its February 14 ruling, the court affirmed a grant of summary judgment by the district court, which rejected the plaintiff’s claims that the Committee violated its fiduciary duties under ERISA by improperly retaining mutual funds managed by Goldman Sachs Asset Management as plan investment options. Among other things, the court found that the plaintiff failed to introduce evidence that defendants retained the challenged funds in the plan for the purpose of advancing Goldman Sachs’ own interests, noting that there was evidence that the defendants employed “a robust process to manage potential conflicts of interest.”
Although dozens of similar cases have been brought against financial institutions under ERISA challenging their inclusion of “proprietary” mutual funds as plan investment options, this was the first summary-judgment victory for a defendant, and most of those cases have settled for tens of millions of dollars, if not more.
Law360 noted that this win “provides an employer-side ‘road map’ for staving off or defeating” claims that fiduciaries breached their duties under ERISA.
The S&C team representing Goldman Sachs included Rick Pepperman, Thomas White, Mark Popovsky, Thomas McIver and Dan Richardson.
Rick and Tom, who also obtained the summary judgment ruling in the district court, were named “Legal Lions” by Law360 for this result and received a “Shout Out” distinction from the American Lawyer’s Litigation Daily.