Benefits & Executive Compensation News

70,000 Oracle Workers Get Class Status in 401(k) Fee Case

Jan. 31, 2018, 8:52 PM

More than 70,000 Oracle Corp. workers can proceed as a class in their lawsuit challenging the company’s management of its $12 billion 401(k) plan.

A federal judge in Colorado Jan. 30 granted class status to the workers, who accuse the California software company of draining more than $40 million from its retirement plan through a bad deal with the plan’s record keeper, Fidelity Management Trust Co.

The ruling comes almost a year after Judge Robert E. Blackburn declined to dismiss the case, adopting a magistrate judge’s report recommending the case move forward.

Blackburn’s latest decision is another victory for St. Louis-based law firm Schlichter Bogard & Denton, best known for triggering the litigation frenzy over excessive fees in retirement plans more than 10 years ago. The firm has sued more than a dozen major companies over excessive fees in their 401(k) plans during the past decade. It has reached multi-million dollar settlements with some of them, including Boeing Co. ($57M), Lockheed Martin Corp. ($62M), Novant Health Inc. ($32M), International Paper ($30M), Northrop Grumman ($16.8M), and Kraft Foods Inc. ($9.5M).

In addition to their claim over excessive fees involving Fidelity, the workers alleged that Oracle caused the plan to make imprudent investments. Blackburn certified three subclasses, one over excessive fees and two over imprudent investments involving the Artisan and TCM funds. He declined to certify a class involving the PIMCO fund because no named class representative invested in it.

Blackburn acknowledge Oracle’s argument that the class definition was “overly broad” in terms of time frame, and with respect to the imprudent claims, as to which participants may be part of the class. Nonetheless, he certified the class subject to later modification if discovery fails to show that, as the participants allege, Oracle concealed various breaches of its fiduciary duties.

Morgan Lewis & Bockius LLP and Brownstein Hyatt Farber Schreck LLP represent Oracle.

The case is Troudt v. Oracle Corp., D. Colo., No. 1:16-cv-00175-REB-CBS, order granting plaintiffs’ motion for class certification 1/30/18.

To contact the reporter on this story: Carmen Castro-Pagan in Washington at ccastro-pagan@bloomberglaw.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com

To read more articles log in. To learn more about a subscription click here.