AT&T’s benefit plan committee acted prudently in monitoring the record-keeping fees paid to Fidelity, Judge Virginia A. Phillips of the U.S. District Court for the Central District of California ruled in an Oct. 7 revision of an opinion originally published Sept. 28. The committee periodically reviewed Fidelity’s disclosures and invoices, hired outside experts to review Fidelity’s compensation, and negotiated a reduction in fees, Phillips said, awarding AT&T summary judgment on all claims.
Phillips rejected multiple challenges to fees paid to Fidelity from Financial Engines Advisors LLC—an online investment advisory platform known as a robo-adviser—on behalf of AT&T employees. Participants in the AT&T plan can’t use the Employee Retirement Income Security Act to challenge compensation between Fidelity and Financial Engines, “because that compensation exists independent of the Plan and stems from an agreement to which the Plan is not a party,” Phillips said.
The participants also accused AT&T of wrongly failing to list this money paid to Fidelity in the Form 5500 annual reports it filed with the Department of Labor. But Phillips agreed with AT&T that payments by Financial Engines to Fidelity are “eligible indirect compensation” that need not be reported on item 2(g) of Form 5500.
“In contrast to Defendants’ detailed, thorough application of the Department of Labor’s instructions for the Form 5500s, Plaintiffs have not met their burden of showing there is a triable issue of fact pursuant to the forms,” she said.
Finally, Phillips said the AT&T plan’s record-keeping feeswere reasonable. The participants argued these fees failed to reflect the true amount paid, because other large plans “include fees for a much wider variety of services under the umbrella of ‘recordkeeping expenses.’” Phillips wasn’t persuaded, saying the participants “draw broad conclusions about other companies’ recordkeeping expenses based on their Form 5500s, but they produce no credible evidence showing how those expenses were computed.”
AT&T is accused of breaching its fiduciary duties under ERISA by negotiating a deal with Fidelity that harmed employees’ retirement accounts. Plan participants say AT&T received a discount on administrative services for other benefit plans in exchange for allowing Fidelity to overcharge employees in their 401(k) accounts.
Solouki Savoy LLP, Schneider Wallace Cottrell Konecky LLP, Berger Montague PC, and Edelson Lechtzin LLP represent the class. AT&T is represented by Mayer Brown LLP.
The case is Alas v. AT&T Servs., Inc., C.D. Cal., No. 2:17-cv-08106, 9/28/21.
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