Two former employees of Philadelphia-based engineering company CDI Corp. on Tuesday filed a proposed class action alleging the company failed to control expenses in its $263 million 401(k) plan.
The employees say CDI didn’t have a proper system for evaluating the investment options and fees tied to the plan. This lack of oversight led the plan to offer expensive, actively managed funds and retail share classes in lieu of cheaper and better performing alternatives, including institutional share classes and passively managed funds, according to the complaint filed in the U.S. District Court for the Eastern District of Pennsylvania.
The employees also charge CDI with hiring conflicted investment advisers and consultants and failing to rein in the plan’s administrative expenses.
This lawsuit is at least the fortieth proposed class action challenging retirement plan fees to be filed in 2020. Targeted employers include Costco Wholesale Corp., Estée Lauder Cos., Trader Joe’s Co., Shell Oil Co., Wells Fargo & Co., and Liberty Mutual Group Inc.
Causes of Action: Breach of fiduciary duty and failure to monitor fiduciaries in violation of the Employee Retirement Income Security Act.
Relief: Declaration of fiduciary breach, restoration of plan losses and lost profits, disgorgement of profits, damages, injunction blocking further fiduciary breaches, removal of breaching fiduciaries, interest, costs, and attorneys’ fees.
Potential Class Size: About 7,030 participants in CDI’s 401(k) plan, along with their beneficiaries.
Response: CDI Corp. didn’t immediately respond to a request for comment.
Attorneys: Edelson Lechtzin LLP represents Crawford.
The case is Crawford v. CDI Corp., E.D. Pa., No. 2:20-cv-03317, complaint 7/7/20.