Genworth 401(k) Class Defeat Disrupts ERISA Litigation Landscape

Benefits attorneys can expect fewer stipulations over class certification and less litigation filed within the Fourth Circuit after that court’s decision axing a class of workers covered by Genworth Financial Inc.'s 401(k) plan.

The US Court of Appeals for the Fourth Circuit last week reaffirmed its decision blocking Genworth employees from banding together as a certified class to challenge the BlackRock Inc. target-date funds in their retirement plan. The lawsuit’s goal is to obtain money that would be added to individual 401(k) accounts, the appeals court reasoned, calling this an individualized monetary claim that can’t be grouped together in a mandatory class action without notice to class members or opt-out rights.

The decision—which has made waves in courts across the country—represents a shift in the Employee Retirement Income Security Act litigation landscape, where class certification rates have been sky-high. It could pose particular problems for a new spate of lawsuits challenging 401(k) fund performance, and it could curb the once-common practice of parties agreeing to class certfication while reducing the number of new ERISA suits filed in the Mid-Atlantic region.

“The rationale in the Genworth case poses a very big obstacle for plaintiffs in 401(k) cases that are challenging fund selection and investments,” said Amanda S. Amert, a Willkie Farr & Gallagher LLP partner who chairs the firm’s ERISA litigation group.

‘Almost a Layup’

Workers suing over their retirement plans have had little trouble securing class status, with class certification motions granted 95% of the time in ERISA cases last year, according to an annual report from Duane Morris LLP. This is higher than the rates seen in most other areas of law surveyed, including securities fraud, antitrust, wage and hour, and discrimination, according to the report.

It’s also common for employers to agree that the ERISA cases filed against them be certified as class actions—a prevalent practice that’s been employed by US Bancorp, Humana Inc., PPL Corp., Hy-Vee Inc., Biogen Inc., and others.

“For awhile there was something of a trend of defendants stipulating to class certification in these cases, though I’ve seen a bit less of that recently,” Amert said. “That was based on a line of cases saying it’s almost a layup to certify a class in an ERISA case.”

The Genworth decision could shift this landscape by giving employers a set of arguments to defeat class bids.

“This decision certainly gives defendants a good reason not to stipulate to class certification,” Amert said.

Fund Performance

In Genworth, the Fourth Circuit focused on the fact that each potential class member “participated in the plan in a materially different way"—sometimes even benefiting from the challenged funds—depending on when they invested or withdrew money, which funds they chose, and how the market performed. These variations suggest there’s no “inherent commonality” among retirement plan participants challenging investment performance, the court said.

This analysis could impede the recent surge of litigation centering on 401(k) fund performance. Unlike prior waves of ERISA litigation, which have centered on retirement plan fee levels, dozens of new cases filed in 2026 alone challenge how well the funds in a given retirement plan fared compared to other options.

Cases that depend on individual workers’ investment choices could be vulnerable to the Genworth opinion’s reasoning, said Wystan M. Ackerman, a Robinson & Cole LLP partner focused on class actions and insurance coverage litigation.

“If the allegations are focused on something like a fee that’s charged to all participants in essentially the same amount, that would be more susceptible to class certification than something that depends on people’s choices,” Ackerman said.

Genworth Financial appeared to recognize this distinction, saying in an April court filing that the case against it “strays from the typical ERISA fiduciary-duty claims concerning excessive fees or fiduciary misconduct that affects all plan participants in a uniform or undifferentiated way.”

Aftershocks

The Genworth decision has caught the attention of courts both within and outside the Fourth Circuit.

A Virginia federal judge in another case hesitated before granting class status in light of the ruling, and a North Carolina federal judge said she’d hold off on finalizing an ERISA class settlement “pending further consideration” due to the decision. Outside the Fourth Circuit, a Pittsburgh-based company cited the court’s ruling in seeking to undo class certification in a dispute over its employee stock ownership plan.

It’s possible these issues could make their way to the US Supreme Court, but probably not until they percolate more in the lower courts and cause a well-defined circuit split, Ackerman said.

Amert predicted plaintiffs’ attorneys will be less inclined to file their cases within the Fourth Circuit, which has jurisdiction over federal courts in Maryland, Virginia, West Virginia, and the Carolinas. About three dozen proposed class actions have been filed under ERISA in district courts within the Fourth Circuit since 2024, with defendants including Northrop Grumman Corp., Leidos Inc., and Duke University.

“ERISA class actions often can be filed in a large number of jurisdictions where the plan has participants, and plaintiffs’ attorneys have a lot of flexibility in deciding where to file their suits,” she said. “I think we’ll see people going to other jurisdictions as long as this is good law in the Fourth Circuit.”

The case is Trauernicht v. Genworth Fin. Inc., 4th Cir. App., No. 24-1880, 6/4/26.