The new lawsuit, filed July 31by Omnicom plan participant Carol Maisonette, centers on a suite of actively managed target date funds from Fidelity Management Trust Co., which isn’t named as a defendant. These funds, which Maisonette says serve as the plan’s default investment option, are more expensive and riskier than a similar suite of passively managed Fidelity funds, and their “lack of downside protection” has been magnified by the recent Covid-19 related market downturn, Maisonette says.
Maisonette’s suit is one of at least six proposed class actions filed in the past two months challenging an employer’s decision to offer the Fidelity Freedom funds in its retirement plans. The cases, which also target Quest Diagnostics Inc., Paychex Inc., Eversource Energy Service Co., CommonSpirit Health, and MedStar Health Inc., were filed by Shepherd, Finkelman, Miller & Shah LLP.
Maisonette’s lawsuit comes two months after a different Omnicom plan participant filed a proposed class action challenging the plan’s fees and investment options more generally. Both cases are part of an ongoing flurry of 401(k) fee litigation in which more than 40 employers have been sued in 2020 alone. Omnicom now joins Quest Diagnostics and Estée Lauder in being hit with multiple proposed class actions over a three-month span.
Causes of Action: Breach of fiduciary duty and failure to monitor fiduciaries in violation of the Employee Retirement Income Security Act, or, alternatively, liability for knowing breach of trust.
Relief: Declaratory, injunctive, and equitable relief, damages, interest, attorneys’ fees, and costs.
Potential Class Size: Thousands of participants and beneficiaries in Omnicom’s 401(k) plan.
Response: Omnicom didn’t immediately respond to a request for comment.
The case is Maisonette v. Omnicom Grp., S.D.N.Y., No. 1:20-cv-06007, complaint 7/31/20.