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Shell, Fidelity Sued Over 401(k) Fees, Handling of Investor Data

Jan. 27, 2020, 3:22 PM

Four participants in Shell Oil Co.'s $10.5 billion 401(k) plan filed a proposed class action in the Southern District of Texas challenging the company’s retirement plan fees and its handling of confidential participant data.

Shell is accused of failing to rein in the plan’s administrative expenses and failing to monitor and remove poorly performing investment options. It’s also accused of allowing the plan’s record keeper, Fidelity Investments Institutional Operations Co., to use participants’ confidential data for improper purposes.

“Shell Defendants allowed the Fidelity Defendants to use Plan participants’ highly confidential data, including social security numbers, financial assets, investment choices, and years of investment history to aggressively market lucrative non-Plan retail financial products and services, which enriched Fidelity Defendants at the expense of participants’ retirement security,” the participants said in their Jan. 24 complaint.

The nine-count complaint raises claims under the Employee Retirement Income Security Act against Shell, Fidelity, and related entities and individuals.

The use of 401(k) participant data to market unrelated services has been a hot topic in ERISA litigation since at least 2019, when multimillion-dollar class settlements signed by Vanderbilt University and Johns Hopkins University included terms seeking to curb the use of this data for marketing purposes.

A pending lawsuit against Northwestern University asks the U.S. Court of Appeals for the Seventh Circuit to consider whether participant data is a plan asset subject to protections under ERISA.

The Shell plan participants are represented by Schlichter Bogard & Denton LLP, the St. Louis-based law firm that’s negotiated multimillion-dollar ERISA settlements with Lockheed Martin Corp., Boeing Co., ABB Inc., and Massachusetts Institute of Technology, among others.

Causes of Action: Breach of fiduciary duty and prohibited transactions in violation of ERISA.

Relief: Declaration of fiduciary breach and prohibited transactions, restoration of plan losses, removal of fiduciaries, surcharge, reformation, attorneys’ fees, costs, and interest.

Potential Class Size: More than 35,000 participants and beneficiaries in Shell’s 401(k) plan.

Response: Shell declined to comment on the allegations.

Attorneys: Jones Granger also represent the proposed class.

The case is Harmon v. Shell Oil Co., S.D. Tex., No. 3:20-cv-00021, complaint 1/24/20.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com

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