Parker-Hannifin’s 401(k) Benchmark Spat Catches High Court’s Eye

The U.S. Supreme Court asked Parker-Hannifin Corp. employees challenging their 401(k) plan to respond to the company’s petition urging the justices to address the “meaningful benchmark” standard used by courts weighing retirement fees and investments.

The high court on Monday asked the employees to respond to Parker-Hannifin’s petition, which seeks reversal of a decision greenlighting claims over the Northern Trust target date funds in the motion control technology company’s retirement plan. The US Court of Appeals for the Sixth Circuit ruled in a 2024 split decision that the workers have viable claims under the Employee Retirement Income Security Act because they plausibly alleged that the Northern Trust Focus Funds had high investor turnover and underperformed a target date fund index from S&P Global.

This move by the justices is seen as an indication that someone at the court is interested in the class action, and it slightly increases the chances the case will be heard, according to a Bloomberg Law analysis published in 2018.

The proposed class lawsuit accuses Parker-Hannifin of mismanaging a 401(k) plan covering more than 32,000 people by retaining a suite of unproven and poorly performing target date funds from Northern Trust, which isn’t named as a defendant. An Ohio federal judge dismissed the case after finding the workers hadn’t put forth valid benchmarks by which to judge the funds in question, but the Sixth Circuit disagreed and revived the dispute.

The appeals court’s decision focused on the “meaningful benchmark” standard that several courts, including the Sixth, Seventh, Eighth, and Tenth circuits, have used to assess whether retirement investors have identified a better alternative that’s sufficiently similar to the fund or fee structure they challenge. Attorneys said the Sixth Circuit’s decision to treat an S&P fund index as a proper benchmark for passively managed target date funds represents a liberal take on the standard that may be out of sync with how other courts have juggled the hundreds of recent lawsuits challenging 401(k) fees and investment options under ERISA.

Parker-Hannifin appealed to the Supreme Court, criticizing the Sixth Circuit for creating an “unprecedented, trivially easy-to-satisfy test” for identifying a meaningful benchmark in an ERISA case. The appeals court also created a circuit split by announcing the possibility that 401(k) investors can state a viable claim without identifying a meaningful benchmark at all, the company said.

The justices set a May 21 deadline for the workers’ response.

Morgan, Lewis & Bockius LLP represents Parker-Hannifin. Schlichter Bogard LLC represents the employees.

The case is Parker-Hannifin Corp. v. Johnson, U.S., No. 24-1030, response requested 4/21/25.