Southwest 401(k) Investors Advance Suit Challenging Single Fund

Southwest Airlines Co. must defend a proposed class action saying it mismanaged its 401(k) plan by offering workers a poorly performing actively managed fund that should have been purged from the plan.

Plan participants have a viable claim for fiduciary breach under the Employee Retirement Income Security Act based on the airline’s alleged failure to remove the fund from the plan despite its chronic underperformance, Judge Karen Gren Scholer of the US District Court for the Northern District of Texas said Wednesday.

Southwest disputed the participants’ allegations, saying they hadn’t identified a meaningful benchmark for assessing the fund’s performance. Scholer ...