ATLANTA, April 12, 2018 /PRNewswire/ -- Sanford Heisler Sharp, LLP and Blumenthal Nordrehaug Bhowmik De Blouw LLP filed a class complaint today in the U.S. District Court of the Northern District of Georgia, alleging that Home Depot violates basic fiduciary duties under ERISA and abuses its employees' trust by mismanaging their 401(k) retirement plan. According to the complaint, Home Depot has selected multiple poorly-performing funds for its 401(k) plan, allowed investment advisers to charge its employees unreasonable fees, and turned a blind eye to a kickback scheme between an investment adviser and the plan's recordkeeper. The consequences to employees have been substantial. According to one leading financial information and technology company, the average Home Depot plan participant earns $100,000 less in retirement savings than employees in top-rated retirement plans of a similar size. The $100,000 disparity translates to an additional 18 years of work per participant.
Plaintiffs Jaime H. Pizarro and Craig Smith, both participants in Home Depot's retirement plan, filed the case on behalf of themselves and approximately 200,000 current and former plan participants. Named as Defendants are Home Depot, the 401(k) plan's investment and administrative committees, and investment advisors Financial Engines Advisors, LLC and Alight Financial Advisors, LLC. The class complaint seeks $140 million in damages.
David Sanford, chairman of Sanford Heisler Sharp and counsel for Plaintiff and the proposed class, noted, "ERISA's fiduciary standards are strict and exacting. Home Depot retained too many poor-performing investment advisory options on the Plan which were highly detrimental to the retirement savings of plan participants. Home Depot and the committees should be held to the highest standard as fiduciaries; instead, in this case, they fall below the lowest standard."
With over $6 billion in assets, Home Depot's plan is one of the largest 401(k) plans in the country. Yet, according to the complaint, many of the plan's investment options regularly underperform their benchmarks and comparable investment options. Accordingly, Plaintiffs claim, Home Depot fails to prudently select investment options and monitor their performance.
Plaintiffs further allege that Home Depot arranged for the investment adviser Financial Engines to sell investment advisory services to participants. Rather than providing personal investment advice, Financial Engines offers what is called "robo advice," in which a robot creates cookie-cutter portfolios based on minimal participant input. According to the complaint, Home Depot allowed Financial Engines to charge plan participants advisory fees that were in some cases double the competitive rate. To add insult to injury, Home Depot condoned an arrangement in which Financial Engines kicked-back a portion of its fee to the plan's recordkeeper. Although Home Depot replaced Financial Engines with Alight Financial Advisors in July 2017, Alight simply re-hired Financial Engines as a "sub advisor." Thus, says the complaint, the new arrangement added another layer of inefficiency to the plan's fee structure.
Charles Field, a partner at Sanford Heisler Sharp and counsel for Plaintiff and the proposed class, added, "As a fiduciary to the Plan, Home Depot is obligated to act for the exclusive benefit of the plan's participants and beneficiaries, to assure that plan expenses are reasonable, and to ensure the plan's investments are prudent. Home Depot neglected these sacrosanct duties."
Norman Blumenthal, the founding partner at Blumenthal Nordrehaug Bhowmik De Blouw LLP and counsel for Plaintiff and the proposed class, added, "Congress enacted the Employee Retirement Income Security Act to provide basic protections for employees with respect to employee benefit plans offered by their employers. Home Depot engaged in a scheme to undermine these basic protections."
As relief, Plaintiffs and the class seek (1) compensation for financial losses to plan participants and beneficiaries resulting from the plan's underperforming investments and excessive fees; (2) reform to Home Depot's retirement plan that would remove imprudent investments and ensure only reasonable investment advisory expenses; and (3) the removal of the fiduciaries who have violated their duties to the plan's participants and beneficiaries under ERISA.
About Sanford Heisler Sharp, LLP
Sanford Heisler Sharp, LLP is a national public interest class-action litigation law firm, which has offices in New York, Washington, D.C., San Francisco, San Diego, Nashville and Baltimore. Sanford Heisler Sharp focuses on employment discrimination, wage and hour, qui tam, and financial services matters. The firm represents select individual clients such as executives, lawyers in employment disputes, and whistleblowers. The firm has recovered over $1 billion for its clients. For more information, call 202-499-5202 or email email@example.com. More information about the firm and its successes can be found at http://www.sanfordheisler.com/. For the latest news visit our newsroom at http://www.sanfordheisler.com/media-room/news-archive/ or follow us on Twitter at https://twitter.com/sanfordheisler.
About Blumenthal Nordrehaug Bhowmik De Blouw LLP
Blumenthal Nordrehaug Bhowmik De Blouw LLP is a leading California employment law firm with offices in San Diego, Los Angeles, San Francisco, Sacramento, Riverside, and Chicago, Illinois. The firm represents consumers and employees in individual and class action cases involving violations of state and federal labor laws, including overtime pay, deferred pension benefits, unemployment claims, employer retaliation, discrimination, wage and hour laws, wrongful termination, employee benefits, and Fair Credit Reporting Act violations. Website: www.bamlawca.com, Twitter: @calaborattorney
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