On Wednesday in the District of New Jersey, employees who participated in digital solutions company Cognizant Technology Solutions’ 401(k) Savings Plan filed a putative class-action complaint against the company, its Board, and 401(k) investment committee. The defendants allegedly violated the Employee Retirement Income Security Act (ERISA) by breaching their fiduciary duties.
According to the complaint, in order to “safeguard Plan participants and beneficiaries, ERISA imposes strict fiduciary duties of loyalty and prudence upon employers and other plan fiduciaries,” who must act “solely in the interest of the participants and beneficiaries.”
Moreover, employers and fiduciaries should “establish a prudent process for selecting investment options and service providers” and “monitor investment options and service providers once selected to see that they continue to be appropriate choices.” According to the complaint, fiduciaries are required to examine the performance and cost of the investments as well as investing in market alternatives “to ensure that well-performing, low cost investment options are being made available to plan participants.”
The plaintiffs claimed that from December 2, 2014, the plan “had at least 410 million dollars in assets under management,” which increased to over $1 billion in 2017 and 2018. The plaintiffs argued that since it is a large plan, it “had substantial bargaining power regarding the fees and expenses that were charged against participants’ investments.”
Allegedly, the defendants breached their fiduciary duties because they failed to objectively and adequately review the plan’s investment portfolio to ensure each investment was prudent, maintained certain fund investments in the plan despite more prudent options that either had lower costs or better performance histories, and failed to control the record-keeping costs of the plan.
The plaintiffs have sought class certification, declaratory judgment, disgorgement of profits, an award for damages, an injunction, equitable relief, pre-judgment interest, and an award for costs and fees.
The plaintiffs are represented by Capozzi Adler, P.C.