U.S..District Judge David R. Herndon of the U.S. District Court for the Southern District of Illinois said he could not yet decide whether Boeing acted as a fiduciary for its 401(k) plan.
Herndon said, for example, he didn’t have enough information to decide whether the plan vested Boeing with discretion to select plan administrators. This would impose on Boeing a fiduciary duty to use care in the selection of such administrators and to monitor the performance of those fiduciaries, the court said.
The lawsuit brought by three Boeing employees alleged that Boeing, its employee benefits plan committee, and its director of benefits breached their Employee Retirement Income Security Act (ERISA) fiduciary duties because of the excessive fee problem (See Details Reported on Boeing 401(k) Fee Suit ).
Herndon threw out Boeing’s contention that the employees could not seek an accounting under ERISA Section 502(a) (3) against a defendant other than a plan trustee. Noting that Boeing’s argument was drawn from the common law of trusts, the court said that while ERISA was drafted against the backdrop of the common law of trusts, the duties imposed on ERISA fiduciaries are broader and more stringent than the common law of trusts.
Herndon rejected the argument by Boeing that the employees had only alleged that Boeing was the plan sponsor and not a plan fiduciary. The court noted that employers do not automatically become fiduciaries by establishing a benefit plan, but employers carry fiduciary status if they exercise discretionary control over the management of the plan.
The case is Spano v. Boeing Co., S.D. Ill., No. 06-cv-743-DRH, 4/18/07.
The issue of excessive 401(k) fees has been a hot one in recent months, drawing a wave of participant lawsuits (See Lawyer: Excessive Fee Suits Not an Organized Anti-Plan Campaign )