ERIC, Industry Groups Urge 9th Circuit to Uphold Dismissal of AT&T Forfeiture Case

The ERISA Industry Committee and a coalition of business groups filed an amicus brief last week with the U.S. 9th Circuit Court of Appeals, urging the court to uphold a district court’s dismissal of a lawsuit challenging AT&T’s use of forfeited 401(k) contributions to reduce future employer contributions to its retirement plan.

The brief filed in Luis Hernandez v. AT&T Services Inc. et al. argues that the district court correctly rejected claims that AT&T violated the Employee Retirement Income Security Act by using forfeited employer contributions to offset future matching and other employer contributions. According to the ERIC, federal law has long permitted retirement plan fiduciaries to use forfeitures for several purposes, including paying plan expenses, restoring benefits for rehired participants and reducing future employer contributions, so long as the plan document allows such uses.

The ERIC and its coalition partners, the U.S. Chamber of Commerce and the American Benefits Council, contend that neither ERISA nor federal regulations require plan fiduciaries to prioritize administrative expenses over future employer contributions when allocating forfeited assets. The groups argue that AT&T acted consistently with the terms of its retirement plan and decades of regulatory guidance permitting forfeitures to be used to offset future company contributions.

The filing also warns that forfeiture lawsuits threaten long-settled retirement plan administration practices and accused the plaintiffs of seeking to impose fiduciary obligations beyond ERISA’s requirements—arguing that fiduciaries must maximize participant account balances, rather than administer plans in accordance with their governing documents.

In a statement accompanying the filing, ERIC Legal Center Executive Director Doug Hinson said AT&T followed the terms of its plan and longstanding regulatory guidance regarding forfeited contributions.

“Retirement plans work because employers can rely on the rules they wrote into them and what the regulators say is permissible,” Hinson said. He added that the plaintiffs’ legal theory conflicts with what regulators and courts have allowed for decades.

The appeal follows an August ruling by U.S. District Judge Otis Wright II, presiding in U.S. District Court for the Central District of California, in which Wright dismissed the complaint without leave to amend. Wright found that Hernandez failed to state a viable ERISA claim and concluded that AT&T’s use of forfeitures was expressly permitted by the plan’s terms and consistent with decades of regulatory guidance. Wright also noted that the plaintiff did not allege that any plan assets were diverted to AT&T or removed from the plan.

The case is one of dozens filed in recent years challenging employers’ use of 401(k) forfeitures. Federal courts have dismissed similar complaints against companies including Home Depot, Kaiser, JPMorganChase, Siemens and Nordstrom, while the Department of Labor has submitted five amicus briefs supporting employers in forfeiture litigation.

Plaintiffs filed 48 plan forfeiture complaints in 2025, according to Encore Fiduciary, up from 29 in 2024.

The AT&T Retirement Savings Plan had 203,226 participants with more than $43.1 billion in assets at the end of 2024, according to its most recent Form 5500 filing.

The 9th Circuit hears appeals from federal district courts in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington.