Federal Judge Dismisses ERISA Excessive Fee Complaint Against Bayada 

A federal judge dismissed a complaint accusing Bayada Home Health Care Inc. of mismanaging its 401(k) plan, delivering a victory for plan sponsors as the court considered the influence of the U.S. Supreme Court’s 2025 decision in Cunningham v. Cornell University. 

The opinion in Peeler v. Bayada Home Health Care, issued on January 27 by U.S. District Chief Judge Martin Reidinger of the Western District of North Carolina, threw out every claim brought by two Bayada employees, finding they lacked constitutional standing and failed to plausibly allege that the plan’s investment choices, recordkeeping costs or advisory fees actually harmed their retirement accounts.  

The decision is one of the most significant district-court responses yet to the Supreme Court’s 2025 Cunningham ruling, which loosened pleading standards for prohibited transaction claims under ERISA and sparked concerns from defense attorneys of a surge in fee litigation. While acknowledging Cunningham’s framework, Reidinger relied heavily on standing doctrine to halt the case at the pleading stage—an approach that ERISA defense lawyers say could blunt the impact of the high court’s ruling. 

Case Background 

The plaintiffs alleged that Bayada fiduciaries breached their duties by offering an allegedly more expensive share class of a J.P. Morgan fund, retaining a poorly performing T. Rowe Price fund, overpaying for recordkeeping services and paying excessive advisory fees to UBS and Morgan Stanley.  

Reidinger rejected each claim. 

On the investment side, Reidinger held that the plaintiffs could not challenge funds they never invested in and that conclusory allegations about risk, fees or long-term underperformance were not enough to show that the one plaintiff who did invest in the T. Rowe Price fund suffered an actual loss. 

On recordkeeping and advisory fees, Reidinger faulted the plaintiffs for relying on flawed comparisons to other retirement plans. Public filings cited in the complaint contradicted key allegations, the judge wrote, and failed to show that supposedly “comparable” plans received the same services for lower costs. 

Ruling on Standing 

Perhaps the most consequential part of the ruling addressed the plaintiffs’ prohibited-transaction claims, those most likely to be affected by Cunningham. 

Although Cunningham held that hiring a service provider can be “presumptively unlawful” under ERISA unless an exemption applies, Reidinger emphasized that plaintiffs must still show a concrete injury to satisfy Article III standing. 

Here, Reidinger found, allegations that advisory fees were “grossly excessive” or “not for necessary services” were not enough. The complaint failed to allege that the plaintiffs’ account balances declined because of those fees or that the services provided were not worth what the plan paid. 

“Bare allegations of excessive fees,” Reidinger wrote, do not establish standing without facts showing real financial harm. 

The Bayada Home Health Care 401(k) Plan had approximately $400 million in assets with more than 43,000 plan participants at year-end 2024, according to its most recent Form 5500 filing.