LabCorp Prevails in ERISA Trial, While Case Against NextEra Allowed to Proceed

Two federal courts reached different decisions in separate complaints that accused large employers of mismanaging employee retirement plans in violation of the Employee Retirement Income Security Act. 

In Florida, a federal judge allowed claims to proceed in a case against NextEra Energy Inc., finding that employees plausibly alleged the company allowed excessive fees and misused retirement plan forfeitures. But in North Carolina, Laboratory Corp. of America Holdings successfully defended against similar claims after a bench trial, with the court concluding the company acted prudently in overseeing its plan.

LabCorp: Court Sides with Employer

On August 12, U.S. District Judge Loretta Biggs, presiding in U.S. District Court for the Middle District of North Carolina, ruled in LabCorp’s favor after a four-day bench trial in a case originally filed three years ago.

The complaint, filed by employee Damian McDonald, alleged LabCorp overpaid for recordkeeping and chose costly investments for its $4 billion retirement plan, harming tens of thousands of workers.

But Biggs found that LabCorp “engaged in a prudent process in managing its recordkeeping fees and monitoring the plan’s investment shares” and that the plaintiffs “failed to meet their burden to establish that LabCorp breached its fiduciary duty of prudence.” 

The court discounted the testimony of the plaintiffs’ experts, noting their reliance on personal practices and approximations, while finding LabCorp’s expert, Steven Gissiner, persuasive in showing the company’s practices were consistent with industry standards.

The Laboratory Corp. of America Holdings 401(k) Savings Plan had 67,414 participants with more than $3.8 billion in assets as of 2023, according to the plan’s most recent Form 5500.

NextEra Energy: Case Moves Forward

Two days later, U.S. District Judge Aileen Cannon, presiding in U.S. District Court for the Southern District of Florida, denied NextEra’s motion to dismiss a class action brought by employee John Stewart on behalf of more than 20,000 participants in the company’s 401(k) plan.

The complaint alleges that between 2017 and 2025, NextEra breached its fiduciary duty under ERISA by failing to control excessive recordkeeping costs and by misusing participant forfeitures.

According to the filing, NextEra’s plan participants paid between $47 and $65 per person in annual recordkeeping fees to Fidelity, while comparable plans paid closer to $20 to $25. Stewart also claims the company failed to seek competitive bids or benchmark costs adequately. The court held these allegations were sufficiently detailed to raise a plausible claim.

“The complaint sets forth plausible allegations that Defendant breached its duty of prudence by failing to monitor and control the Plan’s recordkeeping costs, and also by misusing forfeitures to the detriment of the plan,” Cannon stated.

The ruling means Stewart’s claims will move into discovery and, potentially, toward trial.

The NextEra Energy Inc. Employee Retirement Savings Plan consisted of 20,961 participants with more than $5 billion in assets as of 2023, according to the plan’s most recent Form 5500.