The 9th U.S. Circuit Court of Appeals has denied Franklin Templeton’s petition for permission to appeal a district court’s order granting class action certification in a self-dealing suit regarding its 401(k) plan.
In its argument, the firm pointed out that plaintiff Marlon H. Cryer signed an agreement not to pursue class action claims against the firm in return for receiving post-severance benefits. Cryer contended that the Employee Retirement Income Security Act (ERISA) Section 502(a)(2) mandates that he bring his claims on behalf of the plan and similarly situated participants. But, Franklin Templeton’s lawyers said a Supreme Court decision in LaRue v. DeWolff, Boberg & Assoc., Inc. allows Cryer to pursue a claim on behalf of himself.
Cryer sued Franklin Resources and the plan’s investment committee alleging that defendants breached their fiduciary duties by causing the plan to invest in funds offered and managed by Franklin Templeton, when better-performing and lower-cost funds were available. Last January, a district court judge denied a motion to dismiss the suit, which Franklin Templeton said was not allowed due to Cryer’s agreement.The 9th Circuit offered no explanation for why it denied the firm’s petition.