A federal judge in Newark, N.J., dismissed for a second time an ERISA lawsuit filed against ADP Inc. by a company that participates in the ADP TotalSource Retirement Savings Plan.
U.S. District Court Judge Esther Salas on March 31 supported ADP's motion for dismissal against McCaffree Financial Corp, Overland Park, Kan., 12 months after she dismissed the initial lawsuit.
McCaffree is a sponsor in the ADP plan, and it sued in May 2020 alleging ERISA violations for high record-keeping fees as well as expensive and poor-performing investments over ADP's role as the fiduciary of the multiple-employer 401(k) plan.
When Ms. Salas dismissed the lawsuit the first time, she allowed the plaintiffs to file an amended complaint in McCaffree Financial Corp. et al. vs. ADP Inc. et al.
Ms. Salas wrote that the plaintiffs failed again to show that McCaffree had standing to sue ADP because McCaffree isn't a fiduciary. "Having failed to sufficiently plead constitutional standing," the judge told the plaintiffs they could have one more chance to "plausibly allege" that the company is a fiduciary.
Ms. Salas noted that the latest complaint "does not sufficiently allege" that the defendants violated ERISA for excessive record-keeping fees, administrative fees and total plan costs. She also rejected plaintiffs' allegations that defendants breached ERISA's duty-of-loyalty guidelines, which cover claims that plan executives put their own interests and third parties' interests ahead of those of participants.
In dismissing the plaintiffs' allegation that the defendants didn't follow the retirement plan document, the judge wrote that because the amended complaint "merely recited the statutory language here, it has not made sufficient allegations to survive a motion to dismiss."
ADP TotalSource Retirement Savings Plan, Miami, had $7.9 billion in assets as of Dec. 31, 2021, according to the company's most recent Form 5500 filing.
