A federal judge has denied Edward Jones’ motion to dismiss a lawsuit from its employees alleging the company favored its own investments and those of its “preferred partners” in its 401(k) plan.
Judge John A. Ross on Tuesday struck down Edward Jones’ motion to dismiss, which had sought to end the employees’ two-year-old case pending in the United States District Court in St. Louis.
The employees allege that Edward Jones ran the plan to benefit Edward Jones and its corporate partners, rather than for its employees. Plaintiffs also allege the employees were overcharged for the plan’s recordkeeping.
Mark Boyko of Bailey & Glasser’s office located in Clayton, and Gregory Porter of the firm’s Washington, D.C., office are lead attorneys for the workers.
“We are pleased by today’s ruling,” Boyko said. “Employers who profit from their employees’ retirement savings should expect to be held accountable.”
The case is brought under the Employee Retirement Income Security Act (ERISA) and seeks class action status on behalf of all participants in the Edward D. Jones & Co. Profit Sharing and 401(k) Plan, Boyko added.
The proposed class-action suit, filed Aug. 19 2016 in U.S. District Court in St. Louis, states that the financial services firm breached their fiduciary duties to the plan by populating it with mutual funds run by the company’s corporate partners.
The more than 35,000 employees listed in the suit are asking for Edward Jones to return the money lost in the 401(k) plan. The suit also claims that Edward Jones used more expensive versions of the plans when lower plans were available.
Defendants argued that the breach of fiduciary claims should be dismissed because they fulfilled their duties by offering an array of investment options.
In his opinion on the case, Judge Ross said, “The complaint, when read as a whole, has provided sufficient facts to plausibly state [a claim for a breach of fiduciary duties and for a failure to defray plan expenses]. . . Defendants’ arguments in support of their motion to dismiss challenge the factual allegations of the complaint and are premature at this stage of the litigation.”
He further stated that the employees have sufficiently detailed and differentiated the claims asserted again the Administrative Committee and Investment Committee.
“The amended complaint is far from a “kitchen sink” or “shotgun” pleading in which a plaintiff brings every conceivable claim against every conceivable defendant, resulting in a cause of action so general that it fails to put the various defendants on notice of the allegations against them,” Judge Ross said.
On October 12, 2016, the defendants filed their initial motion to dismiss but the court denied that motion on January 26, 2017, because the complaint “failed to allege any facts establishing it was a plan fiduciary.” In all other respects the court denied the motion, finding the complaint stated viable claims.
Judge Ross set an April 12 hearing to move the case forward. No trial date is currently set.