The Land O’Lakes defendants’ motion to dismiss the suit based on a lack of subject matter jurisdiction and failure to state a plausible claim succeeded only in part, setting the stage for either a full trial or mediation and settlement.
The U.S. District Court for the District of Minnesota has stayed the Employee Retirement Income Security Act (ERISA) lawsuit filed in May 2020 against the Land O’Lakes dairy company.
The judge’s order comes after the filing of a joint motion to stay the proceedings while the parties enter a mediation process. The underlying lawsuit, one of many filed in recent years by the law firm Capozzi Adler, alleges fiduciaries of the Land O’Lakes Employee Savings & Supplemental Retirement Plan have failed to objectively and adequately review the plan’s investment portfolio with due care to ensure that each investment option was prudent in terms of cost.
The suit also alleges the defendants impermissibly maintained certain funds in the plan despite the availability of identical or similar investment options with lower costs and/or better performance histories. Additionally, the complaint includes allegations of disloyal actions taken by plan fiduciaries in the negotiation of service provider relationships.
Back in February, a ruling published by the same district court granted some elements of the defense’s motion to dismiss, while rejecting others. That ruling came in response to the Land O’Lakes defendants’ motion to dismiss the suit based on a lack of subject matter jurisdiction and failure to state a plausible claim.
Before analyzing and ruling on the issues at hand, the preliminary ruling stepped through the various arguments included in the complaint, noting how much of the suit is spent comparing the plan’s investment options with others it allegedly could have and should have used, and in comparing the administrative fees paid by the plan to those allegedly paid by peer plans.
“Plaintiffs challenge 18 of the plan’s 25 investment options, even though they only enrolled in three of those options,” the February ruling states. “Defendants argue that plaintiffs lack standing to challenge investment options in which they were not enrolled because they do not have a particularized and concrete injury relating to those options. Plaintiffs respond that they need not personally invest in each fund to have standing because they suffered overall injury from defendants’ fiduciary breaches and are entitled to bring a class action suit in a representative capacity. The court finds that plaintiffs have standing to challenge the entire plan.”
This determination followed in the footsteps of many prior rulings across the U.S., in which district court judges have embraced the concept that, once a plaintiff properly pleads an injury under their plan, that individual can pursue remedies on behalf of the whole plan and other participants, even though such allegations go beyond the individual’s injury. After this point of success for the plaintiffs, the ruling went on to side in one important way with the Land O’Lakes defendants.
“Plaintiffs compare the expense ratios of the plan’s funds to the median expense ratios in comparable funds in similarly sized plans,” the February ruling states. “This comparison demonstrates that all of the plan’s investment options were above ‘comparable’ median expense ratios of similarly sized plans. Defendants respond that the median expense ratios from the study are not meaningful benchmarks because the study does not distinguish between actively and passively managed accounts. The court agrees with defendants and finds that the study’s median expense ratios are not meaningful benchmarks.”
Though the outcome of the Land O’Lakes mediation process remains to be seen, context for what may come next can be found in the recent settlement agreement inked by Navy defense contractor Serco Inc. in a substantially similar piece of litigation. In that matter, which involved a somewhat smaller retirement plan but related allegations, the parties reached a $1.2 million settlement agreement after nearly a year of discovery, motions and mediation. In addition to the monetary settlement, the agreement includes an injunction on the plaintiffs from filing additional lawsuits on the same grounds as the original case, and the defense denies all allegations and liability for the allegations and claims.
The text of the new Land O’Lakes stay order is available here.
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Advisor Group selects business development VP; Principal announces new chief information officer of retirement and income solutions; Cobbs Allen expands into 401(k) business with new hire; and more.
Advisor Group has appointed Kristen Kimmell as the company’s new executive vice president, business development. In this role, Kimmell will integrate and lead recruiting, transitions and onboarding for Advisor Group’s network of firms, encompassing FSC Securities, Royal Alliance Associates, SagePoint Financial, Securities America, Triad Advisors and Woodbury Financial Services.
Kimmell will report directly to Greg Cornick, president, advice and wealth management, and partner closely with Erinn Ford, executive vice president, adviser engagement; and Susan Theder, chief marketing officer; as well as the presidents of the firms that make up the Advisor Group network.
“We are thrilled to welcome a senior industry leader of Kristen’s caliber to Advisor Group,” says Cornick. “Kristen’s expertise and passion for a digitally enabled approach to organic growth will enable Advisor Group to deliver the best possible transition experience to financial advisers, clients and their teams, while significantly reducing the time spent on the process. She is driven by a sincere desire to help financial advisers achieve their maximum potential and brings empathy and a personalized level of attention to every stage of the recruiting lifecycle.”
Kimmell comes to Advisor Group from RBC Wealth Management, where she served in multiple senior leadership roles, most recently as head of adviser recruiting and field marketing for the company’s U.S. operations. Additionally, under her leadership as the co-executive sponsor of RBC Wealth Management’s Women’s Association of Financial Advisors, the organization doubled the number of women in field leadership roles.
In addition to overseeing Advisor Group’s business development, transitions and onboarding functions, Kimmell will also manage the company’s third-party recruiters, with the goal of deepening engagement with existing recruiters and forming new relationships.
Advisor Group says the appointment is part of a broader strategic plan to recruit more advisers from multiple channels, in addition to reinforcing its core strengths with recruiting from within the independent channel. Kimmell’s appointment is the centerpiece of Advisor Group’s acceleration and advancement of its growth strategy to include a broader push—which she will spearhead—to recruit advisers from outside the independent channel, as well as ensemble and enterprise firms, bank advisers, wirehouse breakaways and hybrid professionals.
The appointment also builds on Advisor Group’s ongoing build-out of digital capabilities across multiple facets of the company’s business. Kimmell will bring her expertise and passion to sparking organic growth through transforming the service experience of financial advisers into one that is fully digitally enabled.
Principal Announces New Chief Information Officer of Retirement and Income Solutions
Principal Financial Group has announced that Shawn Johnson will be the new chief information officer of the company’s Retirement and Income Solutions (RIS) business.
“Shawn brings a wealth of digital and IT [information technology] experience to Principal that’s critical in ensuring our Retirement and Income Solutions business is on the leading edge of recordkeeping technology and digitization,” says Renee Schaaf, president of Principal RIS. “Shawn’s hands-on experience in technology modernization and digital transformation within the retirement recordkeeping industry will be invaluable as we continue strengthening our top-tier provider status.”
As chief information officer, Johnson will have responsibility for the technology and digital strategies for the RIS business and report to Schaaf. In this role he will continue to evolve the company’s retirement savings and analysis platforms for small, medium and large plan sponsors, as well as participants.
Following a strategic review, a Principal spokesperson recently told PLANADVISER: “We will also pursue digital solutions, such as Principal SimpleInvest, our digital IRA [individual retirement account] and advice offering, and our mobile apps that make it easier for customers to do business with us on their terms.”
Johnson succeeds Chief Information Officer Susie Thomann, who will be retiring after leading the technology group within RIS.
Prior to Principal, Johnson spent the past 15 years in leadership positions within the energy, health care and financial services industries, where he drove IT innovation and developed and executed cloud initiatives. In his most recent role at Empower Retirement, Johnson oversaw the support of mission-critical systems while focusing on the modernization and execution of its cloud strategy and upskilling of IT talent.
Johnson earned his bachelor’s degree in mechanical engineering from Colorado State University. He will be based out of the Principal headquarters in Des Moines, Iowa.
Cobbs Allen Expands Into 401(k) Business With New Hire
Cobbs Allen, a national independent agency, is expanding its health and welfare practice to include 401(k) consulting with the addition of John Wilhoit.
“John brings extensive knowledge and industry-leading experience in the retirement space to Cobbs Allen,” says Bruce Denson Jr., president of CAC Specialty, a specialty insurance brokerage and investment banking platform and part of Cobbs Allen. “He is an accomplished leader and will be an instrumental piece to growing and establishing our 401(k) and corporate retirement plans consultant team.”
Prior to joining Cobbs Allen, Wilhoit worked at Willis Towers Watson as a director and created and led the mid-market retirement practice. At Willis Tower Watson, Wilhoit was responsible for the strategic development of clients’ retirement plans and provided them with investment advisement, analysis, communication and education.
BPAS Acquires Retirement Plan Services Provider
BPAS, a national provider of retirement plans, benefit plans, fund administration and collective investment trusts (CITs) is acquiring Fringe Benefit Design of Minnesota Inc. (FBD), a provider of retirement plan administration, actuarial and benefit consulting services with offices in Minnesota and South Dakota.
“We are very excited about joining forces with BPAS,” says Kevin Miller, FBD president and CEO. “We feel that combining our highly skilled administrative team, industry-leading technology and operating efficiencies provided by BPAS, and the investment selection/monitoring provided by The E-Valuator software will make this an industry-leading package that will compete extremely well in the retirement plan industry.”
The acquisition will give BPAS, a subsidiary of Community Bank System Inc., a profile of revenues of approximately $110 million, administration of more than 510,000 retirement plan participant accounts, 4,200 employer clients, approximately $13 billion in defined contribution (DC) plan assets on its daily valuation system and some $110 billion of total assets in trust.
“This transaction represents a very attractive opportunity for us,” says Community Bank System President and Chief Executive Officer Mark E. Tryniski. “Our employee benefits and trust business is the largest of our non-banking businesses and plays a significant role in our overall growth strategy for our financial services businesses on a national level.”
“This affiliation adds exceptional depth and breadth for the benefit of our current and prospective clients,” adds Maryann Geary, president of BPAS. “With this acquisition, we significantly expand our retirement offerings on a national level, including the association and group plan space. We are excited to combine with FBD and committed to growing our capabilities in the region and nationally.”
MetLife Hires Government Relations VP
MetLife Inc. has announced that Frederick Mitchell will join the company as vice president, U.S. government relations, effective July 26. He will serve as a senior member of the U.S. government relations team and lead the company’s advocacy efforts on retirement and financial services policies. Mitchell will be based in Washington, D.C., and report to Maggie Gage, head of U.S. government relations.
Mitchell joins MetLife from the American Bankers Association, where he most recently served as vice president of congressional relations, advising member companies and developing legislative strategies on securities, banking and investments issues.
Previously, Mitchell worked in the office of Government, Regulatory Affairs and Public Policy for PricewaterhouseCoopers (PwC). He also held government relations and paralegal positions with Jones Walker LLP and Williams & Connolly LLP and spent time on the House Ways and Means Committee.
Mitchell received his bachelor’s and master’s degrees from George Mason University and studied at the University of Oxford.
Groom Law Group Announces New Principal
Groom Law Group, Chartered, has hired principal Elizabeth F. Drake.
Drake was previously at another law firm where she led its Employee Benefits Practice Group.
“We are excited to have Elizabeth join us and bring her wide-ranging command of ERISA [the Employee Retirement Income Security Act] and tax issues that apply to employee benefit plans, particularly with respect to qualified retirement plans, to the firm,” says David Levine, co-chair of the firm’s plan sponsor practice. “Elizabeth will be yet another incredible resource for our clients who depend on us for our meaningful sub-specialization in these areas.”
Drake devotes a large portion of her practice to assisting Fortune 150 companies on day-to-day plan administration matters, as well as assisting clients with nondiscrimination testing matters, pension plan de-risking activities, plan mergers and plan terminations. She also represents clients with regard to IRS filings, including with respect to letter ruling requests and corrections. Her history of handling a variety of sophisticated matters on behalf of plan sponsors has earned Drake recognition as a leader in the employee benefits, executive compensation and retirement plan fields by Chambers USA and U.S. Legal 500.
