Colgate-Palmolive Submits Motion for Summary Judgment in Retirement Fraud Lawsuit

Lawyers representing the employee relations committee of the Colgate-Palmolive Co. this week sought to remove the plan sponsor from the litigation because the company committee bears no responsibility for the breach that cost a participant $750,000, the attorneys wrote.  

The breach in which $750,000, accumulated for retirement by plaintiff Paula Disberry, a former Colgate-Palmolive employee, was given to someone else happened due to actions of recordkeeper Alight Solutions, Groom Law Group attorneys claimed in the motion for summary judgment filed on October 3.

“The committee is entitled to summary judgment because the evidence does not show that the committee breached any fiduciary duty, or that any act (or omission) of the committee caused the harm of which plaintiff complains,” Colgate-Palmolive attorneys wrote. “The crux of plaintiff’s complaint is that it was a fiduciary breach for the plan’s recordkeeper (Alight) to mail a temporary PIN to her physical mailing address in South Africa. There is no evidence the committee was even aware of this transaction.”

Groom lawyers claimed that the plaintiff did not plead sufficient facts to allege that the committee breached the prudence standard of the Employee Retirement Income Security Act, according to the motion.

“The question is not whether some additional protective step can be identified with the benefit of hindsight,” the attorneys wrote. “ERISA’s fiduciary duty of care requires prudence, not prescience. Rather, the question is whether the plan acted in an objectively unreasonable manner by failing to protect against a reasonably foreseeable risk.”

Disberry’s attorneys charged the defendants—including the company committee, Alight and custodian Bank of New York Mellon Corp.—with responsibility for the breach, missing several red flags that something was wrong. They cited the perpetrator’s request for a change of phone number, email address, mailing address, bank account number and an immediate cash distribution of the entire $750,000 account balance.

“There is no evidence that the committee acted or failed to act in an objectively unreasonable manner with respect to the distribution at issue,” the Groom attorneys wrote. “There is no evidence that the Committee was itself responsible for the interactions with the call center and website that plaintiffs contends should have been ‘red flags’”.

The defendants’ motion argued the committee had no role in the distribution of plan assets. Further, attorneys argued the alleged theft is insufficient to show that a fiduciary breach on behalf of the committee occurred.

“A party files a motion for summary judgment when the party believes it can prevail in the lawsuit when the material facts are not in dispute or even if the court assumes that the facts presented by the opposing party are true,” says Douglas Neville, practice group leader at law firm Greensfelder, Hemker & Gale PC, by email. “In this case, the facts appear to be crucial to the determination of whether the Colgate-Palmolive plan fiduciaries acted prudently. Therefore, it seems unlikely that the court will grant the motion.”

Lawyers representing the committee filed five separate motions on October 3 in support of the overall argument that the company committee defendant was not responsible for the fiduciary breach that resulted in distributing Disberry’s retirement plan assets to the perpetrator, Groom argued.

“A motion to preclude an expert is usually based on a challenge to the expert’s qualifications, methods, or the relevance of expert testimony to the case,” adds Neville, who is not involved in the litigation. “In this case, the motion seeks to exclude a report produced by the plaintiff’s expert. The defendant argues in its motion that the report should be excluded because it is based on inadmissible legal and other unsubstantiated conclusions, because it is irrelevant, and because it contains factual errors. Although it is difficult to determine whether the motion will succeed without knowing more specific facts of the case, this motion appears to have a better chance of success than the motion for summary judgment.”

In the 2020 plan year, the Form 5500 filing to the Department of Labor, the latest data available, showed that the Colgate-Palmolive Employees Savings & Investment Plan held more than $3.3 billion in assets for 7,373 participants.

The lawsuit, contested in U.S. District Court for the Southern District of New York, is Paula Disberry v. Employee Relations Committee of the Colgate-Palmolive Co. et al.

The employee relations committee of the Colgate Palmolive Co. is represented by attorneys with Groom Law Group, based in Washington, D.C.; defendant Alight Solutions LLC is represented by attorneys with law firm Jenner & Block LLP, based in Chicago; and defendant Bank of New York Mellon Corp. is represented by attorneys with the law firm Mayer Brown, in Chicago.

The plaintiff is represented by attorneys with law firm Renaker Scott LLP, based in San Francisco, and Brustein Law PLLC, based in New York City.

Representatives for neither Alight, Colgate-Palmolive, Groom nor Renaker responded to requests for comment.