Fiduciaries of Small 401(k) Off the Hook for Excessive Fee Suit

A lawsuit that suggested retirement plan excessive fee suits were moving down market has been voluntarily dismissed by plaintiffs.

After defendants in the case were granted and extension to file a response to the complaint, and before they submitted one, the plaintiffs in the case filed a one page court document that simply said, “Pursuant to Fed. R. Civ. P. 41(a)(1), Plaintiffs voluntarily dismiss this action without prejudice.”

The primary argument in Damberg v. LaMettry’s Collision, Inc. is that LaMettry’s 401(k) plan used higher-priced retail class shares when lower-priced institutional class shares were available.

In many of the retirement plan excessive fee suits involving large plans, it is argued that the size of the plans’ portfolios gives them real bargaining power to negotiate lower fees for investments and administration. But, the Damberg lawsuit argued that the $9 million dollar, 114-participant plan also had the ability to negotiate for substantially lower fees than an individual would pay.