Suit Dismissed Over Old Dominion’s Retirement Plan
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A federal District Court judge has dismissed a lawsuit filed against Old Dominion Freight Line Inc. over the administration and pricing of its retirement plan offerings.
The lawsuit was filed Nov. 18, 2022, by former employee Harvey Davis in the federal Middle District of North Carolina.
Old Dominion filed its dismissal request in February, saying Davis lacked standing to file the lawsuit.
Judge Thomas Schroeder ruled Sept. 7 that Davis lacked standing in his dismissal. The lawsuit, however, can be refiled.
Old Dominion could not be immediately reached for comment on the dismissal.
Old Dominion has described the lawsuit as “one of more than 250 cookie-cutter class actions filed in the last three years against large 401(k) plan sponsors.”
“These lawsuits assert hindsight-based imprudence claims against plan fiduciaries associated with the amount of third-party administrative fees the plan paid, the costs of the plan’s various investments, and/or the performance of certain funds.”
According to court filings, Davis was an employee from 1989 until Jan. 31, 2021.
Davis filed the suit on behalf of the Old Dominion 401(k) Retirement Plan. It covers the time period of Nov. 18, 2016, to the present. The 401(k) plan held $2.02 billion in assets as of Dec. 31, 2021.
According to the dismissal, Davis alleges that he was injured by Old Dominion’s mismanagement of the plan, “paying excessive recordkeeping and administrative costs associated with the plan and investing in the imprudent investment options offered by the plan, which are the subject of this lawsuit.”
“But, he provides no factual allegation of what those costs and investments were.
“Instead, on its face, the complaint contains no factual support for the conclusory allegations that he personally invested in any of the imprudent investment options, nor that he suffered any other type of specific financial loss.”
Davis requested class-action status that could cover as many as 24,033 plan participants. Old Dominion listed having on average 22,438 full-time employees as of June 30.
Background
Davis accuses the company of “breaching its fiduciary duties of prudence in violation of the (federal) Employee Retirement Income Security Act.”
Great-West Financial Retirement Plan Services, an affiliate of Empower Financial, is the plan’s recordkeeper.
Specifically, the lawsuit claims the company has allowed the plan to charge excessive fees on investments.
According to the lawsuit, the expense ratio was typically about one-tenth of a percent higher than similar options within the same fund.
“Defendant selected and retained for the plan high-priced investments when the identical investments were available to the plan at a fraction of the cost,” according to the lawsuit.
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The lawsuit claims the higher fees “caused the plan and its participants to wrongfully lose roughly $3 million in retirement savings over the course of the relevant time period.”
Old Dominion said that based on “nonspecific allegations, plaintiffs demand that the court unlock the door to multimillion-dollar class-action discovery, hoping that defendants will [wave] the white flag of settlement rather than bear the financial burden of litigation.”
Old Dominion said in its response that Davis “never invested in any of the challenged funds and alleges no planwide mismanagement.”
“Because Davis never invested in the challenged funds, the value of his individual account will not fluctuate one cent whether he wins or loses this case. Therefore, plaintiff has no concrete stake in this lawsuit.
“The fact that other plan participants may have invested in the challenged funds and sustained alleged injuries to their individual accounts is irrelevant.”
Schroeder ruled that “Old Dominion has met its burden of showing that Davis was not individually harmed, and therefore lacks standing on the face of the complaint to proceed in this case.”
“A review of the records offered by Old Dominion, which may be considered at this stage given the jurisdictional nature of this issue, supports its claim that Davis did not, in fact, invest in any of the challenged funds.”
Thomasville, N.C.-based Old Dominion Freight Line ranks No. 10 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
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