ERISA Class Action Goes Forward Against Prudential
Retirement plan savers can move forward with their ERISA case against Prudential Retirement Insurance & Annuity Company concerning allegations that it improperly profited from its Stable Value product in its 401(k) retirement plans. On September 19, U.S. District Court Judge Vanessa L. Bryant denied Prudential’s motion to dismiss, ruling for the plaintiffs — who are represented by Bailey & Glasser attorneys led by Greg Porter and Ryan Jenny.
The employees and retirees argue that Prudential unlawfully set its own compensation by retaining the “price spread” and setting the Crediting Rate to participants at an improperly low level. The Crediting Rate is the amount of interest paid to investors in the Stable Value fund. Prudential argued that the Stable Value fund is not a ‘plan asset’ and, therefore, not bound by federal law under ERISA. Plaintiffs disagreed. ERISA requires plan fiduciaries to make decisions concerning the plan solely in the interest of the plan participants. Prudential also argued it is not a fiduciary; however, the Court rejected its arguments.
Among other findings, Judge Bryant stated the issue of “whether 1.5 percent is a reasonable rate of return cannot be determined without further factual development.” The Court also noted that “the complaint plausibly alleges that the [Guaranteed Income Account] and [Guaranteed Income Fund] investors bear investment risk notwithstanding the fact that the interest rate is set prior to the beginning of each semi-annual investment period.” Accordingly, the case will now proceed to full discovery.
The case is Leonard D. Wood II, et al., v. Prudential Retirement Insurance & Annuity Company, 3:15-cv-1785 (VLB) (D. Conn.). A copy of the Prudential Order can be found here.
In addition to representing the Prudential savers, Bailey & Glasser also represents stable value investors in cases against Voya, New York Life and Metropolitan Life. Similar motions to dismiss were denied in the New York Life and Metropolitan Life cases earlier this year.Contact Form »