On Friday in the Eastern District of Wisconsin, a former employee filed a putative class action lawsuit against Nestle USA and its board of directors purporting that the company breached its fiduciary duties according to the Employee Retirement Income Security Act (ERISA).
The lawsuit was filed by Lorie M. Guyes for herself and on behalf of a putative class of other participants and beneficiaries of the Nestle 401(k) Savings Plan. The plaintiff claimed that Nestle made payments to itself, while letting workers pay too much in fees for the plans and not monitoring the plans according to the ERISA.
Reportedly, the ERISA requires that companies evaluate fees and expenses and they have a “continuing duty” to monitor fees and remove imprudent investments. However, Nestle reportedly authorized “unreasonably high fees” for recordkeeping and account management services in addition to “engaging in self-dealing.”
The plan in question reportedly has over 39,000 participants and over $4 billion in assets. The fees are reportedly “excessive” compared to other comparable 401(k) plans. In addition to agreeing to excessive fines, the defendants purportedly “paid itself for providing some sort of administrative service to the Plan.” According to the complaint, Nestle was paid a total of $2,571,610 from the plan between 2014 and 2018, however, the services it provided did not add value to the plan.
The complaint stated, “these objectively unreasonable RK&A (record keeping and account) managed account fees, as well as the self-dealing, cannot be justified. Defendants’ failures breached the fiduciary duties they owed to (the) Plaintiff, Plan Participants, and beneficiaries.” IT asked the court to enforce the defendants’ liability to “make good” all of the losses incurred from their breach of duty.
The plaintiff sought to include in the class any others who were involved in the Nestle 401(k) Savings Plan, except those who are defendants, from six years before the lawsuit was filed until its date of judgment.
Guyes is represented by Walchesky & Luzi, LLC.