Courts Continue to Adopt the Eighth Circuit’s “Meaningful Benchmark” Requirement for 401(k) Lawsuits Based on Fund Performance or Fees

A California federal court recently dismissed an ERISA class action claiming that the investment options in Intel Corp.’s 401(k) plan were too expensive and unperformed.  In reaching that decision, the court followed a framework set forth by the Eighth Circuit in Meiners v. Wells Fargo & Co., 898 F.3d 820 (8th Cir. 2018).  This is the latest in a growing trend of decisions to adopt the Meiners framework.

In Meiners, the Eighth Circuit clarified what is necessary to state an actionable ERISA breach-of-fiduciary-duty claim based on allegations that a 401(k) plan offered expensive or underperforming funds.  Specifically, the court held: “a plaintiff must provide a sound basis for comparison—a meaningful benchmark.”  Only by comparing the fees and performance of a “meaningful benchmark” fund can a plaintiff plausibly allege that the challenged funds were too expensive or unperformed.

In the Intel case, the court adopted and rigorously applied the Meiners standard.  The court explained that plaintiffs must not only identify “meaningful  benchmark” funds, they also must set forth “sufficient allegations to support their claim that these other funds are adequate benchmarks.”  It is not enough to “simply label[] funds as ‘comparable’ or ‘a peer.’”  Because the Intel plaintiffs failed to plausibly allege that the comparator funds were meaningful benchmarks, the court dismissed the claims.

The Eighth Circuit’s “meaningful benchmark” test is becoming increasingly popular as courts struggle to deal with the onslaught of ERISA class actions claiming “excessive fees” or “underperformance.”  We expect to see more courts adopt and refine that test in the coming years.

The case is Anderson v. Intel Corp. Inv. Policy Comm., No. 19-CV-04618-LHK, 2021 U.S. Dist. LEXIS 12496 (N.D. Cal. Jan. 21, 2021).

Nick Bullard

Nick is a trial partner in Dorsey’s office in Minneapolis. His practice focuses on complex and high-stakes commercial litigation at the trial and appellate levels. He has particular expertise in defending clients in ERISA class actions involving both retirement and health and welfare plans. In his ERISA practice, Nick has represented some of the largest companies in the world in industries ranging from banking to healthcare.

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