ERISA Class Action Filed Against CenturyLink in Colorado

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A Colorado consumer has filed a proposed class action against CenturyLink, Inc. and the below defendants in which she alleges the parties unlawfully mishandled the operation and administration of the Active Large Cap U.S. Stock Fund offered as part of the company’s 401(k) plan:

The lawsuit, filed on behalf of participants and beneficiaries of the CenturyLink’s Dollars & Sense 401(k) Plan, alleges the defendants violated the Employee Retirement Income Security Act of 1974—ERISA—by sticking with the Large Cap Fund that “consistently under-performed its benchmark index” by two percent or more each year since its formation in 2012.

“Although two percent seems like a minor amount,” the lawsuit explains, “the U.S. Department of Labor has noted that a one percent lower return over a 35-year period makes a 28 percent difference in retirement assets at the end of a participant’s career.”

The plaintiff charges that the underperformance of the Large Cap Fund was “virtually guaranteed” since it contained a serious design flaw—that being CIPM’s decision to use six different fund managers with the same mandate—from the get-go. The odds of the five active fund managers, minus the one passive fund manager, outperforming the market in aggregate, the lawsuit says, were “highly remote.”

“As an investment professional, CIM knew or should have known that the Large Cap Fund’s design was flawed and underperforming,” the lawsuit states. “The Plan fiduciaries breached their duty of prudence by failing to replace or restructure the Large Cap Fund for five years despite its poor design and performance.”