Fluor Corporation Hit with ERISA Class Action Over Alleged Retirement Plan Losses

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Fluor Corporation faces a proposed class action that alleges the multinational engineering and construction firm and its board of directors, among others, are to blame for significant 401(k) plan losses linked to excessive recordkeeping fees and poorly performing investments. 

The 39-page lawsuit, filed in Texas on January 24, alleges that Fluor, its directors and the company’s benefits and investment committees have fallen short of their statutory responsibilities as fiduciaries by allowing the Fluor Corporation Employees’ Savings Investment Plan to be charged unreasonably excessive expenses and bogged down by high-cost, poorly performing investments. 

According to the case, the Fluor defendants have run afoul of the federal Employee Retirement Income Security Act (ERISA).

“Failures by ERISA fiduciaries to monitor fees and costs for reasonableness, such as those identified herein, have stark financial consequences for retirees. Every extra level of expenses imposed upon plan participants compounds over time and reduces the value of participants’ investments available upon retirement. Over time, even small differences in fees compound and can result in vast differences in the amount of a participant’s savings available at retirement.” 

The Fluor 401(k) plan had more than 15,000 participants and roughly $3.45 billion in assets as of December 31, 2020, placing it among the top 0.1 percent of all defined contribution plans by plan size, the lawsuit begins. Plans the size of Fluor’s wield significant bargaining power and can thus demand low-cost administrative and investment management services within the marketplace, the suit says.

According to the lawsuit, the Fluor defendants, within the last six years, have allowed the 401(k) plan to rack up recordkeeping and administrative fees that “far exceed[] the reasonable market rate.” The lawsuit argues that given the plan’s size and resulting negotiating muscle, the defendants, with prudent management and administration, should “unquestionably” have been able to obtain better recordkeeping and administrative service rates per participant.  

Per the suit, comparable 401(k) plans paid far less in admin and recordkeeping fees than the Fluor plan during the same time period. 

“That is clear and compelling evidence that the reasonable market rate is lower than what the Plan was paying since these comparable plans were able to negotiate lower fees for materially identical services,” the case says, calling the defendants’ alleged failure to recognize that 401(k) participants were being grossly overcharged a “shocking breach of their fiduciary duties.” 

The lawsuit goes on to allege that “[s]everal” of the plan’s custom investment options are “objectively imprudent,” and have cost Fluor 401(k) participants “significant growth in their retirement assets.” According to the case, Fluor’s suite of certain target-date funds consists of clearly inferior options in comparison to many mutual fund alternatives, and any objective evaluation of the funds should have made clear that they represented an “inappropriate offering in the Plan lineup,” the suit argues. 

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