401(k) Class Action Reinstated
Posted Aug 3, 2007 5:14 AM CST
By Debra Cassens Weiss
A federal appeals court has ruled a former employee who cashed out of his 401(k) plan has standing to sue for mismanagement.
The July 31 ruling (PDF) by the 3rd U.S. Circuit Court of Appeals reinstates a class action that claims the plan administrator should not have offered an option to invest retirement benefits solely in the employer’s common stock, the Legal Intelligencer reports. The stock price took a dive after a failed merger.
"When determining participant standing under ERISA, the relevant inquiry is whether the plaintiff alleges that his benefit payment was deficient on the day it was paid under the terms of the plan and the statute," Judge Thomas Ambro wrote for the Philadelphia-based court.
The closely watched case attracted amicus briefs from the U.S. Department of Labor and AARP on behalf of the plaintiff as well as briefs from the National Association of Manufacturers for the defendant company.