Just a week after reviving ERISA breach of fiduciary duty claims against Salesforce, the Ninth Circuit revived an excessive fees case against Trader Joe’s Company in Kong, et al. v. Trader Joe’s Company, et al., No. 20-56415, 2022 WL 1125667 (9th Cir. Apr. 15, 2022), a short unpublished opinion.
The district court dismissed Plaintiffs’ claim for breach of fiduciary duty under ERISA for failure to state a claim, which the Ninth Circuit reversed upon finding that the “operative complaint plausibly alleges a failure to provide cost-effective investments with reasonable fees.” The allegations taken as true, Defendants “failed to monitor and control the offering of a number of mutual funds in the form of ‘retail’ share classes that carried higher fees than those charged by otherwise identical ‘institutional’ share classes of the same investments. Except for the extra fees, the share classes were identical. That choice resulted in more than $30,464,538 in extra fees.” This supports that Defendants did not act with the purpose of paying reasonable administrative expenses.
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