Good news for employers / 401(k) committees overseeing retirement plans.
Last week, the U.S. Court of Appeals for the Fourth Circuit issued a significant ERISA decision in Trauernicht v. Genworth Financial, Inc., denying class certification in a fiduciary‑breach case challenging the selection and retention of target‑date funds.
The plaintiffs alleged that Genworth’s $900M, 4,000‑participant plan breached its fiduciary duties by offering BlackRock LifePath Index Funds.
The court rejected class treatment, holding that ERISA §502(a)(2) claims in defined contribution plans involve individualized monetary losses, not a single, plan‑wide injury. Because participants’ investment outcomes differed—and many suffered no loss at all—the claims failed Rule 23’s commonality requirements.
The takeaway: where participants experience different outcomes from the same investment option, fiduciary claims may be more difficult to pursue on a mandatory class basis.
Next steps:
401(k) committees should work closely with ERISA counsel to understand how this decision may affect litigation risk, committee processes, and fiduciary governance going forward.
Good idea to mark this case as an agenda item to have counsel address at the next 401k committee meeting.