Excessive Fee Suit Dropped

Three years to the day after filing suit, a 401(k) plan participant has dropped his excessive fee suit – with a whimper, not a bang.

The suit, originally filed Jan. 14, 2016 in the U.S. District Court for the District of Colorado, was filed by Wahan Krikorian, a participant in the TPS Parking Management LLC 401(k) Plan, who sought to represent a class of “thousands” of 401(k) investors (in 10,000 plans), charging that Great-West/Empower Retirement, “literally has lined its pockets with at least tens of millions of dollars in revenue sharing payments by and through self-dealing, other prohibited transactions and breaches of its fiduciary duties.”

The suit, which was short on details, labeled as “kickback payments” and part of a “pay-to-play scheme” revenue-sharing payments that Empower Retirement received from mutual funds “in return for providing the mutual funds with access to its retirement plan customers, including its 401(k) plan customers.”

The notice of dismissal – which comes two months after the U.S. Court of Appeals for the 10th Circuit refused to review a decision declining to certify the case as a class action – was short and to the point, noting on the that the parties “hereby stipulate and agree to dismiss this action pursuant to Fed.R.Civ.P. 41(a) with each party to bear its own attorneys’ fees, costs and other expenses of litigation.”

Case History

In November, the 10th Circuit declined to certify the class since “the plaintiff class proposed by Mr. Krikorian includes claims based on a NAV contract structure,” and “the allegations in the complaint [#1] do not include claims based on a NAV contract structure,” and that “the definition of a Rule 23 class may not be expanded to include plaintiffs not described in the complaint and claims not alleged in the complaint.” Plaintiff Krikorian had apparently based his claims on a Group Contract structure, and the judge was not willing to accept the premise that those claims were “typical of the claims he seeks to assert on behalf of the proposed class, at least to the extent the proposed class includes plans working with Empower Retirement based on a NAV contract structure.”

In 2017, a federal judge declined to rule for Great-West before trial, commenting at the time that it wasn’t clear whether the company consistently applied its revenue-sharing payments to offset record-keeping fees on a “dollar-for-dollar basis.”

The case is Krikorian v. Great-West Life & Annuity Ins. Co., D. Colo., No. 1:16-cv-00094-REB-SKC, stipulation of dismissal 1/14/19.