A group of present and former employees of Allstate Corp. continued their legal fight over alleged mismanagement of retirement funds in an Illinois federal court last week.
Employee plaintiffs in an Employee Retirement Income Security Act (ERISA) suit against the insurance giant argued against a Motion to Dismiss the case that had been filed by Allstate and the committees tasked with administering and making investment decisions for its profit-sharing retirement plan.
In the court filed Memorandum, plaintiffs argue that “As a remedial statute, ERISA is liberally construed in favor of plan participants,” and that there is extensive case law establishing ERISA’s liberal pleading regime recognizing that “ERISA plaintiffs rarely have access pre-suit to the details of defendant’s fiduciary processes.” They state these employee claims should be viewed in totality without requirement of administrative exhaustion. Allstate had filed a Motion to Dismiss the lawsuit saying that the case should not move forward because the plaintiffs had not exhausted all potential administrative remedies.
The proposed class of employee plaintiffs claim that they lost more than $70 million in retirement savings because Allstate violated its fiduciary duty to retirement plan participants by saddling the plan with poorly performing target date retirement funds and refusing to remove those funds despite a history of abysmal performances and a market loaded with better alternatives. The memorandum summarized the claims by stating that Allstate:
“persistently breached these duties by loading the Plan with a suite of poorly performing target date funds from Northern Trust and burdening the Plan with excessive fees charged by “robo-advisers” Financial Engines and Alight Financial Advisors. Defendants also violated ERISA’s categorical bar on prohibited transactions by, inter alia, turning a blind eye to a kickback scheme between Financial Engines and the Plan’s recordkeeper, Aon Hewitt.”
The Northern Trust investment options have previously been subject to litigation including a 2019 action filed by Walgreens employees.
The U.S. District Court for the Northern District of Illinois case, Cutrone v The Allstate Corp. et al., was originally filed by a single plaintiff in October 2020 and consolidated with actions brought by several other former employees in March of this year.
The Court accepted an Allstate request for an extension of time to reply to the employees’ arguments made against the Motion to Dismiss and the responses are now due by June 9.