In a major win for Wells Fargo, a Minnesota federal judge has thrown out a proposed class action ERISA lawsuit that accused the banking giant of misusing forfeited 401(k) funds—ruling the plaintiff lacked standing and failed to show personal harm.

U.S. District Judge John R. Tunheim issued the decisive ruling Wednesday, granting Wells Fargo & Co.’s motion to dismiss the lawsuit brought by former employee Thomas Matula Jr., who claimed the company improperly diverted unvested employee contributions to cover its own 401(k) obligations rather than plan expenses.

The case had been closely watched in legal and employee benefit circles, with some viewing it as a potential catalyst for broader scrutiny of employer control over retirement assets.

The $2.2 Million Question: Who Benefits from Forfeited Funds?

Matula’s lawsuit, filed in June 2024, alleged that when employees left the company before fully vesting, Wells Fargo repurposed their forfeited 401(k) contributions—amounting to $2.2 million in 2022 alone—to offset its own contributions instead of covering plan-related expenses, in alleged violation of fiduciary duties under the Employee Retirement Income Security Act (ERISA).

But Judge Tunheim pushed back, stating the 401(k) plan’s language doesn’t obligate Wells Fargo to fund elective or optional services, like certain participant-selected investments. Instead, the court held that the forfeited funds can only be used for necessary administrative expenses, which the company already pays for.

"Matula cannot have been injured by Wells Fargo's alleged failure to use forfeited funds to pay for optional services," the judge concluded.

No Harm, No Standing

Key to the dismissal was the judge’s finding that Matula failed to show he suffered any injury, a requirement for standing in federal court. The judge also rejected the idea that Matula was entitled to extra payments into his account, ruling that such corrective contributions would require a demonstrated error, which was never alleged.

"Matula’s attempt to seek extra payments that he was not promised under the plan must be rejected," wrote Tunheim, underlining that entitlement must be grounded in plan terms, not in speculative interpretation.

Legal Teams React, Next Steps Uncertain

Vahan Mikayelyan, one of Matula’s attorneys, said the team respects the court’s opinion but is weighing their options.

“We believe plaintiff does have standing to challenge the use of forfeited 401(k) plan assets,” Mikayelyan told Law360, noting that other courts have ruled differently in similar cases.

Wells Fargo, represented by heavyweight firms Proskauer Rose LLP and Faegre Drinker Biddle & Reath LLP, declined to comment.

Matula was represented by Haffner Law PC and Nolan Thompson Leighton & Tataryn PLC.

A Cautionary Tale for 401(k) Litigation

The outcome may cool some of the momentum around class-action efforts targeting 401(k) plan governance, especially suits arguing for broader interpretations of how forfeited funds must be used.

While the case ends—for now—with Wells Fargo escaping liability, the core issue of who truly benefits from unvested retirement assets remains a live-wire topic in ERISA litigation.