Novo Nordisk announced today that a New Jersey federal judge has dismissed key allegations in a lawsuit concerning its $2.3 billion 401(k) plan, narrowing the claims brought by plan participants. The ruling addresses the Novo Nordisk forfeiture claims 401(k) lawsuit, in which workers alleged that the company misused forfeited funds and maintained underperforming investment options.
U.S. District Judge Zahid N. Quraishi granted a partial motion to dismiss filed by Novo Nordisk, finding that the company’s actions were consistent with the terms of the plan. Specifically, the court dismissed claims that the company improperly used abandoned funds and retained a poorly performing target date fund, noting that the plan allows the use of forfeited funds for future contributions and plan expenses.
“The text of the plan is therefore fatal to plaintiffs’ allegations,” Judge Quraishi said.
The court’s ruling did not address remaining claims related to excessive recordkeeping fees. Plaintiffs had argued that administrative costs were higher than comparable plans due to the company not seeking alternative service providers. However, the judge found that other claims regarding investment performance and fiduciary breaches were “conclusory and speculative,” stating that slight differences in fund returns were insufficient to prove imprudent decisions.
The lawsuit also included allegations that Novo Nordisk used $6.2 million in forfeited funds for its own benefit. Judge Quraishi rejected these claims, highlighting that the plan explicitly permits the use of forfeited funds for company contributions, restoring accounts, or covering plan expenses, and that ERISA does not require the company to maximize benefits beyond the plan’s terms.
Representatives for both the plaintiffs and Novo Nordisk have not issued comments.
The workers are represented by James A. Maro Jr. and Mark K. Gyandoh of Capozzi Adler PC, and Peter A. Muhic of Muhic Law LLC. Novo Nordisk is represented by Jeremy P. Blumenfeld of Morgan Lewis & Bockius LLP.
