A Virginia federal judge has dismissed a lawsuit accusing Bechtel Global Corp. of mismanaging its retirement plan by selecting an allegedly costly and underperforming managed account as its default investment option, ruling that the plaintiff failed to provide adequate comparisons to support her claims.
Judge Finds Comparisons Inadequate
U.S. District Judge Anthony J. Trenga tossed the lawsuit Friday, marking the second dismissal of retiree Debra Hanigan’s case. Hanigan alleged that Bechtel’s choice of a managed account for its Employee Retirement Income Security Act (ERISA) plan default investment led to excessive fees and subpar returns, arguing that a target date fund (TDF) would have been a better alternative.
In his ruling, Judge Trenga said Hanigan’s second amended complaint still did not establish that the managed account and TDF were sufficiently comparable, calling her fee claims unsupported by a “meaningful benchmark.”
“The second amended complaint again fails to allege a meaningful benchmark to support Hanigan’s excessive fee claim,” Judge Trenga wrote.
Differences Between Managed Accounts and TDFs
Hanigan argued that Bechtel’s managed account, which housed approximately 63% of plan participants’ savings, offered worse returns and higher fees compared to TDFs. However, the court noted significant differences between the two investment options.
