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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.

Unlike TDFs, which automatically adjust asset allocation based on a participant's retirement age, managed accounts create personalized investment strategies by assessing factors such as:

• Risk tolerance
• Account balance
• Outside assets
• Pension wealth
• Social Security income

Judge Trenga emphasized that Hanigan failed to show the managed account and TDF provided comparable services, undermining her argument that a TDF was a better alternative.

Prior Dismissal Echoed in Latest Ruling

The dismissal mirrors the judge’s October decision, where he highlighted similar flaws in Hanigan’s claims. Bechtel had argued that her lawsuit relied on “apples-to-oranges” comparisons, and the court ultimately agreed.

Hanigan’s fee comparisons were also found lacking because they did not equitably evaluate the total fees paid under each option. Additionally, her claim that 65% of plan participants did not provide the personal information needed to tailor managed account allocations did not sufficiently address the differences between managed accounts and TDFs.

Class Action Effort Falls Short

Hanigan sought to represent a class of approximately 7,000 retirement plan participants but was unable to meet the court’s standards for demonstrating ERISA violations.

Legal Representation

• Hanigan was represented by Paul M. Secunda of Walcheske & Luzi LLC and Andrew Larry Fitzgerald of Fitzgerald Hanna & Sullivan PLLC.
• Bechtel was represented by Alison Douglass, James Fleckner, Jaime A. Santos, Jordan Bock, and Matthew Luke Riffee of Goodwin Procter LLP.