Genworth Financial has called on the Fourth Circuit Court of Appeals to disband a class of 4,000 retirement plan members who claim that underperforming BlackRock target-date funds (TDFs) significantly impacted their savings. The insurance company asserts that each individual’s situation should be assessed separately, making the case unsuitable for class certification.
In a reply brief filed Monday, Genworth argued that the lower court’s decision to grant class certification to former employees Peter Trauernicht and Zachary Wright was flawed. The company emphasized that some plan participants actually benefited from BlackRock TDFs, and thus, the case requires an individual assessment for each account, which contradicts the foundation of class action lawsuits.
“Ignoring accounts that benefited from the BlackRock TDFs while seeking compensation for those that performed poorly demonstrates that the claims are highly individualized,” Genworth stated. “No common injury exists to unite this fractious class.”
In August, U.S. District Judge Robert E. Payne had granted class certification, determining that Trauernicht and Wright had sufficiently supported their allegations that most participants in the plan who invested in BlackRock TDFs experienced financial losses. The lawsuit, initially filed in 2022, accuses Genworth of breaching its fiduciary duties by opting for BlackRock TDFs due to their low fees, without considering their underperformance compared to other funds.
Genworth further contended that determining whether losses occurred would require a detailed, individual analysis of each plan member’s account, including the specific BlackRock TDF vintage in which they invested and the corresponding time period. This individualized process would lead to varied outcomes, which Genworth argues destabilizes the class certification.
Additionally, the company pointed out that 42% of the plan’s TDF assets had better performance under BlackRock TDFs than alternative options. As a result, any damages awarded to Trauernicht and Wright would only apply to specific individuals, further complicating the case for a class-wide remedy.
The insurance giant maintained that the lower court had incorrectly determined that the workers’ Employee Retirement Income Security Act (ERISA) claims met the commonality requirement for a class, given that some class members were not harmed by investing in BlackRock TDFs.
Trauernicht and Wright, however, defended the lower court’s ruling, arguing that the class action is justified and does not seek individual relief. They noted that any potential recovery would be allocated to the plan as a whole, in accordance with ERISA.
Representatives from both Genworth and the class members did not immediately respond to requests for comment.
The case is currently before the Fourth Circuit in Peter Trauernicht v. Genworth Financial Inc., case number 24-1880.
