However, Judge Padin disagreed, stating that the use of forfeited funds to offset employer contributions was explicitly allowed by the plan. The judge emphasized that Barragan’s broader argument — that Honeywell should have used the funds solely for administrative costs — lacked the legal grounding needed to stand up in court.
Precedent Set in Similar Cases
In making her ruling, Judge Padin referred to a recent case, Hutchins v. HP Inc., where a California judge dismissed a similar lawsuit. The judge in that case had ruled that ERISA’s fiduciary duties of loyalty and prudence did not mandate using forfeited funds for administrative costs, particularly when the plan allowed other options.
Padin echoed this reasoning, noting that Barragan’s claim was too sweeping, proposing that any time a fiduciary had a choice between using forfeited funds for employer contributions or administrative expenses, they must always opt for the latter. This theory was deemed overly broad and implausible by the judge, who pointed out that it would effectively tie the hands of fiduciaries in all scenarios.
Court Rejects Anti-Inurement and Prohibited Transaction Claims
Barragan’s lawsuit also accused Honeywell of violating ERISA’s anti-inurement provision, which prohibits plans from benefiting any party outside of the participants. The judge, however, found that the forfeited funds remained within the plan and were simply reallocated to other participants. As a result, Honeywell did not violate the anti-inurement provision.
