A California federal judge dismissed a proposed class action accusing HP Inc. of unlawfully using former employees’ forfeited 401(k) funds to satisfy its own contributions. The judge found no federal benefits law mandating the company to use the funds to cover plan expenses.
In an order issued Monday, U.S. District Judge Beth Labson Freeman granted HP’s motion to dismiss current plan participant Paul Hutchins’ Employee Retirement Income Security Act (ERISA) suit. Despite Hutchins presenting a “novel legal theory,” his allegation that using forfeited funds to reduce employer contributions breached fiduciary duties of loyalty and prudence was not upheld.
HP Escapes ‘Novel’ 401(k) Suit over Forfeiture usage : Judge’s Findings
“Plaintiff’s claims are so broad, he is effectively arguing that the fiduciary duties of loyalty and prudence create a benefit: the payment of his administrative costs,” Judge Freeman said. “However, the plan does not provide any such benefit, and plaintiff does not allege any facts showing that he is entitled to such a benefit.”
