However, Judge Freeman allowed Hutchins the opportunity to amend his complaint within 30 days to potentially show disloyalty based on more specific facts or special circumstances. Hutchins also alleged HP engaged in a prohibited transaction by using the funds to pay off its own contributions, but Judge Freeman disagreed, citing a U.S. Supreme Court decision that payment of benefits is not a transaction under ERISA’s prohibited transaction provision.
Broader Context and Related Cases
Hutchins’ suit is part of a series of recent cases alleging ERISA violations through the use of forfeited 401(k) funds. As of April, at least nine proposed class actions were pending from 401(k) plan participants accusing employers of misusing forfeitures by reducing expenses on required contributions to individual workers’ accounts instead of lowering plan fees. Companies named in these suits include Honeywell, Clorox, and Mattel, which filed a motion to dismiss last week.
Representatives for HP and Hutchins did not immediately respond to requests for comment Tuesday. Hutchins is represented by Matthew B. Hayes and Kye D. Pawlenko of Hayes Pawlenko LLP, while HP is represented by Mark A. Feller, Deborah S. Davidson, and Matthew A. Russell of Morgan Lewis & Bockius LLP.
