A proposed class action lawsuit accusing JPMorgan Chase & Co. of misusing 401(k) plan forfeitures to cover its own contributions has been dismissed by a California federal judge. The ruling aligns with similar decisions from other courts rejecting challenges to employer use of forfeited, unvested funds under ERISA guidelines.
The case, Daniel Wright v. JPMorgan Chase & Co. et al. (Case No. 2:25-cv-00525), alleged that JPMorgan violated the Employee Retirement Income Security Act (ERISA) by applying forfeited nonvested plan assets for the company’s benefit rather than for plan participants. U.S. District Judge Josephine L. Staton granted JPMorgan’s motion to dismiss without leave to amend, affirming that the bank’s use of forfeited funds was permissible under the explicit terms of the JPMorgan Chase 401(k) savings plan.
Judge Staton’s order highlighted that the plaintiff failed to address prior rulings in similar ERISA cases and presented no facts justifying a different outcome. The plan terms allow forfeitures to either reduce the company’s contributions or cover its share of administrative expenses, and the plaintiff did not dispute this interpretation.
The plaintiff’s argument that JPMorgan improperly used forfeitures to reduce the company’s contributions instead of offsetting administrative expenses was deemed a “flawed assumption” by the court. The ruling emphasized that the plan does not authorize use of forfeited funds to pay participants’ share of administrative costs.
Citing multiple precedents within the Ninth Circuit, including a recent decision in Hutchins v. HP, Judge Staton noted that courts have consistently rejected similar forfeiture-based ERISA claims. The judge further distinguished this case from others where alleged violations involved explicit plan terms.
The complaint stated JPMorgan used nearly $53 million in forfeited funds between 2019 and 2023 to offset matching contributions, a practice the court found within plan provisions. JPMorgan’s 401(k) plan vests employer contributions after three years of service, with forfeited funds controlled by the company for specified uses.
Legal counsel for the plaintiff expressed disagreement with the ruling and indicated they are evaluating further options. JPMorgan representatives declined to comment.
Plaintiff Daniel Wright is represented by attorneys from Haffner Law PC and Setareh Law Group, while JPMorgan Chase & Co. is represented by Morgan Lewis & Bockius LLP.
