A Florida federal judge has dismissed a proposed class action accusing Gerdau Ameristeel of mismanaging its 401(k) plan, ruling that the plaintiff must provide more details about his efforts to exhaust administrative remedies under the Employee Retirement Income Security Act (ERISA).
In a Saturday order, U.S. District Judge Virginia M. Hernandez Covington granted Gerdau Ameristeel’s motion to dismiss the lawsuit filed by former employee Grant Molla. However, the dismissal was without prejudice, allowing Molla two weeks to file an updated complaint addressing the deficiencies.
Insufficient Details on Administrative Exhaustion
Judge Covington ruled that Molla’s amended complaint failed to include sufficient information to demonstrate that he had exhausted the plan’s administrative remedies or that doing so would have been futile. “The conclusory statement that he ‘has exhausted his administrative remedies’ does not allow the court to make such a determination,” Judge Covington wrote.
This marks the second time Molla’s suit has been dismissed without prejudice for similar reasons. In July, Judge Covington directed Molla to include details about his administrative remedies in his pleadings, a step she noted he has yet to fully address.
Claims Against Gerdau Ameristeel
Molla initially sued Gerdau Ameristeel, the U.S. arm of Brazilian steel giant Gerdau, in September 2022. He alleged that the company:
- Charged excessive recordkeeping fees to participants in its $655 million retirement plan.
- Failed to monitor investments, neglecting to ensure the lowest-cost share class was available.
- Offered higher-cost, riskier actively managed funds instead of less expensive, passively managed options.
The case was paused shortly after filing so Molla could bring his claims to Gerdau’s retirement plan committee. Molla later claimed that exhaustion was futile, but the committee ultimately denied his claim and appeal.
Legal Disputes Over Amended Complaint
In August, Molla filed an amended complaint following the court’s initial dismissal. Gerdau moved to strike or dismiss the updated filing, arguing that Molla:
- Still failed to adequately plead exhaustion of administrative remedies.
- Included new claims that had not been previously presented to the plan committee.
Judge Covington’s latest order limits Molla to revising his complaint to address exhaustion of administrative remedies or the futility of doing so. She prohibited additional substantive changes unless Molla first seeks permission from the court.
