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Morgan Stanley Smith Barney LLC has requested dismissal from a lawsuit alleging mismanagement of a retirement savings plan for employees of business processing outsourcing service provider Alorica Inc. In a filing on Monday in Santa Ana federal court, Morgan Stanley argued that it had been "improperly lumped" into a revision of the suit 17 months after the matter was initially filed.

The breach of fiduciary duty suit, brought under the federal Employee Retirement Income Security Act (ERISA), does not include specific allegations regarding Morgan Stanley's duties to the plaintiffs, the services it provided, or the actions it supposedly took that breached those duties, the investment adviser asserted.

"Plaintiffs' broad unsupported conclusions regarding the collective 'defendants' are insufficient to state a claim against" Morgan Stanley, the investment adviser argued.

The latest version of the claims, from March, was brought by former Alorica employees Melissa Olsen, Aaron Munoz, and Cyndy Paniagua. They targeted their former employer, its retirement savings plan committee, both as an entity and as individual members, two of Alorica's benefits executives, and Morgan Stanley as a co-fiduciary of the retirement plan.

The 401(k) plan participants claimed that the mismanagement of their company's 401(k) offering caused them to "invest in subpar investment vehicles and pay additional unnecessary operating expenses and fees with no value to the participants, resulting in a loss of compounded returns."

Specifically, the plaintiffs alleged that they were offered higher-cost share classes when identical lower-cost class shares were available; the plan offered poorly performing actively managed funds instead of passively managed funds with identical investment goals and significantly lower fees; there was no competitive bidding process for service providers such as record keepers; and funds were chosen that were not appropriate for the plan.

"Plainly, the defendants had insufficient processes in place to ensure that the plan participants were provided with prudent investment options and that they paid only reasonable fees," the investors claimed in their suit.

On Monday, Morgan Stanley pointed out that the complaint states the company, its board, the investment committee, the plan manager, and the company's directors and officers have "sole authority to amend or terminate, in whole or part, the plan or the trust, and have discretionary authority to control the operation, management, and administration of the plan."

"As acknowledged in the [second amended complaint], the Alorica defendants, not [Morgan Stanley], had the sole authority and discretion to choose the investments at issue …, monitor the investments at issue, remove the investments at issue and to make decisions regarding the selection and compensation of the providers of services to the plan."

"This is precisely why [Morgan Stanley] was not named in the complaint in the first place and why there are no specific allegations of wrongdoing against" Morgan Stanley in the complaint, the financial services company said.

Representatives for the parties did not immediately respond to requests for comment Tuesday.

Morgan Stanley is represented by Elizabeth H. Lindh, Michelle L. Abdolhosseini, and Amanda L. Botelho of Keesal Young & Logan.

Plaintiffs Melissa Olsen, Aaron Munoz, and Cyndy Paniagua are represented by Christina A. Humphrey and Robert Neil Fisher of Christina Humphrey Law PC, and James Alan Clark and Renee P. Ortega of Tower Legal Group PC.

The case is Aaron Munoz v. Alorica Inc et al., case number 8:22-cv-01856, in the U.S. District Court for the Central District of California.