A federal appeals court on Wednesday sharply questioned lawyers defending Quest Diagnostics Inc.’s pretrial victory in a lawsuit accusing the company of mismanaging workers’ retirement savings, pressing both sides on whether the lab giant followed its own investment rules. The exchange put the spotlight on the Quest 401(k) win suit, a case balancing on the fine line between prudent oversight and alleged fiduciary lapse.
Judges Probe Pretrial Victory
A three-judge panel of the U.S. Court of Appeals for the Third Circuit heard arguments from former Quest employees seeking to revive a proposed class action claiming their 401(k) savings were eroded by underperforming funds, in violation of the Employee Retirement Income Security Act (ERISA).
The appeal challenges a September 2024 ruling by U.S. District Judge Julien Xavier Neals, who granted Quest summary judgment. Neals found the company’s investment committee had diligently managed and monitored the plan’s offerings, delivering Quest a pretrial win.
But appellate judges zeroed in on a key dispute: whether that victory was premature, given expert testimony asserting Quest’s committee failed to follow its own investment policy statement.
