A Florida federal judge dismissed a lawsuit Friday accusing Royal Caribbean of mismanaging its $500 million retirement plan by allowing an investment manager to fill it with underperforming proprietary funds. The court found that the plaintiff failed to present sufficient evidence proving the selection process was objectively imprudent.
Judge Rejects Claims of Faulty Investment Strategy
U.S. District Judge Robert N. Scola Jr. granted summary judgment in favor of Royal Caribbean Cruises Ltd. and Russell Investments Trust Co., ruling that plaintiff Ann Johnson’s claims under the Employee Retirement Income Security Act (ERISA) lacked objective proof of imprudence.
“Just as no prudent fiduciary would rely on ‘prayer, astrology or just blind luck,’ such a misguided fiduciary will nonetheless be shielded from liability if a beneficiary is unable to show that the resulting investment is also imprudent,” Judge Scola wrote.
Johnson, who filed suit in 2021, alleged that Royal Caribbean selected Russell as its retirement plan investment manager in 2015 and subsequently loaded the 401(k) with poorly performing proprietary funds. In 2019, Royal Caribbean replaced Russell as investment manager.
Comparisons Fail to Prove Imprudence
Johnson argued that the Russell target date funds (TDFs) were a poor investment choice, but the court found her comparisons flawed. She contrasted the Russell TDFs—which combine active and passive investment strategies—with funds that relied exclusively on one strategy. The judge ruled that such “apples-to-oranges” comparisons did not prove that no prudent fiduciary would have chosen the Russell TDFs.
