Johnson also attempted to compare the Russell funds to the Vanguard TDFs they had replaced. However, the court rejected this logic, stating that if such a comparison were accepted, any investment that underperformed its successor would be deemed imprudent—an unrealistic standard.
Additionally, the judge dismissed the argument that any level of underperformance should have been detected and addressed, noting that courts require losses to be “consistent” and “substantial” to establish objective imprudence.
Alleged Red Flags Not Enough to Prove Liability
Johnson presented further evidence, claiming that:
- An attorney had advised Royal Caribbean against selecting Russell,
- 80% of the plan’s assets were placed in an unpopular TDF, and
- Russell’s investment management team ranked unfavorably compared to competitors.
However, the court ruled that these issues did not meet the legal threshold to prove the investment itself was objectively imprudent.
“The evidence recounted above simply rehashes Johnson’s complaints about Royal Caribbean’s allegedly faulty selection and retention process and Russell’s alleged internal missteps; none of it establishes that the resulting investment itself was objectively imprudent,” Judge Scola stated.
Royal Caribbean Not Liable Under Investment Agreement
The judge also found that Royal Caribbean was shielded from liability due to its investment management agreement with Russell. Under the contract, the cruise line retained ultimate responsibility for selecting and maintaining investment funds in the retirement plan.
Legal Representation and Next Steps
Representatives for Johnson, Royal Caribbean, and Russell did not immediately respond to requests for comment.
