In a pivotal decision, U.S. Circuit Judge Maxine M. Chesney has ruled against Salesforce, mandating the tech giant to confront a sprawling class action involving potentially 50,000 employees. The lawsuit alleges Salesforce’s 401(k) plan was stocked with costly and underperforming investment options, marking a significant legal setback for the company.
Denial of Summary Judgment
Judge Chesney’s verdict, delivered Wednesday, rebuffed Salesforce.com Inc.’s plea for summary judgment in the Employee Retirement Income Security Act (ERISA) lawsuit. The suit contends that Salesforce, headquartered in San Francisco, breached fiduciary duties by maintaining subpar investment options without seeking superior alternatives.
Salesforce Can’t Ax Vast Class Suit Over 401(k) Management : Contentious Arguments
In its bid for dismissal last November, Salesforce defended its choices regarding the 401(k) plan. The company contended that offering an institutional class of JPMorgan target date funds, though not the cheapest option, was financially prudent due to revenue sharing arrangements. Similarly, it opposed replacing Fidelity mutual funds with collective investment trusts (CITs), citing concerns about third-party evaluations and comparative performance.
