Home Depot Employees Face Bid to Dismiss ERISA Class Action Lawsuit

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Employees and 401(k) members in a class action lawsuit alleging Home Depot mismanaged their retirement accounts face a motion to dismiss in federal court.

Home Depot says it cannot be blamed for the poor performance of the investments provided to its employees in its 401(k) plan.

However, the plaintiffs allege that Home Depot was far more than a victim of a few poor investment choices.

According to the Home Depot ERISA class action lawsuit filed earlier this year, the company’s 401(k) offerings violated the Employee Retirement Income Security Act (ERISA).

Only high fee robo-investing options were made available, alleged the plaintiffs, charging up to 700 percent more than other options not available to 401(k) participants.

The Home Depot class action lawsuit also claims that, in addition to the exorbitant fees, the investment firm used by Home Depot for its 401(k) plans paid kickbacks to investment partners with poorly performing funds.

Compounding the problem, said plan participants, Home Depot refused to do anything about the dud investment funds leaving employees to fall hundreds of thousands of dollars behind in their retirement accounts.

“The claims that plaintiffs seek to bring against the Home Depot defendants — heavy on criticisms about outcomes, but light on concrete factual allegations about how defendants behaved imprudently or disloyally — could be leveled against any 401(k) plan fiduciaries whose plan fails to provide the best investment results over a given period of time,” argued the hardware chain in its motion to dismiss the Home Depot ERISA class action lawsuit.

Home Depot also contends that its decision to use the investment firms that are co-defendants in the Home Depot ERISA class action lawsuit was sound.

The investment firms, Financial Engines and Alight Financial, have also moved for dismissal of the Home Depot ERISA class action lawsuit.

Both companies argue that the class action allegations are about customer service issues, such as being placed on hold for too long, and not ERISA violations.

“Plaintiffs fail to identify any loss caused by [Financial Engines (FEA)],” states one investment firm in its motion to dismiss the Home Depot ERISA class action lawsuit. “They say FEA’s fees were excessive, but not that were they unreasonable in light of the performance of their investments. They allege that FEA did not update ‘lifestyle’ information often enough, but not that Plaintiffs’ financial situation materially changed or that those changes would or should have led FEA to select different investments.”

“Plaintiffs simply fail to explain how supposed customer service frustrations affected their bottom line and so fail to allege loss or causation—both essential elements of their claims.”

Since initiating the Home Depot class action lawsuit, an additional six plaintiffs have been added.

The Home Depot employees are represented by Charles Field, Edward Chapin, David Tracey, Kevin Sharp and Leigh Anne St. Charles of Sanford Heisler Sharp LLP, Norman Blumenthal of Blumenthal Nordrehaug Bhowmik De Blouw LLP and T. Brandon Welch of Stillman Welch LLC.

The Home Depot ERISA Class Action Lawsuit is Pizarro, et al. v. The Home Depot Inc., et al., Case No. 1:18-cv-01566, in the U.S. District Court for the Northern District of Georgia.