Kimberly-Clark class action over mismanaged retirement plan escapes dismissal

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Update:

• U.S. District Judge Sam A. Lindsay denied Kimberly-Clark’s motion to dismiss a class action over alleged Employee Retirement Income Security Act (ERISA) violations, stating the plaintiffs have sufficiently presented their case. 
• The plaintiffs allege Kimberly-Clark breached its fiduciary duties by charging plan participants “unreasonable and unnecessary recordkeeping fees.”
• The plaintiffs also assert they suffered “actual injury” from these excessive recordkeeping fees “paid in the form of direct compensation to the plan,” which they claim resulted in millions of dollars in losses
• The plaintiffs seek an order requiring Kimberly-Clark to restore all monetary losses, surrender all profits received from the plan and discontinue the violations. 

Kimberly-Clark retirement fund mismanagement lawsuit overview:

• Who: Kimberly-Clark Corp. is asking a judge to throw out a class action lawsuit filed by employees.
• Why: Employees allege Kimberly-Clark violated the Employee Retirement Income Security Act by allowing its retirement plan to push excessive fees on to participants. The company has called the lawsuit “flimsy” and claims employees are “not comparing apples-to-apples.”
• Where: The lawsuit is being heard in federal court in Texas.

(Aug. 12, 2021)

Kimberly-Clark Corp., which includes major brands including Kleenex, Cottonelle, and Huggies, has asked a Texas federal judge to throw out a class action lawsuit filed by employees alleging that the company violated the Employee Retirement Income Security Act (ERISA).

The personal care product manufacturer, which employees around 46,000 people globally, said in a brief to support a motion for dismissal that employees were “not comparing apples-to-apples” and that if a judge allowed such a “flimsy” lawsuit proceed, the courts would be flooded with ERISA lawsuits, Law360 reports.

The company said: “Any plan that paid more than a (worker’s) preferred, and arbitrarily selected, rate for administrative services would then be susceptible to suit.”

“Plaintiffs’ allegations, which are long on rhetoric and generalities, and short on specific facts concerning this plan, all boil down to a challenge to ‘commonplace and longstanding’ retirement-plan practices, and do not ‘nudge’ plaintiffs’ claims ‘across the line from conceivable to plausible,'” the company wrote.

Kimberly-Clark added that the class action lawsuit did not provide examples of other 401(k) plans that offered the same services for lower fees.

“Plaintiffs are not comparing ‘apples-to-apples,’ because they ask the court to simply disregard material differences in the services offered by different plans,” Kimberly-Clark argued.

The class action lawsuit was filed by Kimberly-Clark former senior brand manager Christina Seidner and former marketing executive Jared Mackrory who alleged that Kimberly-Clark allowed its retirement plan to push excessive fees on to participants. They added that the company had several plan managers providing overlapping services that led to extra costs, and it did not solicit a range of quotes to get the best price for management, Law360 reports.

They allege that between 2015 and 2019, fees were around $75 per participant, when similar plans were between $30 and $35. According to the class action lawsuit, over five years Kimberly-Clark paid more than $26 million to more than a dozen providers, including Fidelity, Northern Trust Corp. and Hewitt Financial Services.

Paul Secunda of Walcheske & Luzi LLC, an attorney for the workers, told Law360 he and the rest of the legal team “do not cherry-pick our comparators.”

“We look for plans with the same number of participants and the same amount of assets under management, and sometimes even the same record-keepers and service providers,” Paul said.

“We believe we have a very strong case here that Kimberly-Clark has charged excessive fees to its participants when there are a number of opportunities for it to charge less. We have started the process of proving that.”

Do you know how the management fees for your 401(k) stack up to similar plans? Let us know in the comments section!

The workers are represented by Joe Kendall of Kendall Law Group PLLC and by James Walcheske, Scott Luzi and Paul Secunda of Walcheske & Luzi LLC.

Kimberly-Clark Corp., its board of directors and its benefits administration committee are represented by Veronica S. Moyé, Karl G. Nelson, Heather L. Richardson and Jennafer M. Tryck of Gibson Dunn & Crutcher LLP.

The Kimberly-Clark ERISA Class Action Lawsuit is Christina C. Seidner, et al. v. Kimberly-Clark Corp., et al., Case No. 3:21-cv-867, in the U.S. District Court for the Northern District of Texas.

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