Bailey Glasser Defeats Motion to Dismiss in Schwab Managed 401(k) Action


Bailey & Glasser, LLP secured an important win for employee participants of the Vituity and MedAmerica 401(k) retirement plan. On Friday, U.S. District Court Judge Richard Seeborg of the Northern District of California ruled on a motion to dismiss filed by CEP America and the MedAmerica Retirement & Benefits Committee, which oversees the 401(k) plan offered to employees and retirees of Vituity and MedAmerica. In his ruling denying the motion in part, Judge Seeborg noted that the Complaint alleges that the fees charged by recordkeepers to other 401(k) plans “were multiples less than those charged” by Schwab.

The employees, represented by Greg Porter, BG’s ERISA, Employee Benefits & Trust Litigation Practice Group Leader, and ERISA partner Mark Boyko, allege that the Defendants violated ERISA laws by allowing millions of dollars of their retirement savings to go to Schwab’s recordkeeping arm and to MedAmerica. The Plaintiffs also alleged that Schwab’s excessive compensation included Schwab receiving benefits from the 401(k) Plan’s use of Schwab’s bank savings account.

“Employers need to understand and accept their responsibility for prudently managing 401(k) plans free from conflicts of interest and self-dealing,” Boyko said. “We look forward to pursuing this matter on its merits.”

The case is Nagy, et al., v. CEP America, LLC, et al, No. 23-cv-5648, and is pending in the Northern District of California.

Bailey Glasser’s ERISA team handles class actions and high-stakes individual actions involving employee pension benefits—including employee stock ownership plans (ESOPs), 401(k) plans and other defined contribution or individual account plans, and traditional defined benefit pension plans—and trust litigation involving family and other private trusts. We litigate these actions throughout the United States under the federal employee benefits law known as the Employee Retirement Income Security Act (ERISA) and under state trust law. Gregory Porter, our Practice Group Leader, has received the top ranking (Band One) for his ERISA work by the global legal ranking company Chambers & Partners, and the group as a whole is also ranked by Chambers & Partners in the Nationwide ERISA Litigation: Mainly Plaintiffs category.

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