The Implications of the U.S. BlackRock Target-Date Fund Litigation
January 04, 2023
Last summer, lawsuits were brought against 11 U.S. employers that offered the BlackRock LifePath Index target-date funds (BlackRock TDFs) as an investment option for their 401(k) plans. Each suit was proposed to be tried as a class action, brought on behalf of current or former participants of the plans. BlackRock itself is not a defendant in these cases. Two of the lawsuits were dismissed by a U.S. District Court last month while the other nine suits are ongoing.
The lawsuits allege that the plan fiduciaries focused on selecting a low-cost investment option without appropriate consideration of investment performance as compared with five other target date fund suites with the highest assets under management in the U.S. marketplace. The lawsuits seek compensatory damages for lost investment return, legal costs and other declaratory relief.
In a motion to dismiss the complaint by one of the defendants, it was argued that even if the allegations were true, they don’t amount to a breach of fiduciary duty based on established ERISA caselaw. Further, the American Benefits Council, ERISA Industry Committee, and the American Retirement Association together filed a “friend of the court” brief which strongly supports the position of the employer and urges the claim be dismissed as it is at odds with decided ERISA caselaw.
