Adidas America, Inc. is the defendant in a proposed class action alleging participants of the sportswear apparel company’s 401(k) savings and retirement plan and their beneficiaries have been charged unjustifiably excessive administrative fees.
Filed in Oregon federal court, the case explains the Employee Retirement Income Security Act—ERISA—requires that those charged with overseeing employee 401(k) plans adhere to strict fiduciary standards. Among a fiduciary’s responsibilities, the suit says, is the duty to act prudently in ensuring the amount of fees paid to those who service the plan, such as recordkeepers and investment product providers, are no more than reasonable.
Included in the complaint is a breakdown of the fees paid by each Adidas 401(k) plan participant compared to those paid by a representative group of plans with participant counts ranging from 5,000 to 9,999 and with total plan assets valued at greater than $500 million. According to the case, the difference between the 401(k) plan administrative fees charged by Adidas and the average of those charged by comparative plans based on the total number of participants is more than $6,242,000. The plaintiffs and proposed class members were wholly unaware that the fees charged under Adidas’ retirement plans were excessive compared to market norms, the lawsuit asserts.
According to the case, Adidas caused plan participants to lose millions in savings by selecting and retaining excessively expensive investments while at the same time failing to look into retaining superior, lower-cost mutual funds that were readily available. All told, the lawsuit wages Adidas’s 401(k) plan administrative fees are consistently the highest among its comparator peers.
The suit proposes to cover a more than 7,478-member-strong class of those who participated in or were a beneficiary of the Adidas Group 401(k) Savings and Retirement plan from July 1, 2013 through the date of a possible judgment on the lawsuit.