A proposed class action lawsuit has been filed on behalf of participants in The Vail Corporation’s 401(k) retirement plan who were allegedly injured by the mountain resort company’s poor management of the plan.
A proposed class action lawsuit has been filed on behalf of participants in The Vail Corporation’s 401(k) retirement plan who were allegedly injured by the mountain resort company’s poor management of the plan. According to the case, Vail has negligently filled with plan with low-performing, expensive mutual funds instead of more prudent options that “were readily available.”
Under the Employee Retirement Income Security Act (ERISA), the administrator of a retirement plan is obligated to manage the plan “with the care, skill, prudence, and diligence” of “a prudent man acting in a like capacity and familiar with such matters,” the lawsuit begins. The case alleges that despite its clear fiduciary duties, the defendant has “inexplicably failed” to select the most prudent mutual fund options as part of the Vail Resorts 401(k) Retirement Plan, and has instead offered employees high-fee investment options that “cannot be justified.”
More specifically, the suit alleges that for at least 18 of the Vail plan’s 27 mutual fund share classes, the classes’ issuer offered a different share class that charged lower fees and “consistently achieved higher returns” than what was selected by the defendant. The presence of these under-performing funds in the Vail plan’s investment menu goes beyond “simply sloppy business practice,” the case argues, and is more accurately the result of a breach of Vail’s fiduciary duties to plan participants and beneficiaries.
A step further, the complaint says that even slight differences in a mutual fund’s fees and performance can significantly impact the amount of savings available to plan participants upon retirement. Excessive fees, according to the suit, can “impair the value of a participant’s account.”
Had Vail been a prudent fiduciary, the company would have continuously monitored the performance of the plan’s investment options against relevant benchmarks and peer groups. Similarly, had Vail acted in participants’ best interests, the company would have replaced under-performing options with “better-performing and reasonably priced options,” the lawsuit argues.
The case claims that as a result of the defendant’s negligent management of its retirement plan, participants have lost millions through poor performing investments and unreasonable fees.