Capital Group Secures Dismissal of ERISA Complaint

Skadden litigators won the rare dismissal of a putative class action complaint alleging violations of ERISA, filed against The Capital Group Companies, Inc. The plaintiff alleged that defendants breached ERISA fiduciary duties and engaged in prohibited transactions by including proprietary mutual funds in its in-house 401(k) plan. The court held that the plaintiff's allegations concerning the inclusion of "unduly expensive" investment options in the plan did not state a claim for breach of fiduciary duty, because a fiduciary's failure to offer the cheapest investment option available, standing alone, is insufficient to state a plausible claim. The court also rejected the plaintiff's prohibited transaction claims, holding that the majority were time-barred, and the remainder were expressly permitted by a Department of Labor regulation allowing mutual fund companies to offer their own proprietary funds in their in-house 401(k) plans.