A U.S. District Court judge in Hartford, Conn., rebuffed a request by Xerox Corp. and its 401(k) plan fiduciaries to dismiss an ERISA complaint by three participants who alleged the defendants mismanaged the plan.
The plaintiffs alleged the plan paid excessive fees to record keepers affiliated with Xerox and that the defendants violated ERISA’s duty to monitor the committee the administers the plan. They sued in August 2021 and are seeking class-action status in Carrigan et al. vs. Xerox Corp. et al.
The defendants argued that the plaintiffs failed to state a claim for ERISA violations.
“Plaintiffs disagree, claiming that their allegations are sufficient to state a claim at this early stage of the litigation,” U.S. District Court Judge Sarala V. Nagala wrote Monday. “The court agrees with plaintiffs and thus denies defendants’ motion to dismiss.”
Ms. Nagala noted that the plan had two different record keepers during the period cited by plaintiffs for alleged violations of ERISA: Xerox HR Benefits Services from 2015 to 2017, a subsidiary of Xerox; and Conduent Human Resource Services from 2017 to 2021, which was spun off from Xerox HR.
“Notwithstanding the spinoff, however, plaintiffs allege that Xerox ‘retained significant equity in Conduent,’ and that Conduent’s relatively small client portfolio rendered Xerox a significant client for Conduent,” Ms. Nagala wrote. The plan hired an unaffiliated record keeper in 2021, which the judge did not identify.