ERISA lawsuit against Fluor over 401(k) plan investments dismissed

A federal court on Wednesday dismissed a lawsuit filed against Fluor Corp. by two former employees who claimed that the engineering and construction company offered expensive, poor-performing investment options in its 401(k) plan.

The plaintiffs alleged that the plan’s suite of nine custom target-date funds managed by BlackRock trailed that of off-the-shelf target-date funds. They also criticized the plan’s custom large-cap equity fund, smidcap equity fund and non-U.S. equity fund, which they claimed failed to outperform their benchmarks.

The ERISA lawsuit was filed in January 2022 in U.S. District Court in Dallas against Fluor, the company’s board of directors, its benefits administrative committee and retirement plan investment committee, and against Mercer Investments, the plan’s fiduciary investment adviser. BlackRock was not named as a defendant.

The court agreed with Fluor’s motion to dismiss the case on the grounds that the plaintiffs failed to allege enough facts “to state a claim upon which relief can be granted.” It also agreed with Fluor’s argument that the plaintiffs lacked standing.

The court ruled that because the plaintiffs did not invest in the options that they claimed were inferior, they suffered no injury and therefore did not have standing. One plaintiff did not invest in any of the 12 options at issue, while the other invested in just three.

While the court granted standing for claims involving the three plan options in which one of the plaintiffs invested, it ruled that the plaintiff failed to “provide information that would enable the court to evaluate defendants’ process and conduct for selecting the investments that he did.”

“Providing the court with data from other investments that outperformed the Fluor investments does little to aid the court in evaluating the fiduciary process,” the court wrote in its opinion. “Put bluntly, a flawed fiduciary process can result in great returns while a diligent and complete fiduciary process can result in underperformance.”

The court gave the plaintiff who invested in three of the investment options at issue 28 days to file an amended complaint in Deborah Locascio et. al. vs. Fluor Corp. et. al.

Fluor did not immediately return a request for comment.