Allstate ERISA Class Action
Case name: Katherine Cutrone, Mary Ellen Morgan, et al. v. The Allstate Corporation, et al.
Case type: [Financial Services]
Filed in: [United States District Court for the Northern District of Illinois]
Docket: [Case no.: 1:20 CV 6463]
In January 2021, Sanford Heisler Sharp filed a Class Complaint in the U.S. District Court of Northern Illinois alleging that the Allstate Corporation breached basic fiduciary duties under ERISA by mismanaging the retirement funds that employees had entrusted in its care. The Complaint describes how Allstate failed to prudently monitor the investment performance of the Plan options as required by ERISA. As a result, Allstate continued to offer the Northern Trust target date funds despite chronic underperformance, causing the Plan, and hence participants, to suffer significant losses to their retirement savings.
The Complaint further alleges that Allstate allowed two investment advisers to charge its employees unreasonable fees for managed account and online advice services. As a part of that, the Complaint alleges that Allstate turned a blind eye to a kickback scheme between one of the investment advisers and the Plan’s recordkeeper. The arrangement added another layer of inefficiency that unreasonably drove up the total fees.
Plaintiffs Katherine Cutrone, Mary Ellen Morgan, Michael Smutz, Stan Smith, Mary Beth Am Rhein, Valerie Reinecke and Eddie Yousif filed the case on behalf of themselves and approximately 44,000 current and former plan participants and their beneficiaries. Named as Defendants are the Allstate Corporation, Allstate’s 401(k) committee, the 401(k) Plan’s administrative and investment committees, and the individual members of those committees. The investment advisers alleged to have charged unreasonable fees are Financial Engines Advisors LLC and Alight Financial Advisors, LLC.
As relief, Plaintiffs and the proposed classes seek (1) approximately $70 million for financial losses to Plan participants and beneficiaries resulting from the Plan’s underperforming investments and excessive fees; (2) reform to the Allstate Plan that would require divestiture of imprudent investments and ensure only reasonable investment advisory expenses; and (3) the removal of the fiduciaries who have violated their duties to the Plan’s participants and beneficiaries under ERISA.
- [Original Complaint filed by co-counsel Oct. 30, 2020]
- [Original Complaint filed by Sanford Heisler Sharp Jan. 4, 2021]
- [Amended Consolidated Complaint filed March 22, 2021]
- Allstate can’t slip ERISA suit over retirement plan options, Law 360, September 30, 2021
- Allstate said employees in ERISA suit “lost nothing”, Law 360, June 10, 2021
- Allstate workers fight insurer’s bid to ditch ERISA suit, Law 360, May 13, 2021
- More Allstate workers lob ERISA claims over fund lineup, Law 360, January 5, 2021