Home Depot ERISA Class Action

Case name: Pizarro, et al. v. The Home Depot, Inc., et al.

Case type: Financial Services Litigation
Filed in: U.S. District Court for the Northern District of Georgia
Docket: Case No.: 1:18-CV-01566-WMR

Case Summary

On February 2, 2023, Sanford Heisler Sharp McKnight and Stillman Welch, LLC filed an appeal in the Eleventh Circuit on behalf of more than 200,000 participants in the Home Depot FutureBuilder Plan (the “Plan”), who allege that Home Depot breached fiduciary duties under the Employee Retirement Income Security Act (ERISA) in their mismanagement of the company’s $9 billion 401(k) plan.

The original Complaint, filed by Sanford Heisler Sharp McKnight in the U.S. District Court for the Northern District of Georgia in April 2018, alleged that Home Depot breached ERISA and cost Plan participants millions of dollars by failing to divest from multiple poorly performing funds; allowing investment advisers to charge unreasonable fees; and turning a blind eye to a kickback scheme between an investment adviser and the Plan’s recordkeeper.

The Complaint also details how Home Depot used a company called Financial Engines as an investment advisory service, characterizing them as “experts.” In fact, according to the Complaint, Financial Engines is referred to as a “robo adviser” in the financial investment industry because instead of humans it uses a computer program to formulate a cookie-cutter, mathematical approach to investment advice. Not only did Home Depot encourage employees to sign on with Financial Services, the Complaint alleged, but it also allowed Financial Services to charge unreasonable fees to Plan participants.

In September 2020, U.S. District Court Judge William M. Ray II granted class certification. In February 2022, the Court heard oral arguments on motions for summary judgment. In March 2022, Judge Ray recused himself after inheriting Home Depot stock, and the case was re-assigned to Judge Steven D. Grimberg. In September 2022, Judge Grimberg granted Home Depot’s motion for summary judgment. Even though the Court found that Plaintiffs had established disputes of material fact as to whether Defendants breached their duty of prudence under ERISA, it ruled that Plaintiffs had failed to show the breaches caused losses to the plan.

In their appeal to the Eleventh Circuit, Plaintiff-Appellants—joined by the U.S. Department of Labor as an amicus—argue in part that the Court erred by disregarding the prevailing view that once breach is established, the burden of proof vis-a-vis causation is on the Defendants, not the Plaintiffs.

The appeal is in the briefing stage.