Compass Lexecon Client Baker Hughes Prevails in ERISA Class Action

The Plaintiff in this case (Espinoza v. Baker Hughes Holdings, LLC), a proposed class of Baker Hughes retirement plan participants, claimed that Baker Hughes breached its fiduciary duty of prudence by paying excessive compensation for its recordkeeping services via float income. The Plaintiff claimed that this resulted in unreasonably high costs to retirement plan (Plan) participants during the proposed class period.

Compass Lexecon Senior Managing Director Dr. Adel Turki was retained by counsel for Baker Hughes to review the transaction records related to the Plan. Dr. Turki found that the entire float income was used to pay for bank charges or Plan expenses, such as recordkeeping and other administrative services.

On February 10, 2025, US District Judge Sim Lake (S.D. Texas, Houston Division) ruled in favor of Baker Hughes and granted its motion for summary judgment. The Court found that “Defendant is entitled to summary judgment because Plaintiff has failed to produce evidence capable of establishing that Defendant owes a fiduciary duty to its treatment of float and, alternatively, because Plaintiff has failed to cite evidence capable of establishing that Defendant breached its fiduciary duty of prudence, or that any such breach caused a loss to the Plan.”

In reaching its ruling, the Court relied on Dr. Turki’s testimony, stating: “The Turki Report and deposition testimony show that the Plan’s recordkeeper maintained Plan accounts that earned float income, that the float income was used to pay bank expenses for the account, and that whatever was left over was transferred to the Plan’s expense account and used to pay Plan expenses, including e.g., for accountants and lawyers. Contrary to Plaintiff’s argument, the Turki Report does not show that the Plan’s recordkeeper received indirect compensation via float.” The Court further stated that, “even if [it] were to find that … the Turki Report constitute[ed] evidence that the recordkeeper received indirect compensation via float,” the Turki Report does not “show any loss to the Plan.”

Dr. Turki was supported by a team at Compass Lexecon that included Clifford Ang and Eugia Yao. Compass Lexecon worked closely with Greg Mersol and Matthew Somogye of Baker & Hostetler LLP.