Compass Lexecon Client Prudential Prevails in ERISA Class Action

Plaintiff in this litigation (Young Cho v. The Prudential Insurance Company of America, et al.) claimed that Prudential Insurance Co. et al. (Prudential) breached their fiduciary duties by failing to prudently select and monitor funds in their employee savings plan. Plaintiff criticized the performance of certain investment options in Prudential’s 401(k) plan and argued that they should have been removed in a timely matter. Further, Plaintiff claimed that Prudential breached their fiduciary duties by providing plan participants with an optional asset allocation tool known as “GoalMaker” that allocates retirement funds among certain plan investment options.

Compass Lexecon supported Professor Russell R. Wermers of the University of Maryland Smith School of Business, who was retained by Prudential to analyze claims about the challenged investments and evaluate the basis of Plaintiff’s experts’ opinions. Professor Wermers found that Prudential’s investment oversight committee considered quantitative and qualitative metrics that are widely used in the asset management industry for evaluating the economic reasonableness of investment options as part of its process for selecting and monitoring funds. Additionally, Professor Wemers found that the challenged investments were economically reasonable investment options for the time period during which they were offered in the plan, given contemporaneous beliefs and expectations.

On December 19, 2024, US District Judge Jamel K. Semper (D.N.J.) ruled in favor of Prudential in granting their motion for summary judgment. The Court found that “it is undisputed [Prudential’s investment oversight committee] engaged in a robust process for selecting and monitoring the [plan] during the class period” and that “each of the funds had points where they exceeded their benchmarks.” The Court’s ruling extensively cited Professor Wermers’ analyses and conclusions regarding factors considered by the plan’s investment oversight committee and the performance of the challenged funds.

Professor Wermers was supported by a Compass Lexecon team led by Adel Turki and Joseph Goodman that included Constance Kelly, Andrew Linde, and William Dolan. Compass Lexecon worked closely with attorneys at Willkie Farr & Gallagher LLP, including Amanda Amert, LaRue Robinson, and Sara Kim.