Home Depot ERISA Class Action

Case Materials

Click here to read the class certification

Click here to read the complaint

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Kevin Sharp
Judge Kevin Sharp
Nashville Managing Partner
Nashville, TN
Ed Chapin
Ed Chapin
San Diego Managing Partner
San Diego, CA
Charles Field
Charles Field
San Diego Partner
San Diego, CA
David Tracey
David Tracey
Senior Litigation Counsel
New York, NY
Leigh Anne St. Charles
Leigh Anne St. Charles
Senior Litigation Counsel
Nashville, TN
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April 12, 2018 - Sanford Heisler Sharp Files $140 Million ERISA Class Case Against Home Depot on Behalf of More Than 200,000 Retirement Plan Beneficiaries

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Home Depot Faces $140M Suit Over 401(k) Mismanagement

ERISA Fiduciary Breach Litigation Targets Home Depot, Financial Engines

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Case Description

Case Type: ERISA
Company Name: Home Depot

Update: The United States District Court for the Northern District of Georgia Atlanta Division certified a class of hundreds of thousands of retirement plan participants in a matter alleging breach of fiduciary duty under the Employer Retirement Income Security Act of 1974 (“ERISA”). The Court also denied Home Depot’s motion for summary judgment on plaintiffs’ ERISA claims.

The plaintiffs allege that Home Depot failed to remove chronically underperforming funds and failed to monitor Financial Engines’ and Alight’s investment advisory fees to ensure the fees were not excessive.

Chairman David Sanford noted, “The Court’s ruling allows plan participants to move forward to trial. We look forward to proving our case before a jury in Atlanta.”

Charles Field, Chair of Sanford Heisler Sharp’s Financial Services Practice and lead counsel on the case, said, “This is a vital case for Home Depot employees whose misplaced trust in Home Depot to carefully manage their retirement savings has caused employees substantial harm. We intend to hold Home Depot accountable under the fiduciary standards that the law demands.”

Sanford Heisler Sharp, LLP and Blumenthal Nordrehaug Bhowmik De Blouw LLP filed a class complaint today in the U.S. District Court of the Northern District of Georgia, alleging that Home Depot violates basic fiduciary duties under ERISA and abuses its employees’ trust by mismanaging their 401(k) retirement plan. According to the complaint, Home Depot has selected multiple poorly-performing funds for its 401(k) plan, allowed investment advisers to charge its employees unreasonable fees, and turned a blind eye to a kickback scheme between an investment adviser and the plan’s recordkeeper. The consequences to employees have been substantial. According to one leading financial information and technology company, the average Home Depot plan participant earns $100,000 less in retirement savings than employees in top-rated retirement plans of a similar size. The $100,000 disparity translates to an additional 18 years of work per participant.

Were you a Home Depot employee who invested in the company’s 401(k) plan?

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Plaintiffs Jaime H. Pizarro and Craig Smith, both participants in Home Depot’s retirement plan, filed the case on behalf of themselves and approximately 200,000 current and former plan participants. Named as Defendants are Home Depot, the 401(k) plan’s investment and administrative committees, and investment advisors Financial Engines Advisors, LLC and Alight Financial Advisors, LLC. The class complaint seeks $140 million in damages.

David Sanford, chairman of Sanford Heisler Sharp and counsel for Plaintiff and the proposed class, noted, “ERISA’s fiduciary standards are strict and exacting. Home Depot retained too many poor-performing investment advisory options on the Plan which were highly detrimental to the retirement savings of plan participants. Home Depot and the committees should be held to the highest standard as fiduciaries; instead, in this case, they fall below the lowest standard.”

With over $6 billion in assets, Home Depot’s plan is one of the largest 401(k) plans in the country. Yet, according to the complaint, many of the plan’s investment options regularly underperform their benchmarks and comparable investment options. Accordingly, Plaintiffs claim, Home Depot fails to prudently select investment options and monitor their performance.

Plaintiffs further allege that Home Depot arranged for the investment adviser Financial Engines to sell investment advisory services to participants. Rather than providing personal investment advice, Financial Engines offers what is called “robo advice,” in which a robot creates cookie-cutter portfolios based on minimal participant input. According to the complaint, Home Depot allowed Financial Engines to charge plan participants advisory fees that were in some cases double the competitive rate. To add insult to injury, Home Depot condoned an arrangement in which Financial Engines kicked-back a portion of its fee to the plan’s recordkeeper. Although Home Depot replaced Financial Engines with Alight Financial Advisors in July 2017, Alight simply re-hired Financial Engines as a “sub advisor.” Thus, says the complaint, the new arrangement added another layer of inefficiency to the plan’s fee structure.

Charles Field, a partner at Sanford Heisler Sharp and counsel for Plaintiff and the proposed class, added, “As a fiduciary to the Plan, Home Depot is obligated to act for the exclusive benefit of the plan’s participants and beneficiaries, to assure that plan expenses are reasonable, and to ensure the plan’s investments are prudent. Home Depot neglected these sacrosanct duties.”

Norman Blumenthal, the founding partner at Blumenthal Nordrehaug Bhowmik De Blouw LLP and counsel for Plaintiff and the proposed class, added, “Congress enacted the Employee Retirement Income Security Act to provide basic protections for employees with respect to employee benefit plans offered by their employers. Home Depot engaged in a scheme to undermine these basic protections.”

As relief, Plaintiffs and the class seek (1) compensation for financial losses to plan participants and beneficiaries resulting from the plan’s underperforming investments and excessive fees; (2) reform to Home Depot’s retirement plan that would remove 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.

If you or someone you care about has been taken advantage of in a securities or other financial transaction, Sanford Heisler Sharp can help right that wrong.

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Sanford Heisler Sharp, LLP is a public interest law firm representing individuals and groups against corporations and governmental entities. The firm also represents individual citizens when a corporation is committing an act of fraud against the U.S. Government. As a private attorney general, Sanford Heisler Sharp, LLP specializes in employment, Title VII and wage and hour matters; representation of executives and attorneys; qui tam whistleblower cases; consumer fraud; housing discrimination; mass torts; and appellate and complex litigation.

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