Employees of BlackRock Inc. urged a California federal judge on Monday to allow them to proceed as two classes in their lawsuit alleging the investment firm violated the Employee Retirement Income Security Act and cost retirement plan participants more than $100 million.
Named plaintiffs Charles Baird and Lauren Slayton asked U.S. District Judge Haywood Gilliam to certify one class of employees who participated in BlackRock's collective trust investment funds and another class who participated in the company's 401(k) plan, known as the BlackRock Retirement Savings Plan.
"The claims arise from a single set of core evidence that has identical legal import for all members of both classes," the employees said, calling their suit a "prototypical class action."
The employees also asked the judge to certify the classes as "mandatory non-opt out classes," because any resolution of the case would necessarily affect every participant in the retirement plans.
"Adjudication of plaintiffs' claims concerning their beneficial interest in the BlackRock Plan and the assets of the BlackRock CTIs would necessarily dispose of other class members' interest in the plan and the BlackRock CTIs, respectively," the employees said.
Baird and Slayton hit BlackRock, its subsidiaries and board members, along with BlackRock's investment consultant Mercer Investment Counseling, with a sprawling, 134-page, 11-count amended complaint in August. The suit says that with the aid of Mercer, BlackRock mismanaged its retirement plans by charging excessive hidden fees, selecting investments that charged up to 871% in premiums, violating ERISA, and costing participants hundreds of millions of dollars in losses.
The second amended complaint says that as of Dec. 31, 2016, the BlackRock Plan had approximately $1.78 billion in assets and approximately 10,000 participants. Thousands of BlackRock employees and former employees invest, on average and in the aggregate, $125 million in the BlackRock Plan, according to the complaint.
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"Congress made it crystal clear that this kind of egregious self-dealing violates the law," she said.
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Baird and Slayton are represented by Michelle C. Yau, Mary J. Bortscheller and Daniel R. Sutter of Cohen Milstein Sellers & Toll PLLC, and Todd F. Jackson and Nina Wasow of Feinberg Jackson Worthman & Wasow LLP.
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