Overview
On March 3, 2021, a participant in a 401(k) Plan offered to employees and agents of New York Life Insurance Company (New York Life) filed Krohnengold v. New York Life Insurance Company,Case No. 1:21-cv-01778, in the United States District Court for the Southern District of New York. The class action was brought on behalf of current and former employees and agents of New York Life Insurance Company under the Employee Retirement Income Security Act (“ERISA”). Additional participants were added as plaintiffs in subsequent amended complaints.
The Plaintiffs claimed that Defendants, including New York Life, the Boards of Trustees of the 401(k) plans offered by New York Life (“Trustees” or “Boards of Trustees”), and individual members of the Boards of Trustees, breached their fiduciary duties under ERISA related to the management of the 401(k) plans (the “New York Life Insurance Employee Progress Sharing Investment Plan” and the “New York Life Insurance Company Agents Progress Sharing Plan”).
This lawsuit was about corporate self-dealing and the prohibited transfer of employees’ retirement assets to Defendants at the expense of the retirement savings of New York Life employees and agents. Defendants were all fiduciaries and parties-in-interest of the 401(k) plans who were required by ERISA to act prudently and solely in the interest of the Plans’ participants when making decisions with respect to 401(k) plan investments.
Summary of the Claims
PlPlaintiffs claimed that Defendants breached their fiduciary duties with respect to their disloyal and imprudent management of the Plans in violation of ERISA, to the detriment of participant investors who collectively lost millions of dollars.
According to the claims, Defendants violated federal pension law in two principal ways during the Class Period (March 2, 2015 and thereafter).
- First, Plaintiffs alleged that, unless participants affirmatively elected different investment options, Defendants unlawfully invested participants in the Fixed Dollar Account by default. The Complaint further alleged that it was imprudent and disloyal for Defendants to use the Fixed Dollar Account as participants’ default investment because the fund was undiversified, failed to provide sufficient investment returns to provide adequate retirement security, and improperly caused the Plans’ assets to inure to New York Life’s benefit.
- Second, Plaintiffs alleged that Defendants improperly favored and included New York Life’s own in-house investment funds in its Plans (specifically the MainStay Income Builder Fund, MainStay Epoch U.S. All Cap Fund, MainStay Epoch U.S. Small Cap Fund, and MainStay Retirement Funds), earning New York Life and its affiliates windfall profits at the expense of the retirement savings of New York Life employees and its agents, despite the ready availability of superior, albeit unaffiliated, investment options.
As a result of Defendants’ fiduciary breaches and prohibited transactions, the 401(k) plans’ participants were allegedly deprived of millions of dollars in retirement savings that they would have earned if Defendants had selected non-proprietary fund options for the Plans and a proper default investment for participants.
Plaintiffs sought to restore profits earned by New York Life and losses suffered by themselves and other participants in the Plan as a result of Defendants’ conduct.
Class Action
This lawsuit was certified as class action on behalf of all participants and beneficiaries of the 401(k) plans who held assets in the MainStay Epoch U.S. All Cap Fund, MainStay Epoch U.S. Small Cap Fund, MainStay Income Builder Fund, any MainStay Retirement Fund, or the Fixed Dollar Account in the plans at any time from March 2, 2015 through the effective date of settlement, excluding Defendants, any of their directors, and any members of the Defendant committees during the class period.
Status of the Litigation
Krohnengold v. New York Life Insurance Company, Case No. 1:21-cv-01778, U.S. District Court, Southern District of New York, was filed on March 3, 2021. An amended complaint was filed on June 15, 2021. On August 10, 2022, the Court largely denied Defendants’ motion to dismiss. On September 8, 2022, Plaintiffs filed a second amended complaint, which Defendants moved to dismiss on September 28, 2022. Plaintiffs opposed the motion on October 17, 2022, and Defendants filed their reply on October 31, 2022. On March 28, 2023, the Court denied the motion to dismiss the second amended complaint, allowing Plaintiffs’ claims related to the Fixed Dollar Account to proceed. On February 26, 2024, Plaintiffs filed a motion for preliminary approval of a $19 million settlement – approximately 20% to 25% of the alleged losses that workers claimed were due to the company’s mismanagement of two New York Life retirement plans. The settlement was preliminarily approved on March 5, 2024. On June 25, 2024, Plaintiffs moved for preliminary approval of the settlement. On July 18, 2024, the Court granted final approval to the $19 million settlement of this certified class action.
Whom to Contact for More Information
If you are a member of the proposed class or you have information which might assist us in the prosecution of these allegations, please contact one of the following persons:
Kai Richter, Esq. – krichter@cohenmilstein.com
Jacob Schutz, Esq. – jschutz@cohenmilstein.com
Doron Hadar, Paralegal – dhadar@cohenmilstein.com
Cohen Milstein Sellers & Toll PLLC
1100 New York Avenue, N.W., Suite 500
Washington, D.C. 20005
Telephone: 888-240-0775 or 202-408-4600