There has been another well-deserved victory for defendants in the multitudes of lawsuits filed against large retirement plans challenging the use of the BlackRock LifePath suite of target funds. The case, Bracalente v. Cisco Systems, was dismissed by a district judge in California. This is one more example of courts making the right decision in these lawsuits that focus almost exclusively on investment returns. We discussed the Microsoft BlackRock case dismissal in a previous blog here.
The decision follows a similar theme as the other dismissals; the courts will not second-guess fiduciary decisions based solely on the outcome of those decisions. In these cases, allegations of underperformance of the LifePath suite of target date funds compared to other target date funds are insufficient. The plaintiffs cannot look back and cherry-pick comparative investments and timeframes to allege a breach of fiduciary duty. They must point to additional facts such as failure to follow a prudent process in selecting the target date suite.
In this decision, it was noted that in 2022 the LifePath target date suite has outperformed some of the comparative funds identified in the lawsuit. The court also noted that it was aware of similar lawsuits and the fact that several have also been dismissed. Judges for the remaining cases should follow suit in what should hopefully be the beginning of the end of frivolous lawsuits targeting retirement plans and plan fiduciaries.