Single ERISA Claim Against Liberty Mutual Allowed to Proceed

A federal district court judge in Massachusetts issued a ruling in a class action lawsuit against Liberty Mutual on June 5, granting in part and denying in part the company’s motion for summary judgment. The ruling in Ahmed v. Liberty Mutual Group Inc. clears the way for one of the plaintiffs’ core claims to proceed, while narrowing the scope of the case.

The complaint, originally filed in April 2020 by current and former participants in Liberty Mutual’s employee retirement plan, alleges that the company breached fiduciary duties under the Employee Retirement Income Security Act by selecting and retaining imprudent investment options and failing to act solely in the interest of plan participants.

The plaintiffs cite examples of investment options, such as Sterling Capital Management’s mid-cap value equity fund, that had underperformed for years, and identify Wells Fargo’s Government Money Market Fund as the plan’s “only stable income investment option,” even though other options were available “with much higher returns in all markets.”

U.S. District Judge Mark Mastroianni, presiding in U.S. District Court for the District of Massachusetts, ruled that Liberty Mutual and its co-defendants are entitled to summary judgment related to claims that the company maintained an “excessive expense account balance” without proper justification and portions of other claims alleging that Liberty Mutual had breached its fiduciary duty of loyalty by prioritizing corporate interests over those of plan participants.

However, Mastroianni denied summary judgment on the claim that Liberty Mutual breached its duty of prudence, ruling that the plaintiffs “have demonstrated loss in connection with the Wells Fargo US Government Money Market Fund,” because at least one “suitable alternative” existed.

On the claims for which he granted summary judgment, Mastroianni wrote that the plaintiffs failed to offer sufficient evidence that Liberty Mutual retained the challenged funds to serve its own interests at the expense of retirement plan participants. The plaintiffs had pointed to internal emails, such as one mentioning a 2016 leadership dinner with Wells Fargo executives, and an internal planning document as evidence. Mastroianni found the evidence “insufficient, speculative and unrelated.”

Mastroianni ruled that to succeed on a claim alleging a breach of the duty of loyalty, the plaintiffs must demonstrate that Liberty Mutual’s “operative motive was to further its own interests,” which he ruled the plaintiffs failed to do. 

Mastroianni ordered Liberty Mutual to submit revised redactions and unsealing proposals for public documents by June 12 and ordered both parties to file a joint status report by June 19. The report must include proposed trial dates, expected trial length and the parties’ openness to alternative dispute resolution, including court-sponsored mediation.

The ruling sets the case in motion to proceed toward trial, but only on the claimed breach of prudence.

Liberty Mutual was represented by Skadden, Arps, Slate, Meagher & Flom LLP. The plaintiffs were represented by the Naumes Law Group of Milton, Massachusetts and Schlichter Bogard & Denton,
LLP, of St. Louis, Missouri.