I read with great interest the latest on Daniel Wright's 401k forfeiture case against JP Morgan Chase. The case was decided in favor of JP Morgan Chase. Wright's legal team is not allowed to amend and refile. The details (as my non-lawyer brain has been able to piece together):
In Daniel Wright v. JPMorgan Chase & Co., U.S. District Judge Josephine L. Staton dismissed all claims alleging ERISA violations over JPMorgan's use of forfeited 401(k) plan assets. The plaintiff argued that JPMorgan breached fiduciary duty by using forfeitures to offset employer contributions instead of paying plan expenses, despite the Plan explicitly allowing such use.
Judge Staton:
Found the plaintiff had standing due to a concrete economic injury.
Concluded the use of forfeitures complied with the Plan and longstanding ERISA precedent.
Rejected the plaintiff’s “novel theory” that the plan should still have paid plan expenses with forfeitures rather than reducing employer contributions as provided by the plan document as both unsupported by the Plan’s terms and contrary to established law.
Dismissed all related claims (breach of fiduciary duty, anti-inurement, prohibited transaction, and failure to monitor) for lack of legal merit or factual support.
Pointed out that other forfeiture cases (HP, Intuit, McManus, and Qualcomm) are different from Wright's case against JP Morgan Chase.
Notably, she denied leave to amend, citing the futility of doing so and the plaintiff’s failure to address prior relevant rulings or request amendment.
The Parting Glass
This ruling is a clear win for plan sponsors and fiduciaries. It reinforces that discretion clearly granted in plan documents will be upheld, and courts will not entertain speculative or policy-based challenges that contradict ERISA precedent. The case underscores the importance of precise plan drafting and following well-settled fiduciary standards.
PS Will these lawsuits finally come to an end when the template plan document clearly states an order in which forfeitures must be used? Will these end when there is clarity that there is no discretion in how plans use forfeitures? We can only hope especially when one reflects on the time and money spent on this case.