Live Nation has 401(k) plan fee challenge sent to arbitration

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Live Nation Entertainment has won a court order dismissing a proposed class action over its 401(k) plan fees, with the dispute sent into arbitration.

According to a report from Bloomberg Law, the live entertainment company amended its 401(k) plan last year, to require that any claim relating to plan benefits or fiduciary conduct be resolved by confidential, binding arbitration. 

The plan included a class action waiver preventing participants from bringing representative actions on behalf of others. 

The article from Bloomberg Law added that the provisions were valid and enforceable, and required the dismissal of a proposed class action filed in March. 

As explained by the American Society of Pension Professionals & Actuaries, a suit filed in the US District Court for the Central District of California (Avecilla v Live Nation Entertainment Inc, C.D.Cal, No. 2:23-cv-01943, complaint 3/15/23), by participant plaintiffs Pamela Avecilla and Sean Bailey, the fiduciaries of the $769m (£602m/€697m) plan, “chose to accept the benefits of federal and state tax deferrals for their employees via a 401(k) plan, and the owners and executives of Defendant organisations have benefitted financially for years from the same tax benefits. However, Defendants have not followed ERISA’s standard of care.” 

The suit also alleged that the plan fiduciaries ‘breached their fiduciary duties of prudence and loyalty’ by offering and maintaining funds with higher-cost share classes, when identical lower-cost class shares were available and could have been offered to participants; offering a guaranteed income product that carried unnecessarily high risk, generated relatively low returns and offering an expensive share class of the product; offering expensive investments, depriving participants of compound returns which greatly exceed the annual cost of fees and revenue sharing and failing to maintain and restore trust assets. 

The suit added: “Plan suffered millions of dollars in losses resulting from Defendants’ fiduciary breaches and remains exposed to harm and continued future losses…”