JACKSONVILLE (LN) — A federal judge on Wednesday denied Southeastern Grocers LLC’s motion to dismiss a class action lawsuit alleging the grocery chain breached its fiduciary duties under ERISA by allowing its 401(k) recordkeeper to charge excessive fees.
Joyce Ulch, a Southeastern Grocers employee, filed the suit on behalf of more than 12,000 participants in the company’s retirement plan. The complaint alleges that Fidelity Investments Institutional, the plan’s recordkeeper, extracted excessive direct and indirect compensation, which held more than $1 billion in assets as of December 2021.
The case was stayed for nearly a year while Ulch exhausted administrative remedies and later during an unsuccessful mediation. U.S. District Judge Thomas J. Chappell lifted the stay and ruled on the motion to dismiss after reviewing the amended complaint.
Southeastern Grocers argued that Ulch failed to state a plausible claim for breach of the duty of prudence regarding both direct fees and indirect compensation, such as revenue sharing and float income. The company urged the court to consider exhibits attached to its motion, including Form 5500 reports and administrative records, to refute Ulch’s allegations.
Judge Chappell declined to expand the record beyond the complaint and its attachments, agreeing with Ulch that the company was attempting to resolve factual disputes at the dismissal stage.
The court held that Ulch’s allegations regarding direct compensation were plausible because she cited five comparable benchmarks showing similar plans with substantially lower recordkeeping fees. The judge also denied the motion regarding indirect compensation, noting that the duty of prudence is context-specific and cannot be fully evaluated without discovery.
The court emphasized that the ruling makes no prediction on the ultimate merits of the case.
Southeastern Grocers must file an answer to the complaint by May 27, 2026. The parties must also file a joint case management report by that date.