The class action lawsuit, which is seeking unspecified monetary damages, was filed earlier this year by a Pennsylvania law firm, Capozzi Adler, on behalf of Brenda L. Lucero, Heather Barton, Cythina Hurtado and Ilona Kompaniiets, who are listed as the plaintiffs. But it wasn't until late August when CUPRA answered with its court filing that it is seeking to dismiss the case.

According to their LinkedIn profile pages, Lucero lives in El Paso, Texas and worked as a compliance specialist at the $1.4 billion FirstLight Federal Credit Union in El Paso for more than 11 years. Barton of Sierra Blanca, Texas, retired from the $11.6 billion San Diego County Credit Union in San Diego, Calif., after 41 years of service and worked as a fraud investigator, compliance director and collection manager. Hurtado of El Paso was a fraud analyst for nearly 11 years at FirstLight, and Kompaniiets of San Diego worked as a financial analyst at the $3.5 billion California Coast Credit Union in San Diego for a year and a half.

The Madison, Wis.-based CURPA is a 401(k) defined contribution plan. Most of the credit union employers have less than $15 million in assets in their plan and average about 200 plan participants each, according to court filings.

The lawsuit claimed CURPA, its board of directors, board of trustees and the Plan Administration Committee allegedly violated laws of the Employee Retirement Income Security Act (ERISA). The lawsuit referenced CUNA as a sponsor for the plan and that it is a named fiduciary. However, attorneys for CURPA said in court documents that CUNA has no affiliation with CURPA, although it is one of the participating employers in the retirement plan.

The lawsuit alleged CURPA breached its fiduciary duties in multiple respects, such as failing to make decisions regarding the plan's recordkeeping and administration fees, and failing to engage in an appropriate and prudent process, the latter of which led to excessive recordkeeping and administration costs.

The lawsuit also claimed the CURPA board of directors failed to monitor and evaluate the plan administration committee, and allegedly stood idly by as the plan suffered significant losses and failed to monitor the processes by which plan investments were evaluated. What's more, the lawsuit's lawyers claimed the board failed to remove committee members who allegedly maintained imprudent, excessively costly and poorly performing investments within the plan, and paid exorbitant fees for recordkeeping and administration.

As one of the retirement plan participants, the lawsuit highlighted CUNA, which leverages its economy of scale to provide better pricing for its members. But CUNA members allegedly obtained much worse pricing from the national trade organization than each member could have obtained individually at much smaller 401(k) providers for nearly identical services, according to the lawsuit. CUNA members on average had between 171 and 212 participants and between $11.5 million and $15.7 million in assets under management.

"Accordingly, each member organization could have approached, Vanguard, for example, a major provider of 401(k) services and obtained pricing, conservatively, at $100 per participant," the lawsuit read. "Instead, the plan was saddled by outrageous per participant fees as high as $271 per participant in 2017 with the lowest fee charge dipping only slightly below that in 2020 and 2021 at $239 per participant, a nearly 171% excess in 2017 and nearly 139% excess in 2020 and 2021."

CURPA attorneys countered in their court filings, however, that the lawsuit improperly used large single-employer plans to compare to the CURPA plan, and whether those other plans have lower fees says nothing about the reasonableness of CURPA's fees.

When compared to the cost of maintaining many single employer plans, a MEP allows the participating employers to achieve some economies of scale, though CURPA's attorneys acknowledged the administrative costs to serving many small employer members may diminish any economy of scale. The scale efficiencies do not translate into savings for small employer members and participants because regulatory requirements applicable to large MEPs (like CURPA's) may be more stringent than those applicable to most separate small plans.

What's more, CURPA's lawyers alleged the Vanguard information regarding the pricing of $100 is nowhere to be found in its brochure and claimed it was a "manufactured number" that Capozzi Adler's lawyers created to allow for the possibility that CURPA might have had more expenses due to its management of multiple plans.

Nevertheless, the lawsuit's attorneys also alleged CURPA's total plan cost was 50% higher than the median for similar plans.

According to a 2018 study conducted by BrightScope and the Investment Company Institute, the average asset weighted total plan cost for plans with more than $1 billion in assets was 0.22% of total plan assets. CURPA's total cost ranged from a high of 0.43% in 2018, or 95% above the median, to a low of 0.33% in 2020, or 50% above the median of 0.22%.

Again, CURPA's lawyers pointed out that the BrightScope and Investment Company Institute study is a meaningless comparison to CURPA's plan, in part because the lawsuit's attorneys cited the wrong numbers from the study.

"Plaintiff's repeated reference to a median total plan cost of 0.22% from the ICI study is incorrect," CURPA's lawyers wrote. "There is no reference to a 0.22% number in any discussions of the total plan costs. The ICI study identified an asset-weighted average total plan cost of 0.24% for plans in 2018 with more than $1 billion in assets. It identified a median total plan cost of 0.28% for plans with more than $1 billion in assets with a distribution between the 10th and 90th percentiles of 0.15% and 0.45%. Thus, the Plaintiffs mathematical comparisons of the (CURPA) plan's cost to those in the ICI study are just plain wrong."

In its opposition to CURPA's motion to dismiss the lawsuit, Capozzi Adler argued that "as an initial matter, minor errors in calculation does not defeat otherwise well-pled claims. "Importantly, the complaint's allegations are enough to put Defendants on notice that Plaintiffs allege they overpaid for RKA," recordkeeping and administrative expenses.

Capozzi Adler has filed more than a dozen ERISA lawsuits in the first seven months of this year. Its apparent strategy is to convince federal judges to deny motions to dismiss these lawsuits, which will allow the law firm to continue their cases and push for settlements, according to an article about ERISA lawsuits published by InvestmentNews, which serves financial advisors.

From January to mid-July, InvestmentNews reported there have been 42 ERISA class action lawsuits filed, and if the rate ticks up slightly, that number may eclipse 100 lawsuits this year, making it the highest year ever for ERISA lawsuits. The article noted one of the reasons behind the spike in ERISA lawsuits was Capozzi Adler, which has filed 17 cases from January to mid-July, up from 11 cases it filed last year though down from the 40 lawsuits filed in 2020.

In 2021, the nation's top ERISA settlements totaled $837 million, up from $380 million in 2020, according to Seyfarth's annual survey of workplace class action settlements.

Capozzi Adler did not respond to CU Times' request for comment. The three credit union employees and one retiree also did not respond to CU Times' request for comment.