Caliber Collision 401(k) plan participants, including at least one former employee, have sued the company, alleging that over $4 million in retirement funds were used to offset employer contributions.<\/p>\n
Specifically, the suit argues Caliber breached the fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA) and violated its prohibited transaction rules and anti-inurement provision. Ten unnamed plan fiduciaries are defendants in the case.<\/p>\n
The suit claims that from 2019 through 2022, Caliber used only $112,238 to offset plan expenses while plan participants paid plan expenses, directly and indirectly, of over $6 million to third-party service providers.<\/p>\n
\u201cThis lawsuit is about ensuring that retirement plan fiduciaries follow their duties under ERISA and act in the best interests of employees,\u201d wrote Seth Bloom, one of the plaintiffs\u2019 attorneys, in an emailed statement to RDN. \u201cMr. Fordyce believes that the legal process will fairly examine the facts and provide the relief the law requires. Beyond that, we\u2019ll let the case speak for itself in court.\u201d<\/p>\n
The plaintiffs\u2019 attorneys are based in five states: Texas, Tennessee, Illinois, Louisiana, and Florida.<\/p>\n
According to the suit, the Caliber Holdings Corp. Retirement Savings Plan was created by Caliber \u201cfor the sole benefit of its eligible employees.\u201d<\/p>\n
\u201cIn accordance with ERISA, the plan\u2019s operating documents provide that assets of the plan should not be \u2018used for, or diverted to, purposes other than the exclusive benefit of participants or their beneficiaries and for defraying reasonable expenses of administering the plan,’\u201d the suit states.<\/p>\n
\u201c[T]he plan fiduciaries have consistently chosen to utilize essentially all forfeited plan assets to benefit Caliber by reducing Caliber\u2019s contractually obligated declared contributions to the plan and paying plan expenses from plan assets other than forfeited plan assets, i.e., participants\u2019 accounts.\u201d<\/p>\n
The suit includes a breakdown of the amounts that Caliber allegedly \u201cflowed directly to its bottom-line profit\u201d out of the retirement plans, saving it the respective amounts in contributions:<\/p>\n
In 2019, $621,634;
\nIn 2020, $625,248;
\nIn 2021, $1,499,053; and
\nIn 2022, $1,362,338.<\/p>\n
\u201cFrom 2019 through 2023, the plan fiduciaries caused plan participants to pay plan expenses through deductions from their accounts and indirectly through revenue sharing or similar methods,\u201d the suit states. \u201cThe minimum direct amounts paid by participants were: (1) in 2019, $1,197,846; (2) in 2020, $1,291,101; (3) in 2021, $1,409,746; (4) in 2022, $1,305,257; (5) and in 2023, $1,664,834.\u201d<\/p>\n
Rather than \u201cloyally and prudently\u201d acting in the best interest of plan participants and avoiding prohibited transactions, \u201cdefendants chose to use plan assets almost exclusively to benefit Caliber, to the detriment of the plan and its participants.\u201d<\/p>\n
\u201cDefendants\u2019 conduct, at the very least, necessitates the inference that they either did not have processes in place to weigh the benefits to participants in allocating forfeitures, or that they ignored their duty to act exclusively for the plan participants because the plan fiduciaries were motivated by self-interest and\/or the interest of Caliber when allocating forfeited plan assets,\u201d the suit states.<\/p>\n
The suit notes that ERISA requires plan fiduciaries to use forfeited plan assets to provide benefits and defray plan expenses as soon as administratively practicable.<\/p>\n
As of December 31, each year from 2019 through 2022, unallocated forfeited plan assets allegedly remained unused in the following amounts:<\/p>\n
In 2019, $634,123;
\nIn 2020, $1,191,429;
\nIn 2021, $232,428; and
\nIn 2022, $197,388.<\/p>\n
[T]hroughout the class period, defendants used less than 2% of the forfeited plan assets to defray plan expenses,\u201d the suit states. \u201cA prudent and loyal fiduciary presented with this scenario would not have applied millions of dollars to offset future company contributions and left millions of dollars unused each year when plan participants shouldered millions of dollars in administrative expenses. These actions by the fiduciaries, at a minimum, necessitate the inference that imprudence or disloyalty was at play in their decision-making process.\u201d<\/p>\n
Caliber didn\u2019t respond to a request for comment regarding the lawsuit by the publication deadline. Only one former employee, Roy Fordyce, is named in the suit and is the proposed class representative.<\/p>\n
According to Fordyce\u2019s LinkedIn profile, he worked at a Maryland Caliber location as an autobody estimator for nine months in 2023. He declined to comment on the suit.<\/p>\n
Other recent Caliber news<\/p>\n
In July,\u00a0Caliber Holdings Inc. confidentially submitted a draft registration statement with the Securities and Exchange Commission (SEC) for a proposed initial public offering<\/a> of its common stock,\u00a0according to a press release<\/a>.<\/p>\n Caliber said at the time that the number of shares offered and the price range for the offering hadn\u2019t yet been determined.<\/p>\n