Maryland and Connecticut Show Where 401(k) Fund Litigation Goes Next
Plaintiffs filed two new ERISA suits on June 23, 2026. One in Maryland. One in Connecticut. Both target the same fiduciary duty, and both push the theory onto new ground. Our earlier post covered the American Century One Choice target-date filings. The pattern repeats: Fiduciaries pick a fund. They hold the fund through years of underperformance. They keep no record of a real review. The duty stays the same. The targets are changing.
The Two New Filings
In the Connecticut filing, Baker v. Avangrid Management Company LLC, No. 3:26-cv-01002 (D. Conn.), a former employee brings a proposed class action. She claims the plan held an actively managed T. Rowe Price large-cap growth fund and kept the fund through years of weak returns. The fund trailed both its peers and its own benchmark. The alleged plan losses run from about $45 million to $124 million since 2020. The basis of her claim is that prudent fiduciaries would have removed the fund years ago.
What is notable is that this is not a target-date suit. The plan offered a single core-menu option. The monitoring theory now reaches ordinary equity funds, not just the default fund.
A parallel suit, Scott v. Sodexo, Inc., No. 1:26-cv-02508 (D. Md.), is notable for its venue. Maryland sits in the Fourth Circuit, which decided Genworth. In Trauernicht v. Genworth Financial, Inc., 169 F.4th 459 (4th Cir. 2026), the court held ERISA Section 502(a)(2) claims for investment losses in a defined contribution plan are individualized. A plaintiff seeking damages for a defined contribution plan investment loss in the Fourth Circuit does not get a mandatory Rule 23(b)(1) class, and must clear the Rule 23(b)(3) predominance requirement by showing that common questions of law or fact predominate over individual issues.
Why This Matters
The theory outgrew target-date funds. Early 2026 filings clustered around one TDF suite. Avangrid applies the same logic to a plain equity option. This suggests that any fund on your menu with a long, visible record of trailing returns now invites a claim.
Venue may be playing a bigger role in plaintiff strategy. The Fourth Circuit has established that for defined contribution plans, class certification requires a showing of a common injury, but the Second Circuit sets no comparable bar.
However, the same defense applies in any circuit, because the core question stays constant: Did your committee evaluate and document the choice to keep the fund?
What To Do Now
- Look past your target-date suite. Pull the full menu, flag every option with a long record of trailing its benchmark and peers.
- Document the retention decision. The selection alone is not enough. Keep committee minutes, benchmarking, consultant reports, and watch-list actions. The gap with no review is the weak point in these complaints.
- Match your IPS to practice. If your policy sets watch-list triggers or scoring thresholds, follow them. An ignored IPS hands the plaintiff a guide.
- Confirm share class and rationale. Hold the least expensive share class you qualify for. Where you hold a pricier class, record the reason at the time, through revenue-sharing or recordkeeping offsets.
- Treat venue as a live factor. Your exposure shifts with the circuit a plaintiff reaches. Bring the Genworth line into your risk review and into any active case.
The Bottom Line
These filings show a wider pattern. The reach runs from one fund family to the full menu. The risk varies by circuit, but all plan sponsors should build the fiduciary file before any complaint arrives.
If you have questions about your plan's investment oversight or fiduciary process, contact our Employee Benefits & Executive Compensation attorneys at 214-420-6142 or by filling out the below to discuss your ERISA compliance and litigation risk.
DISCLAIMER: This summary is not legal advice and does not create any attorney-client relationship. This summary does not provide a definitive legal opinion for any factual situation. Before the firm can provide legal advice or opinion to any person or entity, the specific facts at issue must be reviewed by the firm. Before an attorney-client relationship is formed, the firm must have a signed engagement letter with a client setting forth the Firm’s scope and terms of representation. The information contained herein is based upon the law at the time of publication.