AutoZone sues Northern Trust over alleged ERISA violations

September 28, 2021

The plaintiffs argued that plan fiduciaries violated ERISA by retaining GoalMaker, an asset allocation service provided by Prudential Financial Inc., which allegedly steered participants to high-cost investment options. Prudential, the plan's record keeper, wasn't cited as a defendant.

Northern Trust was added as a defendant in an amended complaint filed Sept. 22 in federal court in Memphis.

In restating their complaints against AutoZone and its fiduciaries, the plaintiffs accused Northern Trust of failing to act prudently.

The investment committee and Northern Trust "were aware of the need to consider low-cost index funds as an alternative to the high-cost GoalMaker funds," said the complaint in the case of Iannone et al. vs. AutoZone Inc. et al. "The committee itself clearly and directly expressed concerns that it would be appropriate to replace actively managed funds with index fund alternatives."

Maintaining that a prudent investment adviser would have conducted a comprehensive review, the plaintiffs, who are seeking class-action status, wrote that "Northern Trust failed to do this, in breach of its fiduciary obligation to the plan and its participants."

A spokesman for Northern Trust wrote in an email that the company declined to comment.

"One of the first things AutoZone did after terminating Northern Trust was to consider low-cost index fund alternatives to the high-cost actively managed funds," the plaintiffs wrote. A new adviser "switched to a core lineup of index funds."

The plaintiffs also alleged that "Northern Trust had to have a viable, documented process and methodology for monitoring the plan's investment and expenses, which it did not have."

The AutoZone 401(k) Retirement Savings Plan, Memphis, Tenn., had approximately $675 million in assets as of Dec. 31, 2019, according to the lawsuit.