Bozzini v. Ferguson Enterprises LLC

Background

This putative class action concerns alleged violations of the Employee Retirement Income Security Act of 1974, or ERISA. The plaintiffs, Tera Bozzini and Adrian Gonzales, sued Ferguson Enterprises LLC and the Retirement Plan Committee of the Ferguson Enterprises, LLC 401(k) Retirement Savings Plan.

The challenged allegations concerned forfeited retirement-plan contributions. These are contributions made for employees who leave before becoming fully vested. The plaintiffs alleged that Ferguson used nearly all of those funds—approximately $18 million—to reduce Ferguson’s contribution obligations instead of using them to save the plan and its participants money on administrative expenses.

The second amended complaint asserted a second cause of action for breach of the duty of loyalty under 29 U.S.C. § 1104(a)(1)(A), and a third cause of action for a prohibited transaction under 29 U.S.C. § 1106(a)(1)(A). Ferguson moved to dismiss those two claims and moved to strike the plaintiffs’ jury demand.

The Court’s Analysis

The court first held that the plaintiffs had introduced a new legal theory in violation of an earlier order. That order permitted the plaintiffs to amend their pleading to correct certain deficiencies but did not permit them to add claims or parties without Ferguson’s consent or the court’s permission. The earlier complaint did not mention forfeited contributions or allege that their handling supported the duty-of-loyalty and prohibited-transaction claims. The court therefore concluded that dismissal was appropriate on that ground alone.

The court also ruled that the claims would fail as currently pleaded. For the duty-of-loyalty claim, the court found that the plaintiffs’ allegation that Ferguson directed forfeited funds only toward the plan’s benefit, rather than toward participants’ administrative expenses, was not enough to state a viable claim. The court explained that more factual context was required.

The court likewise found the prohibited-transactions claim insufficient. The plaintiffs alleged that Ferguson took and used plan assets for its own benefit, causing approximately $15 million in losses to the plan and participants. The court concluded that these allegations, without more, did not state a prohibited-transaction claim.

Disposition

The court GRANTED Ferguson’s motion to dismiss. The plaintiffs’ second and third causes of action were DISMISSED. The order does not state whether that dismissal was with or without prejudice. It allowed the plaintiffs to seek leave to amend by filing a motion within seven days, with deadlines for Ferguson’s response and the plaintiffs’ reply.

The court also STRUCK the jury demand. The plaintiffs had consented to that result and explained that the demand appeared in the operative complaint because of a drafting error. The hearing scheduled for June 5, 2025 was VACATED.