Key Issues to Watch in ERISA Defined Contribution Plan Class Action Litigation in 2026

2025 was a very busy year for the benefits industry and for ERISA class action litigation involving defined contribution plans. As we celebrate the New Year and look forward to 2026, below are some key issues to watch that may have a significant impact on ERISA class action litigation involving defined contribution plans in the coming year and beyond.  

Forfeiture Lawsuits

For the past two years, dozens of plan sponsors have been targeted in an ongoing wave of forfeiture lawsuits challenging the longstanding practice across defined contribution plans of allocating forfeitures to company contributions. While new forfeiture lawsuits were filed at a rapid pace for most of 2025, there was a slowdown at the end of the year, with only five new forfeiture lawsuits filed in the fourth quarter, and none after mid-November. However, even with the end-of-the-year slowdown, 43 forfeiture cases were filed in 2025, which was a more than 40 percent increase over 2024 (when 30 forfeiture cases were filed). And, in total, more than 80 forfeiture cases have been filed since the first such lawsuit was filed in September 2023.

1.  Motion to Dismiss Rulings

Although dozens of forfeiture cases are pending, some good news for plan sponsors is that district courts are continuing to dismiss them. Since our October Legal Update, six more district courts have ruled on motions to dismiss in forfeiture cases, and all six granted the motions:

• Polanco v. WPP Group, 2025 WL 3003060 (S.D.N.Y. Oct. 27, 2025)
• Del Bosque v. Coca-Cola Sw. Beverages, 2025 WL 3171326 (N.D. Tex. Nov. 13, 2025)
• Brown v. Peco Foods, 2025 WL 3210857 (S.D. Miss. Nov. 14, 2025)
• Hernandez v. AT&T Services, 2025 WL 3208360(C.D. Cal. Nov. 14, 2025)
• Garner v. Northrop Grumman Corp., 2025 WL 3488657(E.D. Va., Dec. 5, 2025)
• Brewer v. Alliance Coal LLC, 2025 WL 3527171 (N.D. Okla. Dec. 9, 2025)
• Donelson v. Meijer, 2025 WL 3754241 (W.D. Mich., Dec. 29, 2025)

By our count, 20 federal district courts in 18 states have now issued written opinions on motions to dismiss in 31 forfeiture cases, with 26 of those rulings (80+ percent) favoring plan sponsors, including the last 13 motion to dismiss rulings in a row.¹

2.  Pending Appeals

There are now at least six active appeals in forfeiture cases before three US Courts of Appeals (Third Circuit, Eighth Circuit, and Ninth Circuit) that could materially impact the forfeiture landscape. Briefing has been completed in two of the appeals—Hutchins v. HP, Inc. (9th Cir.) and Matula v. Wells Fargo (8th Cir.)—and we anticipate many of the other appeals will be fully briefed by mid-February. Oral argument has not yet been scheduled in any of the appeals.

Notably, the US Department of Labor (“DOL”) on January 8 filed another amicus brief asking the Ninth Circuit to affirm the dismissal of the forfeiture lawsuit against JPMorgan. The new amicus brief reiterates and builds upon the DOL’s arguments in its July 2025 amicus brief urging the Ninth Circuit to affirm the dismissal of the forfeiture lawsuit against HP.² DOL was also recently granted leave by the Third and Ninth Circuits to file amicus briefs supporting Siemens and Honeywell in their pending forfeiture appeals. We anticipate these briefs, which are scheduled to be filed later this month, will continue to build on the DOL’s forfeiture arguments, and each of the appeals addresses different plan forfeiture language.

We will continue to closely watch these appeals, as the appellate court rulings may materially impact the volume and viability of forfeiture lawsuits going forward. Although it is difficult to predict when these pending appeals will be resolved, we expect to see at least one or two decisions in 2026.

3.  Forfeiture Settlements

As we have seen for years with respect to ERISA excessive fee lawsuits, the frequency and size of class action settlements materially impact the litigation landscape because ERISA plaintiff law firms will continue to file lawsuits if it is profitable for them to do so. To date, there have been seven settlements in ERISA class actions with forfeiture claims, with the four announced settlement amounts ranging from $1.15 million to $9.6 million. The majority of these settlements were reached early in the litigation, even before the district courts ruled on the plan sponsor’s motion to dismiss. While there can be good reasons for an early settlement—and every case must be evaluated individually—early settlements often embolden ERISA plaintiff firms because they seek, and are often awarded, up to one-third of the settlement amount in attorney’s fees without having had to expend substantial time or resources litigating the case.

Prohibited Transaction Claims Challenging Service Provider Arrangements

In our October 2025 Class Action Legal Update, we discussed the potential implications of the US Supreme Court’s ruling in Cunningham v. Cornell University, and how lower courts would handle prohibited transaction claims challenging routine service provider arrangements at the pleading stage. As a refresher, the Court held in Cunningham that an ERISA plaintiff must plausibly allege the elements of a prohibited transaction under ERISA Section 406—including that a fiduciary caused the plan to engage in the prohibited transaction—but does not have to preemptively address in the complaint every potentially applicable prohibited transaction exemption. Because the Court recognized that ERISA plaintiffs might seek to take advantage of its decision by filing “meritless” prohibited transaction claims, the Court instructed lower courts, consistent with its prior ruling in Dudenhoeffer, to closely scrutinize ERISA prohibited transaction claims, including for Article III standing and other pleading requirements.

Since Cunningham, we have seen an increase in the number of prohibited transaction claims, particularly in cases challenging recordkeeping and other service provider fees. While most of the complaints have included breach of fiduciary duty claims challenging the same fees, some ERISA plaintiffs have started to assert stand-alone prohibited transaction claims, presumably to take advantage of the perceived lower pleading standard. Motions to dismiss are currently pending in a growing number of cases with prohibited transaction claims challenging plan recordkeeping and other service provider arrangements. In some early positive news for plan sponsors, a district court in Michigan recently dismissed a prohibited transaction claim challenging a plan’s recordkeeping fees in Fleming v. Kellogg Co.³ The district court granted the motion with prejudice, finding first that the plaintiff’s fiduciary breach claims failed because he did not plausibly allege that the plan’s recordkeeping fees were unreasonable. The court emphasized that the plaintiff did not, despite having multiple opportunities to do so, plausibly allege that his comparator plans received a similar “type, level, or quality of services” at a lower cost than the services received by the Kellogg plan.

The district court also dismissed the plaintiff’s prohibited transaction claim because he did not plausibly allege that the receipt of recordkeeping services from, and the payment of recordkeeping fees to, the plan’s recordkeeper was a prohibited transaction. The court agreed with the Fifth Circuit’s reasoning in D.L. Markham DDS, MSD, Inc. 401(K) Plan v. Variable Annuity Life Ins. Co. that the contractual agreement that initially turns a plan service provider into a “party in interest” under ERISA Section 3(14) cannot serve as the basis for a prohibited transaction claim.⁴ This is because, according to the Fifth Circuit, a prohibited transaction under ERISA Section 406(a)(1) requires a plan fiduciary to have already entered into a transaction with an existing “party in interest.” And “entities that are not already providing services to a particular plan at the time of contracting with that plan . . . are not ‘parties in interest’ under ERISA.”⁵ Accordingly, because the Kellogg plaintiff did not allege that the plan’s third-party recordkeeper was already a party-in-interest when the parties negotiated and entered into the at-issue contractual recordkeeping agreement, the prohibited transaction claim failed.⁶

It will be worth watching whether other courts follow the Fifth Circuit’s and the district court’s reasoning and reject similar prohibited transaction claims challenging routine service provider arrangements on the basis that the service provider was not a party in interest when it entered into the arrangement.⁷ Indeed, on January 2, the Kellogg plaintiff filed a notice of his intent to appeal the district court’s motion to dismiss ruling in the Sixth Circuit. We will also be watching how courts address prohibited transaction claims in situations where a plan had a pre-existing relationship with a service provider when it entered into the contractual arrangement being challenged as a prohibited transaction. Some plan sponsors are also beginning to challenge prohibited transaction claims on Article III standing grounds because, as the Supreme Court reiterated in Cunningham, merely alleging a statutory violation (including a prohibited transaction) is not enough for a plaintiff to have Article III standing. The plaintiff must also allege a requisite injury-in-fact arising from the prohibited transaction. It remains to be seen how courts will address these Article III arguments.

US Supreme Court May Address the Pleading Standard for Investment Challenges

In December, we reported on the Solicitor General filing amicus briefs on behalf of the United States in Pizarro v. Home Depot, Inc. and Parker-Hannifin Corp. v. Johnson urging the Supreme Court to grant the cert petitions in two ERISA class actions involving important legal questions for the benefits industry: (1) whether a burden-shifting framework applies to loss causation and (2) the pleading standard for ERISA fiduciary-breach claims challenging plan investments.

Unfortunately, the Supreme Court will not address the first question involving loss causation, as the plaintiffs in Pizarro on January 7, 2026 moved to dismiss their cert petition asking the Supreme Court to review the Eleventh Circuit’s decision affirming summary judgment in favor of Home Depot. As a result, for now, there will continue to be a circuit split on the issue, with the First, Second, Fourth, Fifth, and Eighth Circuits applying a burden-shifting framework (i.e., the defendant fiduciary has the burden to prove no causation) and the Tenth and Eleventh Circuits not applying a burden-shifting framework (i.e., the plaintiff bears the ordinary burden to prove causation). However, with the Solicitor General’s well-reasoned rejection of the burden-shifting framework in its amicus brief in Pizarro, perhaps we will see a shift in the lower courts on this important legal question. 

With respect to the appropriate pleading standard for ERISA fiduciary-breach claims challenging plan investments, there are currently two pending cert petitions seeking the Supreme Court’s review: Parker-Hannifin and Anderson v. Intel Corp. Investment Policy Committee. As we previously reported, in Parker-Hannifin, a split Sixth Circuit panel held that, it was not necessary for an ERISA plaintiff to plead a “meaningful benchmark” to state a plausible imprudent investment claim premised on alleged underperformance. In Anderson, the Ninth Circuit took the opposite position, holding the plaintiffs were required to plead a “meaningful benchmark” to support their investment imprudence claim and because they had failed to do so, the district court had properly dismissed their claims.

Based on the timing of the Solicitor General’s brief in Parker-Hannifin, we anticipate the Supreme Court may consider the cert petition during its upcoming conferences on January 16 or 23. The Court could also consider the Anderson cert petition at the same time and, in so doing, decide to grant neither, one, or even both of the cert petitions. While we cannot predict with any certainty whether the Supreme Court will grant the cert petitions and hear the cases, we should know the answer in the coming weeks.

Arbitration of ERISA Class Actions

On December 15, 2025, the Eleventh Circuit became the seventh federal appellate court⁸ to apply the judicially created “effective vindication doctrine”⁹ and hold that an arbitration clause in an ERISA plan document was unenforceable because it required the plaintiffs to waive substantive rights and/or remedies under ERISA. In Williams v. Shapiro, the Eleventh Circuit held that an employee stock ownership plan’s arbitration clause violated the effective vindication doctrine because, as drafted, it prohibited the plan’s participants from bringing ERISA fiduciary breach claims “in a representative capacity” and also precluded them from “seek[ing] or receiv[ing] any remedy which has the purpose or effect of providing additional benefits or monetary or other relief” to any other participant.¹⁰ According to the Court, these prohibitions “prevent[ed] the plaintiffs from effectively vindicating” their rights under ERISA Sections 409 and 502(a)(2) in arbitration.¹¹

While the majority of federal appellate courts have now applied the effective vindication doctrine to invalidate arbitration clauses in defined contribution plans, the Eleventh Circuit observed that the seven appellate courts were presented “with near-identical [arbitration] language eliminat[ing] the right to pursue substantive plan-wide remedies,”¹² including the removal of a plan fiduciary, which is expressly contemplated by ERISA Section 409 as a potential remedy for a fiduciary breach. And because the arbitration clauses were drafted to preclude severing the problematic language, the courts applied the effective vindication doctrine to invalidate the arbitration clauses in their entirety. It remains to be seen how courts would view a carefully crafted plan arbitration clause that (i) delegates the question of arbitrability to the arbitrator, and (ii) does not include the reoccurring plan language that has been the subject of the appellate court decisions to date. It also remains to be seen whether the Supreme Court will agree to hear a future ERISA plan arbitration case and, if so, whether it will agree with the lower courts’ application of the effective vindication to ERISA breach of fiduciary duty claims.

Conclusion

It has now been more than 20 years since the first ERISA excessive fee class actions were filed challenging the administration of defined contribution plans. Despite the myriad industry advancements and evolution of defined contribution plans during that time, more ERISA class actions targeting defined contribution plans were filed in 2025 than in any prior year when you count both traditional excessive fee lawsuits and the new wave of forfeiture lawsuits. While plan sponsors are more successful defeating these lawsuits today than in the past, the ERISA plaintiff’s bar continues to pursue new legal theories. In addition, as we discussed in our October 2025 Class Action Legal Update, there continue to be a large number of defined contribution plan class action settlements, which can encourage ERISA plaintiff firms to file more lawsuits.

Despite all of this, there is hope for plan sponsors and fiduciaries. With ERISA plaintiff’s firms increasingly filing copycat lawsuits asserting the same allegations and claims, plan sponsors are seeing more success on motions to dismiss. And when plan sponsors fight these lawsuits through summary judgment or trial, they prevail the vast majority of the time. We are now also seeing the DOL actively push back on ERISA class action litigation through its amicus briefs, and we anticipate the DOL will also seek to curb ERISA class action litigation through rulemaking and sub-regulatory guidance. Hopefully, when we ultimately look back on 2026, we will see a stemming of the tide of ERISA class action lawsuits targeting defined contribution plans.

---

¹ For a listing of the earlier motion to dismiss rulings, please see our October 2025 Forfeiture Legal Update.

² For more details on DOL’s amicus brief, please see our July 2025 Forfeiture Legal Update.

³ Fleming v. Kellogg Co., Case 1:22-cv-00593, ECF No. 87 (W.D. Mich. Dec. 8, 2025) (granting motion to dismiss with prejudice).

⁴ 88 F.4th 602 (5th Cir. 2023).

⁵ Id. at 609–10 (emphasis added); Fleming, ECF No. 87, at 16-17.

⁶ The district court emphasized that Cunningham did not affect the outcome of the case because the Supreme Court’s decision “did not address which entities fall within the ‘party in interest’ definition or which ‘transactions’ fall within [ERISA Section 406].”

⁷ A magistrate judge adopted the Fifth Circuit’s reasoning in recommending the district court dismiss the prohibited transaction claims against SSGA challenging a pension risk transfer because the plaintiffs failed to allege that SSGA was already a service provider to the plan, and therefore a party-in-interest, when AT&T engaged SSGA to serve as an independent fiduciary for the pension risk transfer transaction. Piercy v. AT&T Inc.,2025 WL 2505660, at *43-45 (D. Mass. Aug. 29, 2025). 

⁸ The other federal appellate courts include the Second, Third, Sixth, Seventh, Ninth, and Tenth Circuits.

⁹ Although the Supreme Court has never applied the effective vindication doctrine to invalidate an arbitration agreement, it has explained that the doctrine “invalidates arbitration provisions that prospectively waive a party’s right to pursue statutory remedies.” Am. Express Co. v. Italian Colors Rest., 570 U.S. 228, 235 (2013) (internal quotation omitted) (explaining that the key question is whether “the prospective litigant effectively may vindicate its statutory cause of action in the arbitral forum”). 

¹⁰ 2025 WL 3625999, at *6 (11th Cir. Dec. 15, 2025) (Federal Reporter citation not yet available).

¹¹ Id. at *7.

¹² Id. (emphasis added). The challenged plan arbitration clause in Williams stated:
All Covered Claims must be brought solely in the Claimant’s individual capacity and not in a representative capacity or on a class, collective, or group basis. Each arbitration shall be limited solely to one Claimant’s Covered Claims, and that Claimant may not seek or receive any remedy which has the purpose or effect of providing additional benefits or monetary or other relief to any individual or entity other than the Claimant. For instance, with respect to any claim brought under ERISA § 502(a)(2) to seek appropriate relief under ERISA § 409, the Claimant’s remedy, if any, shall be limited to (i) the alleged losses to the Claimant’s individual Account resulting from the alleged breach of fiduciary duty, (ii) a pro-rated portion of any profits allegedly made by a fiduciary through the use of Plan assets where such prorated amount is intended to provide a remedy solely to Claimant’s individual Account, and/or (iii) such other remedial or equitable relief as the arbitrator(s) deem(s) proper so long as such remedial or equitable relief does not include or result in the provision of additional benefits or monetary relief to any individual or entity other than the Claimant, and is not binding on the Committee or Trustee with respect to any individual or entity other than the Claimant.
Id. at *1.