ERISA Fee Litigation in 2025: Year in Review

If 2024 set a near-record pace for ERISA class action litigation, 2025 matched it and raised the stakes. Plaintiff law firms filed 155 ERISA fiduciary class action lawsuits — maintaining the frenetic pace that has defined the past several years — while a unanimous U.S. Supreme Court decision fundamentally lowered the bar for these cases to proceed. New theories emerged, old ones evolved, and plan sponsors of every size found themselves in the crosshairs.

For plan sponsors, the lesson of 2025 is the same as every year before it, only more urgent: documented, proactive fiduciary governance is not a best practice — it is your primary legal defense.

Here is a comprehensive look at the cases, trends, and rulings that shaped the ERISA litigation landscape in 2025.

By the Numbers

Defined contribution plans were named in 63% of all ERISA class action litigation filed in 2025, with health plans accounting for a growing share (22%) as fee scrutiny has expanded beyond retirement accounts. Of the 155 total filings:

• 98 targeted defined contribution plans (primarily 401(k) and 403(b))
• 39 targeted health and welfare plans — a significant expansion from prior years
• More than 30 cases settled during the year, with average settlement values exceeding $3 million
• Over $1.3 billion has been paid out across 200+ settlements in the past five years

Plans in the $250M–$750M asset range saw increased targeting — a continuation of the plaintiff bar's expansion beyond mega-plans into the mid-market. Most lawsuits continued to allege excessive recordkeeping fees, imprudent investment selection, or both.

The median settlement in 2025 was approximately $1.6 million — roughly half the $3 million median in 2023 — reflecting both more aggressive motion-to-dismiss practice and a growing volume of smaller “copycat” cases.

The Case That Changed Everything: Cunningham v. Cornell University

The most consequential development of 2025 arrived on April 17, when the U.S. Supreme Court issued a unanimous decision in Cunningham v. Cornell University that fundamentally altered the litigation landscape for every ERISA plan sponsor in America.

The case originated with a class action filed in 2016 on behalf of 28,000 Cornell University employees, alleging the university's retirement plans paid excessive fees to recordkeepers TIAA and Fidelity. Cornell had successfully moved to dismiss the prohibited transaction claims — arguing that plaintiffs needed to plead around the applicable Section 408 exemption, which permits “reasonable arrangements” with service providers. Both the district court and the Second Circuit agreed.

The Supreme Court reversed unanimously. Writing for the majority, Justice Sotomayor held that a plaintiff need only allege the elements of a prohibited transaction — that a fiduciary caused the plan to engage in a transaction with a “party in interest” — without also preemptively negating the available exemptions. The burden of asserting and proving those exemptions shifts to the plan sponsor.

The practical consequence is stark: hiring a recordkeeper, investment advisor, or TPA is now sufficient grounds to allege a prohibited transaction. Justice Alito, concurring, warned that the decision would produce “untoward practical results” because plan administrators are practically required to employ third-party service providers.

The decision applies to all ERISA-covered plans — 401(k), 403(b), and defined benefit plans alike. Industry observers widely expect the ruling to significantly increase filing volume, particularly against mid-market plans that previously presented less attractive litigation economics.

The Supreme Court acknowledged these concerns and noted that district courts retain tools to screen meritless claims: requiring plaintiffs to file a reply rebutting applicable Section 408 exemptions, dismissing cases that allege no participant injury, and using Rule 11 sanctions as a deterrent.

The New Litigation Frontier: Stable Value Funds

While recordkeeping fee cases remain the backbone of ERISA excessive fee litigation, the most dramatic development of 2025 was the explosion of lawsuits targeting stable value funds — conservative capital preservation options that had attracted virtually no litigation scrutiny before this year.

Plaintiff firms filed 27 stable value fund lawsuits in 2025, a more than 500% increase compared to 2024. The core allegation: that plan fiduciaries breached their duty of prudence by offering stable value funds or guaranteed investment contracts (GICs) with crediting rates lower than allegedly comparable alternatives available in the market.

The expansion follows a familiar playbook. Target-date funds were the prior wave's target — plaintiff firms filed dozens of cases alleging plan sponsors selected higher-cost TDFs when cheaper alternatives existed. Many of those suits were settled or dismissed, prompting plaintiff attorneys to search for the next theory. Stable value funds — common in large plans, often holding billions in aggregate — represent an attractive new target.

Courts are only beginning to assess these claims. Early decisions have been mixed: defendants have prevailed where plaintiffs failed to demonstrate that the challenger fund and the comparator fund share the same underlying structure, credit risk profile, and liquidity terms. Courts have been skeptical of comparisons between fundamentally different stable value products. However, where plaintiffs have identified specific, structurally comparable alternatives with meaningfully higher crediting rates, cases have survived initial motions to dismiss.

For plan sponsors: if your plan includes a stable value option, the 2025 litigation wave is a signal to review the fund's crediting rate against comparable alternatives and document your committee's rationale for the selection.

Forfeiture Lawsuits: 43 New Cases in 2025

The forfeiture lawsuit wave — which began in September 2023 — continued to surge through 2025, with 43 new cases filed during the year and approximately 80 total forfeiture lawsuits filed since the theory first appeared.

The legal theory is straightforward but contested: ERISA plan documents typically allow unvested employer contributions — “forfeitures” left behind when employees depart before vesting — to be applied either to offset future employer contributions or to pay plan administrative expenses. Plaintiff firms argue that using forfeitures to offset employer contributions, rather than to reduce fees paid by participants, constitutes a breach of fiduciary duty.

Courts have been largely skeptical. As of year-end 2025, defendants' motions to dismiss were granted in 25 cases and denied in only five. The Department of Labor weighed in forcefully through amicus briefs in multiple cases, taking the position that where a plan document expressly permits forfeitures to be applied to offset employer contributions, there is no fiduciary breach.

Filing pace also slowed in the fourth quarter of 2025 — only five new forfeiture cases were filed in Q4, compared to the aggressive pace earlier in the year. Whether that signals the beginning of the end for this litigation wave, or simply a pause while plaintiff firms await the remaining motions-to-dismiss rulings, remains to be seen.

Key takeaway for plan sponsors: Review your plan document's forfeiture language. If it permits — and your committee has elected — to apply forfeitures to employer contribution offsets, document the rationale in your committee minutes. The DOL's position supports this practice, but documentation remains your best protection if a claim is filed.

Share Class Litigation: Courts Apply Greater Scrutiny

Retail vs. institutional share class claims — which allege that plan fiduciaries selected higher-cost retail share classes when lower-cost institutional alternatives (such as R6 class shares) were available — remained active in 2025, but at a notably lower volume than in prior years as courts applied more rigorous analysis.

In Matney v. Barrick Gold of North, plaintiffs alleged that the plan held JP Morgan Smart Retirement R5 target-date funds (expense ratios of 0.55%–0.57%) instead of R6 shares (0.44%–0.47%). The Utah district court granted the motion to dismiss — not because R6 was unavailable, but because plaintiffs failed to account for a 15-basis-point revenue sharing credit returned to participants, which effectively eliminated the cost difference.

In another notable ruling, the Michigan district court in England v. Denso International America rejected a creative plaintiff theory: that the plan acted imprudently by selecting an R6 share class because the Investor share class carried a lower net expense ratio when revenue sharing was factored in. The court rejected this “net expense” argument and dismissed the claim.

These decisions represent a meaningful development. Courts are increasingly demanding “apples to apples” comparisons — plaintiffs cannot simply point to a lower-cost share class without accounting for revenue sharing, structural differences, and the overall economics of the arrangement.

For plan sponsors: the share class question remains a real fiduciary obligation. Document why your plan uses a particular share class, confirm whether revenue sharing is credited back to participants, and evaluate alternatives at least annually.

What Settlements Actually Pay — And Who Benefits

A 2025 analysis of ERISA settlement economics revealed a striking disparity between what participants recover and what plaintiff attorneys collect. The median per-participant award in settled ERISA cases was just $67.79 — while plaintiff law firms averaged $1.59 million per case in fees, consuming approximately one-third of each settlement.

In one illustrative case — Dukes v. AmerisourceBergen Corp. — workers averaged just $5.85 each, while attorneys collected more than $200,000 in fees. Contrast this with the $48.5 million settlement in a case against Pentegra's multiple employer plan — one of the larger resolutions of the year — where per-participant awards reached approximately $1,138.

These figures prompted a December 2025 hearing before the House Committee on Education and Workforce, titled “Pension Predators: Stopping Class Action Abuse Against Workers' Retirement.” Witnesses argued that many ERISA class actions are meritless copycat lawsuits that enrich plaintiff firms while delivering negligible benefits to the participants they claim to represent.

Legislative proposals emerged in 2026 targeting DOL enforcement transparency and restricting the agency from sharing investigation data with private litigants — further signaling that political and judicial pushback against the litigation wave is growing.

What Protects Plan Sponsors

Despite the elevated litigation environment, the fundamentals of fiduciary protection have not changed. When plan sponsors fight ERISA class actions through summary judgment or trial, they prevail the vast majority of the time. The challenge is that most sponsors settle — not because they are liable, but because the cost of discovery and litigation exceeds the settlement demand.

The most effective defenses in 2025 shared a common thread: documented process. Courts consistently ruled in favor of plan sponsors who could demonstrate:

• A regular, documented fee benchmarking process — at minimum annual
• Investment committee minutes that show genuine deliberation, not rubber-stamp approval
• A written investment policy statement that the committee actually followed
• Periodic RFP processes or competitive market studies for recordkeeping and advisory services
• Review of the full compensation picture — direct fees plus all indirect revenue sharing
• Documentation of share class evaluation, including revenue sharing netting

The lesson from Cunningham v. Cornell is not that every arrangement with a service provider will be litigated to trial — it is that your ability to demonstrate a prudent, documented process at the pleading stage has become more important than ever. Plans without documentation have no defense at the motion to dismiss stage. Plans with documentation have one.

FEEDUCIARY is built around this principle. A benchmarked, documented fee analysis — showing your plan's all-in costs compared to market rates for plans your size — is exactly the kind of evidence that demonstrates prudence. It belongs in your fiduciary file.