Judge Rules Against Former CU Employees Over Retirement Plan Lawsuit

A Wisconsin federal judge ruled against former credit union employees last week when he decided not to reconsider his order to deny the class certification of a lawsuit, claiming the $1.5 billion Credit Union Retirement Plan Association, CURPA, has been saddled with excessive fees, recordkeeping and administrative expenses.

The lawsuit was filed in 2022 by a Pennsylvania law firm, Capozzi Adler, on behalf of plaintiffs Brenda L. Lucero, Heather Barton, Cynthia Hurtado and Ilona Kompaniiets, claiming CURPA allegedly cost the retirement plan and its 21,000 participants millions of dollars.

The former credit union employees asked U.S. District Court Judge James D. Peterson in Madison to certify their civil filing as a class action lawsuit, but he decided against it in January.

They asked him to reconsider his ruling but on Feb. 22 Judge Jackson turned them down because the former credit union employees failed to show that the court misapplied the law and failed to identify other errors with the court’s decision based on the information that the plaintiffs provided in their class action motion.

Lucero worked as a compliance specialist at the $1.5 billion FirstLight Federal Credit Union in El Paso, Texas. Barton retired from the $13.4 billion San Diego County Credit Union in California and worked as a fraud investigator, compliance director and collection manager. Hurtado was a fraud analyst at FirstLight, and Kompaniiets worked as a financial analyst at the $3.2 billion California Coast Credit Union in San Diego.

They are former participants of the CURPA 401(k) plan, a multiple-employer plan (MEP). The plan, while sponsored by CURPA, includes more than 100 different participating employers who each signed separate agreements to participate in the MEP. Lucero, Barton, Hurtado and Kompaniiets argued in court filings that several entities involved in administering the plan failed to control recordkeeping costs and allegedly breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA).

Although for many ERISA plans a legal claim regarding excessive fees would be a candidate for class certification because the fees would be charged to all plan participants using the same formula, Judge Peterson noted the CUPRA plan operated differently.

“Rather than applying a set fee schedule for all plan participants, plan administrators allowed individual employers to negotiate their own fees with the recordkeeper, resulting in disparate fees,” Judge Peterson wrote in his ruling in January. “Among the named plaintiffs themselves, one of them was charged as little as $10.91 in fees while another was charged as much as $471.53. In fact, three of the four plaintiffs (Heather Barton, Ilona Kompaniiets and Cynthia Hurtado) were charged fees that fall within what (they) themselves contend is reasonable.”

Because Barton, Kompaniiets and Hurtado did not identify any other harm that they suffered, Judge Peterson ruled they lacked standing in the case.

Lucero, however, has been allowed to pursue the claims in the lawsuit but not as a class action case. She has approximately $85,000 in savings in her CUPRA 401(k) account, according to court documents.

Although the case remains open, the law firm representing Lucero indicated in court filings that it would not be “economically viable” to litigate the case for a single plaintiff with very limited damages.