Case Study: Chevron
The question “What do you want to achieve?” distills a philosophy of practice that has been at the core of our client relationships for over 130 years. We know we succeed when our clients do, which is why we consider helping them achieve their most important goals our greatest achievement. The case study below is one example of how we’ve recently helped a client achieve an important objective.
In recent years, there has been a dramatic increase in ERISA fiduciary breach litigation targeting 401(k) plan sponsors and fiduciaries. Among those leading the charge is plaintiffs’ counsel Jerome Schlichter—who The New York Times has called “a Lone Ranger of the 401(k)s.”
When Schlichter set his sights on Chevron’s US$19 billion 401(k) plan in 2016, the company turned to O’Melveny for its defense.
In a suit brought in the Northern District of California on behalf of more than 40,000 plan participants, Schlichter advanced many of the arguments typically asserted in fiduciary breach cases. But the court found that plaintiffs’ hindsight allegations of poor fund performance and vague allegations of excessive fees and disloyalty were insufficient to raise a plausible inference of fiduciary breach. O’Melveny’s motion to dismiss was granted, first with leave to amend and then with prejudice.
The case was characterized by the press as a “big loss” for the plaintiffs’ bar and a “complete rebuke” of Schlichter’s theories. Notably, the court’s ruling has also been leveraged by other companies facing similar claims.
On appeal in late 2018, the Ninth Circuit upheld the district court’s orders.