CINCINNATI — Cintas Corp. asked the U.S. Supreme Court this week to help it resolve a three-year-old dispute about the company’s 401(k) plans. It’s a case that could impact thousands of current and former Cintas employees.
Two employees, Raymond Hawkins of Miamisburg and Robin Lung of Adams County, filed a proposed class action lawsuit in 2019 arguing they lost money because the company failed to provide lower-cost mutual fund options in its retirement plans. Cintas argued arbitration clauses in their employee contracts prevented the plaintiffs from pursuing a class action claim against the company.
U.S. District Judge Timothy Black rejected Cintas’ argument in January, 2021. The U.S. Sixth Circuit Court of Appeals upheld Black’s ruling in April. But Cintas argued this week that other appellate courts have answered the same question differently. It wants the Supreme Court to settle the question once and for all, a decision that could impact dozens of cases involving company retirement plans.
Companies are trying to force arbitration in retirement plan cases because it discourages retirees from seeking damages.
"If some guy loses $4,000 on fees, he can’t afford to pay the cost of arbitration," said Robert Perez, an attorney who represents individuals in disputes involving retirement plans and health care claims. "The individual would not be able to bring those claims."
But in a class action case, the cost of litigation is spread over thousands of plaintiffs, making it harder for companies to combat.
"Whenever you’re talking about pensions, you’re talking about a lot of money," Perez said. "It’s likely to cost them a lot of money to litigate this and if they lose it’ll cost them even more."
In its securities filings to shareholders, Cintas has declined to estimate the potential cost of the lawsuit.
“The defendants deny liability and a legal contingency is neither probable or estimable at May 31, 2022,” the company disclosed in its most recent annual report.
The original complaint did not seek a specific damage award. Instead, it sought a court order “to restore to the plan all profits which the participants would have made if the defendants had fulfilled their fiduciary obligations.” The complaint said the plan had $1.8 billion in assets at the end of 2017 and 53,357 people were participants or beneficiaries.
