Liao v. Fisher Asset Management, LLC
4:24-cv-02036
| N.D. Cal. | Jun 16, 2025Background
- Frank Liao worked for Fisher Asset Management and participated in a 401(k) plan governed by ERISA from 2004 to 2006.
- Employer matching contributions to his account had a three-year vesting schedule; Liao separated prior to vesting any portion of those employer contributions.
- Under the plan, unvested employer matches are forfeited after five consecutive breaks in vesting service post-termination; this occurred in 2011.
- Fisher did not direct the liquidation of the unvested match (then grown to $245,000 with earnings) until 2023.
- Liao sued under ERISA, alleging he was entitled not just to the original unvested match, but to the investment earnings accrued after 2011, and accused Fisher of violating the plan and breaching fiduciary duties.
- The court previously dismissed all claims, allowed amendment, and now considers the renewed (amended) complaint.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Entitlement to Earnings on Forfeited Unvested Funds | Plan terms entitle him to all earnings on account assets | Plan terms bar entitlement to earnings after forfeiture event | Forfeiture cuts off all rights to earnings |
| Breach of Fiduciary Duty Under ERISA | Forfeiture of post-2011 earnings breached plan/fiduciary duty | All actions complied with plan terms; no breach | No breach; defendant complied with plan |
| Prohibited Transaction Under 29 U.S.C. § 1106 | Liquidation and use of excess earnings was prohibited | No facts showing improper use; use to pay plan expenses allowed | Plaintiff failed to allege a claim |
| Leave to Amend | Should permit further amendment | Further amendment would be futile | Denied; judgment for defendant |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading standard for sufficiency of factual allegations)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for motions to dismiss)
- Lockheed Corp. v. Spink, 517 U.S. 882 (1996) (reallocation of plan funds under plan terms is not a prohibited transaction)
- Wright v. Oregon Metallurgical Corp., 360 F.3d 1090 (9th Cir. 2004) (fiduciary duties not breached where terms of plan followed)