U.S. pharmacy chain Walgreen Co., or Walgreens, could pay $300 million in damages after a group of beneficiaries of its profit-sharing retirement plan sued the company for allegedly breaching fiduciary duties as it offered underperforming funds under the plan.
The class-action lawsuit was filed in the U.S. District Court Court for the Northern District of Illinois in Chicago on Aug. 9.
Members of Walgreens' profit-sharing retirement plan alleged that the company "loaded the plan with a suite of poorly performing funds called the Northern Trust Focus Target Retirement Trusts," adding that it kept the funds throughout the class period despite their continued underperformance.
In addition, the plan's participants claim Walgreens selected Northern Trust Funds, which are classified as target-date funds designed to achieve certain investment results based on a member's expected retirement date, "despite a market teeming with better-performing alternatives."
Sanford Heisler Sharp LLP, which represents the plaintiffs in the class-action suit, said Aug. 9 that "plan participants have invested over $3 billion in these 10 target retirement date funds."
"As a fiduciary to the plan, Walgreen is obligated to monitor the plan to ensure these investments are prudent. This obligation is especially critical where these 10 funds make up almost a third of the plan's assets. We believe Walgreen neglected their sacrosanct duties," the law firm said.
Walgreens and its parent company, Walgreens Boots Alliance Inc., did not immediately respond to S&P Global Market Intelligence's requests for comment.