A Florida federal district court judge recently denied NextEra Energy's motion to dismiss a proposed Employee Retirement Income Security Act (ERISA) class action filed by John Stewart, an employee who participates in the company's 401(k) plan. The participant claims that the energy company misappropriated forfeited funds and a recordkeeper illegally profited from plan earnings.
The case is Stewart v. NextEra Energy Inc., Case Number 9:23-cv-81314, U.S. District Court for the Southern District of Florida.
Stewart first filed his ERISA breach of fiduciary duty suit in September 2023, claiming that the company's $5 billion 401(k) plan charged millions in excessive fees from more than 20,000 participants. The fees allegedly went to compensate Fidelity, the plan's recordkeeper. Stewart also claimed that the company should have applied forfeited funds, or nonvested employer contributions to workers' accounts who terminated employment, toward plan expenses. Instead, NextEra used the forfeited funds to reduce other employer-side contributions.
In her opinion, the district court judge said that both of Stewart's ERISA claims were sufficiently detailed to overcome the company's motion to dismiss. The ruling rejected NextEra's argument that plan documents authorized how they applied forfeited funds, stating that the company's interpretation of plan documents was only one possible interpretation. In so ruling, the judge adopted a California district court's June 2025 ruling that dismissed a proposed class action against JPMorgan Chase & Co. concerning forfeited 401(k) funds, as language in the plan prevented JPMorgan from using the funds to decrease plan expenses.
The district court judge also rejected arguments from NextEra that the plan terms gave full discretionary authority to its committee to interpret its terms. As a result, the company claimed that a fiduciary breach claim alleging forfeiture misspending was non-viable. Still, the judge disagreed, stating that plan document compliance doesn't always equate to properly carrying out a fiduciary duty.
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