Southwest Airlines Sued by Plan Participants over ‘Disastrous’ Performance of a 401(k) Fund

Southwest Airlines plane. Credit: Diego M. Radzinschi/ALM

On the heels of several significant Employee Retirement Income Security Act (ERISA) class settlements in 2024, Southwest Airlines was hit with a class-action lawsuit alleging that it breached basic fiduciary duties under ERISA and violated its fiduciary duties by mismanaging the company’s retirement savings plan, after 15 years of “chronic underperformance,” according to an announcement Wednesday from Sanford Heisler Sharp McKnight. The law firm filed suit in the U.S. District Court for the Northern District of Texas on behalf of the plaintiffs.

In December 2024, Sanford Heisler filed for preliminary approval of a record $69 million settlement in its multiyear class action against UnitedHealth over “low performing” 401(k) funds. In 2023, the law firm also obtained final approval of a $61 million settlement in a long-running ERISA class action against General Electric. These settlement amounts are believed to be the largest ever for ERISA cases, stemming from poorly performing investment options in a 401(k) plan, according to the law firm.