Judge revives 3M target-date suit on Fidelity benchmark

PLANADVISER first reported the August 11 ruling. Chief U.S. District Judge Eric Tostrud, in the U.S. District Court for the District of Minnesota, granted in part and denied in part 3M Co.'s motion to dismiss the amended complaint in Batt et al. v. 3M Co. The ruling revives a case that had looked finished in March, when Tostrud dismissed the original complaint because the participants had not identified a meaningful investment benchmark.

The suit dates to August 2025. Jennifer Batt, Madhu Chandnani, Karen Davison, and Willard Jenkins—four current or former employees—sued individually and on behalf of similarly situated participants in the 3M Voluntary Investment Plan and Employee Stock Ownership Plan and the 3M Savings Plan. Named alongside 3M were its board of directors, the 3M Benefits Fund Investment Committee, and 3M Investment Management Corp., the subsidiary that helped manage plan assets. The amended complaint says 3M violated ERISA's duty of prudence by continuing to offer custom target-date funds that underperformed suitable alternatives; that 3M failed to monitor plan fiduciaries; and that payments to 3M IMCO constituted prohibited transactions and self-dealing.

The original complaint never cleared the pleading stage. Tostrud dismissed it without prejudice in March, and the plaintiffs filed an amended version on March 31. The new filing offered far more detail on comparators, naming five target-date fund families the plaintiffs said were sufficiently similar to the 3M series: BlackRock, Fidelity Freedom, T. Rowe Price, Voya, and Putnam. Weighing asset allocation, sector allocation, Morningstar style, and risk, Tostrud found four of the five comparable. Putnam did not make it.

Four families remained, and one carried the case. Tostrud found that the Fidelity Freedom funds consistently beat the 3M target-date series by a significant margin, supporting a plausible inference that the plan's fiduciaries acted imprudently. That is enough to keep the core prudence claim alive. Putnam's exclusion matters just as much: a large, recognizable fund family does not automatically qualify. Comparability has to be shown, not assumed.

'Meaningful benchmark' is the same phrase at the center of the Labor Department's proposed safe harbor for private assets in defined-contribution plans, a rule Retirement Capital Daily has covered extensively. The proposal has stalled around the question of what an adequate benchmark would be, since private-market strategies do not come with a ready-made public peer group. This case is the easier version of the problem. Target-date funds have daily pricing, standard style boxes, and a shelf full of direct competitors. The court's exercise—check allocation, check risk, check returns—is simple enough to fit in a complaint.

The ruling does not answer the private-assets question; it concerns a public-market product class. But the logic travels. When a similar product exists and has outperformed the plan's chosen fund, a court will treat that as a plausible basis for an imprudence claim. That is not a finding of liability. 3M has lost only the motion to dismiss, not the case. The participants still have to convince a later court, on a fuller record, that the fiduciaries breached their duty.

For sponsors running custom target-date funds, the lesson is available now. Run the comparison before a plaintiff does. Find the closest public fund family, measure it against the custom series on allocation and risk, and ask whether the returns hold up. The 3M complaint will not be the only one drafted this way. The Fidelity yardstick is now part of the record.

Discovery will determine whether the 3M committee ever took that step. The judge has decided only what is plausible, not what happened.