The Non-Financial Ledger: What the Numbers Cannot Capture

Imagine spending thirty years at a manufacturing company. You show up. You do the work. You put a piece of every paycheck into the retirement plan because the company told you it was the safe, responsible thing to do. You trusted that the people running that plan, the highly paid executives and committee members whose job it literally was to protect your money, were doing their job.

Now imagine finding out that for at least five of those years, your money sat in funds that were already flagging warning signs before a single dollar of yours was moved into them. Funds that had churned through 90 percent of their own holdings in a single year. Funds that were consistently trailing the benchmarks they were designed to match. And that nobody in charge of Parker-Hannifin’s retirement committee, nobody on the Board, nobody on the Human Resources and Compensation Committee, pulled the plug.

The legal system calls this a breach of fiduciary duty. What it actually is, is a betrayal. Not the dramatic, headline-grabbing kind of betrayal where someone steals your wallet. The quiet, bureaucratic kind that happens in conference rooms, where someone decides that inertia is cheaper than action, and the people who pay the price are the ones who will never see the inside of those rooms.

Retirement is not an abstraction. For a machinist, a factory floor worker, or an administrative employee at a Parker-Hannifin facility, the balance in that retirement account is the difference between dignity and desperation in the final decades of their lives. A 4 percent annual underperformance against a benchmark might sound like a rounding error to a hedge fund manager. Compounded over five years, applied to a working person’s life savings, it is the difference between being able to retire at 65 or being forced to keep working at 70 because the math no longer adds up.

The workers who filed this lawsuit are not billionaires making a speculative bet. They are five named individuals representing a class of 32,000 people who were told that the system would protect them. Michael Johnson, Matthew Collaro, John Berg, Mallikarjun Kandula, and Tyler Seamons put their names on a federal lawsuit because they had no other way to find out what happened to their money. The only way they could get answers was to sue, survive a motion to dismiss, survive an appeal of that dismissal, and fight their way into the discovery process where the real documents live.

They finally won that fight in November 2024. But the damage to their accounts, and to the accounts of the other 31,995 people in this plan, was already done years before anyone filed a single page of court documents.

There is also the dignity question. One of the things ERISA was designed to do when Congress passed it in 1974 was to make sure that workers were not at the mercy of whatever investment decisions their employers felt like making. It was supposed to impose real accountability. The fact that five workers had to spend years in federal court just to get a judge to say “yes, this is worth investigating” tells you something about how far that accountability has drifted.

Legal Receipts: What the Court Record Actually Says

The following quotes are drawn directly from the Sixth Circuit’s November 20, 2024 opinion in Johnson et al. v. Parker-Hannifin Corp. et al., Case No. 24-3014. Nothing has been paraphrased or invented.

“With approximately $4.3 billion in assets, the Plan is among the largest 0.03% of all defined contribution plans in the United States.”

— Sixth Circuit Majority Opinion, p. 3 (quoting Amended Complaint ¶ 14–15)

• This establishes that Parker-Hannifin’s retirement plan was not a small operation with limited bargaining power. It was in the top fraction of a percent of all defined contribution plans in the country, which directly undercuts any later argument that the company could not negotiate for lower fees or better fund terms.
• The court used this fact to support the workers’ claim that Parker-Hannifin had “tremendous bargaining power to obtain share classes with far lower costs.” A plan this large had leverage. The question the case now asks is: why wasn’t that leverage used?

“Parker-Hannifin’s ‘failure to utilize the available, lower-cost share class of the Focus Funds caused the Plan to pay as much as 250% more in fees.'”

— Sixth Circuit Majority Opinion, p. 5–6 (quoting Amended Complaint ¶ 105)

• This is the fee claim in plain numbers. Parker-Hannifin enrolled workers in the K share class of the Focus Funds, which carried a 0.07 percent fee. The J share class, available at the same time, charged 0.02 percent. The only difference between the two classes was the fee.
• The court confirmed that the fund manager, investment strategy, underlying portfolio, and asset allocation were identical between the two share classes. Workers were paying 250 percent more for the exact same product.

“The Focus Funds turnover rates reached as high as 90 percent… A turnover rate above 30% ‘warrants close analysis by investment professionals as it can suggest that the manager is not following a disciplined investment strategy.'”

— Sixth Circuit Majority Opinion, p. 4 (quoting Amended Complaint ¶ 80–81)

• A 90 percent turnover rate means the fund replaced nearly its entire portfolio of holdings within a single year. For a passively managed index fund designed to replicate stable benchmarks, this is an extraordinary level of internal upheaval.
• Investment professionals set 30 percent as the threshold for “close analysis.” Parker-Hannifin’s chosen funds hit three times that threshold. The court ruled this fact, combined with persistent underperformance, was sufficient to support an inference that the company’s retention process was flawed.

“[D]espite the persistent underperformance and upheaval in the Focus Funds, the Funds remained in the Plan until September 2019.”

— Sixth Circuit Majority Opinion, p. 5 (quoting Amended Complaint ¶ 95)

• Parker-Hannifin added the Focus Funds in February 2014. The funds were already underperforming benchmarks before that date. The company kept them until September 2019, a period of over five years during which the problems did not resolve and in some cases intensified.
• The court’s majority held that ERISA imposes a “continuing duty” to monitor and remove imprudent investments. Every year those funds remained in the plan while underperforming was, the court said, a separate potential breach of that continuing duty.

“Wasting beneficiaries’ money is imprudent… It is beyond dispute that the higher the fees charged to a beneficiary, the more the beneficiary’s investment shrinks.”

— Sixth Circuit Majority Opinion, p. 19 (quoting Tibble v. Edison Int’l, 843 F.3d 1187, 1198 (9th Cir. 2016))

• The court cited established federal precedent to make this point. Paying higher fees when lower-fee alternatives are available is not a neutral administrative choice. It is a substantive harm to every plan participant.
• The court further noted that plan fiduciaries “cannot ignore the power the trust wields to obtain favorable investment products, particularly when those products are substantially identical, other than their lower cost, to products the trustee has already selected.” Parker-Hannifin had that power. The workers’ lawsuit alleges it did not use it.

“No matter how clever or diligent, ERISA plaintiffs generally lack the inside information necessary to make out their claims in detail unless and until discovery commences… If plaintiffs cannot state a claim without pleading facts which tend systemically to be in the sole possession of defendants, the remedial scheme of the statute will fail.”

— Sixth Circuit Majority Opinion, p. 17 (quoting Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 598 (8th Cir. 2009))

• This passage explains why the workers’ victory on appeal matters beyond this one case. The court acknowledged that workers suing over retirement fund mismanagement almost never have access to the internal deliberations, committee meeting minutes, or fee negotiation records they need to prove their case without first getting into discovery.
• By reversing the dismissal, the Sixth Circuit preserved the workers’ ability to access exactly those internal documents. What Parker-Hannifin’s fiduciaries actually discussed, what they knew, and when they knew it may now become part of the court record.

Societal Impact Mapping: Who Gets Hurt and How

Public Health

Financial insecurity in retirement has direct, documented connections to physical and mental health outcomes. When retirement savings are systematically eroded by preventable mismanagement, the harm extends far beyond a bank balance.

• A 1 percent difference in investment fees compounded over a 35-year career produces a 28 percent reduction in total retirement savings at the time of retirement, according to the court record. For workers who entered Parker-Hannifin’s plan at younger ages, even small fee discrepancies translate into tens of thousands of dollars less available for healthcare costs in old age.
• Workers who cannot afford to retire on schedule are statistically more likely to remain in physically demanding jobs past their bodies’ capacity to safely perform them. For manufacturing and industrial workers, continued employment past a safe retirement age increases the risk of workplace injury, chronic pain conditions, and stress-related illness.
• Retirement insecurity is a clinically recognized driver of depression, anxiety, and cardiovascular disease in older adults. Workers who expected a certain level of retirement security and discovered their savings had been eroded by poor fiduciary choices face a specific category of financial trauma that research links to accelerated cognitive decline.
• Approximately 32,000 current and former Parker-Hannifin employees were in this plan. Even a modest average loss per account, spread across that population, represents a significant aggregate reduction in the financial resources available to a working-class community to manage healthcare, housing, and basic living costs in retirement.

Economic Inequality

The structure of this case reflects a recurring power imbalance in American retirement law. Large corporations control enormous pools of workers’ money, and workers have almost no visibility into how that money is being managed.

• Parker-Hannifin itself had $4.3 billion in plan assets and “tremendous bargaining power” to negotiate lower fees, according to the court. Workers had none of that bargaining power individually. They were entirely dependent on the company’s fiduciaries to act on their behalf. When fiduciaries fail, there is no individual recourse except a class action lawsuit that takes years and millions of dollars in legal fees to navigate.
• The cheaper J share class of the Focus Funds was available throughout the period when workers were enrolled in the more expensive K share class. The fee difference was 0.05 percent, which sounds trivial. Applied to even a fraction of the $4.3 billion in plan assets, the aggregate overpayment in fees runs into millions of dollars that came directly out of workers’ accounts and went to the fund provider.
• The workers who brought this lawsuit had to plead their case twice, first in district court and then on appeal, before they even reached the discovery phase where the actual internal documents are produced. This process took over three years from the initial filing in January 2021 to the appeals court ruling in November 2024. Workers without access to specialized ERISA litigation firms like Schlichter Bogard LLP, who represented the plaintiffs here, have essentially no realistic path to accountability.
• The dissenting judge’s opinion in this case argued for a higher pleading standard that would have required workers to specify the exact share classes invested in, the precise minimum investment thresholds, whether providers granted waivers to other plans, and why they did so, all before any discovery has occurred. That standard would effectively make it impossible for workers to ever get into court, since all of that information is held exclusively by the company they are suing.
• Between 2014 and 2017, individual Focus Fund vintages underperformed the top-performing alternatives by between 4 and 17 percentage points annually. Workers approaching retirement during those years experienced the worst compounding effect, with fewer remaining years for their accounts to recover from the lost ground.

What Workers Were Told vs. What Was Actually Happening

Anatomy of the Fee Structure: Identical Products, Different Prices

Parker-Hannifin enrolled workers in higher-cost share classes of multiple funds when lower-cost alternatives were available. The anatomy below shows exactly how that fee structure worked.

The “Cost of a Life” Metric

Who Was Responsible: The Chain of Fiduciary Duty

ERISA assigns fiduciary responsibility across multiple layers of a plan’s administration. In this case, multiple Parker-Hannifin entities were named as defendants, each carrying obligations to the workers they ultimately failed.

What Now: The Watchlist and the Path Forward

The Sixth Circuit’s ruling sends this case back to the district court for further proceedings. Here is who to watch, what bodies have jurisdiction, and what workers and advocates can do.

Who Is Accountable

• Parker-Hannifin Corporation, as the Plan Sponsor and primary named defendant in Case No. 24-3014 (N.D. Ohio No. 1:21-cv-00256).
• The Board of Directors for Parker-Hannifin Corporation, named collectively as defendants responsible for fiduciary oversight of the plan.
• The Human Resources and Compensation Committee of the Board of Directors for Parker-Hannifin Corporation, named as a defendant and responsible for compensation and benefits decisions.
• The Parker Total Rewards Administration Committee, named as a defendant and directly responsible for the day-to-day administration of the retirement plan, including investment selection and fee negotiation.

The Regulatory Watchlist

• Department of Labor (DOL), Employee Benefits Security Administration (EBSA): The primary federal regulator of ERISA-governed plans. EBSA has authority to investigate plan fiduciaries for breaches of prudence and loyalty, and can impose civil penalties and require corrective action independent of private litigation.
• Securities and Exchange Commission (SEC): Parker-Hannifin is a publicly traded company. To the extent that disclosures about plan administration, executive compensation tied to the plan, or related-party transactions were made to shareholders, the SEC’s disclosure enforcement authority is relevant.
• The U.S. District Court for the Northern District of Ohio, Cleveland Division: This is where the case is now remanded. Judge Bridget Meehan Brennan, who dismissed the original complaint, will now oversee the next stage of proceedings, including discovery. Watch the docket under Case No. 1:21-cv-00256.
• The Sixth Circuit Court of Appeals: The majority opinion authored by Judge Karen Nelson Moore, joined by Judge Bloomekatz, establishes controlling precedent in Ohio, Michigan, Kentucky, and Tennessee for how ERISA imprudence claims are evaluated at the pleading stage.

What Workers and Advocates Can Do

• If you are or were a Parker-Hannifin employee and a participant in the Parker Retirement Savings Plan, you may be a member of the proposed class. Contact Schlichter Bogard LLP, the firm representing the plaintiffs, to understand your rights and whether you are covered by the class action.
• File a complaint with the DOL’s EBSA at dol.gov/agencies/ebsa if you believe your employer’s retirement plan fiduciaries are not acting in your interests. EBSA investigates plan mismanagement independently of private litigation.
• Review your own 401(k) or defined contribution plan’s fund lineup. Request the plan’s annual 408(b)(2) fee disclosure documents from your plan administrator. Compare the share classes you are enrolled in against the lowest-cost share classes available for the same funds. If there is a gap, document it and ask your HR department in writing why the lower-cost class was not selected.
• Organize with coworkers. ERISA class actions require named plaintiffs willing to put their names on the lawsuit. The five individuals in this case made it possible for 32,000 people to potentially receive relief. Workers who are aware of their plan’s underperformance and fee structures are the foundation of any accountability effort.
• Support ERISA litigation organizations and legal aid groups that take on retirement plan misconduct cases on a contingency basis for workers who cannot afford hourly legal fees. These cases are costly and time-intensive, and the firms that pursue them depend on public support and attention to sustain their dockets.
• Follow the case docket. Discovery in this case, if it proceeds, could reveal internal committee communications, fee negotiation records, and investment review processes that have never been made public. Court filings are publicly available through PACER at pacer.uscourts.gov under Case No. 1:21-cv-00256, N.D. Ohio.