Monster Beverage Fails In Bid To Nix Workers' 401(k) Fee Suit

By Gina Kim

Law360 (May 21, 2025, 6:23 PM EDT)

Monster Beverage cannot escape a proposed class action alleging it allowed its employee 401(k) plan to be saddled with unreasonable recordkeeping costs and took excessive amounts from the plan to pad an Employee Retirement Income Security Act (ERISA) benefit account, a California federal judge has ruled.

In a brief order Friday, U.S. District Judge John W. Holcomb of the Central District of California denied a motion to dismiss filed by Monster Beverage Corp. and the administrative committee of Monster Energy Co.'s retirement plan against a lawsuit accusing them of violating ERISA and wasting millions of dollars from the fund.

The three named plaintiffs, led by Richard Hollien, filed their first amended complaint in November, alleging the defendants imprudently picked and retained unduly high-cost, low-performing share classes of funds for the retirement plan, harming its participants and beneficiaries.

The Monster employees also accuse the company of charging excessive fees to participants to maintain "an unreasonably large ERISA Benefit Account," which they claim the defendants treated as a "slush fund." The plaintiffs further take issue with recordkeeping and plan administrative services fees paid to recordkeeper Transamerica Retirement Solutions, which was paid a required share of revenue from the plan's funds and the plan participants' accounts, according to the suit.

The plaintiffs argued the required revenue-sharing arrangement is asset-based and calculated on the dollar amount of accounts rather than on a per capita basis. In other words, the more funds invested in the plan, the more recordkeeping fees are paid to Transamerica, even if its services don’t change and no additional work is done to justify the rising costs.

The Monster employees claim the average recordkeeping payment per participant per year was $100, three times larger than what comparable plans pay. Other recordkeepers like Fidelity, Vanguard, and Great-West can provide a high level of service, and in this instance, no unique services were provided to the Monster plan that would warrant higher fees, the plaintiffs claim.

Under Monster's plan, each participant paid an average of $104.52 for recordkeeping, compared with DropBox at $37.77, Pinterest at $21.97, Granite Retirement Savings at $32.97, Verint Systems at $13.36, Destination XL Group at $44.97, and AWG Inc. at $37.99, the suit says.

The plaintiffs seek to represent a proposed class of all participants and beneficiaries of Monster's retirement plan anytime between June 26, 2018, and the date the court enters judgment. Causes of action include violation of ERISA for duty of prudence and failure to monitor other fiduciaries.

In December, Monster moved to dismiss the first amended complaint, saying it made reasonable decisions related to the plan and that plaintiffs lacked standing because they did not allege with specificity that they personally paid excessive fees.

Monster argued that a retirement plan does not breach ERISA simply for paying more than average for recordkeeping. Nor is it an ERISA violation if an entity chooses to pay a portion of a plan’s expenses through a revenue-sharing arrangement, which can reduce overall plan expenses.

Plaintiffs bring no details regarding specific services provided to the plan, services offered in comparable plans, or what other recordkeeping options were available, the motion said. Nor do they provide factual details showing that Transamerica’s services were the same as those provided in allegedly comparable plans, or that those plans also used Transamerica, Monster argued.

“We appreciate Judge Holcomb's careful analysis of the issues and we look forward to vigorously pursuing the plaintiffs' claims through the remaining stages of litigation,” Peter A. Muhic of Muhic Law LLC, one of the attorneys for the proposed class, told Law360 in an emailed statement Wednesday afternoon.

Representatives for Monster did not immediately return inquiries seeking comment Wednesday.

The proposed class is represented by James A. Clark and Renee P. Ortega of Tower Legal Group PC, Peter A. Muhic of Muhic Law LLC, and Edwin J. Kilpela Jr. of Wade Kilpela Slade LLP. The defendants are represented by Ryan M. Sandrock and Marc P. Miles of Shook Hardy & Bacon LLP.

The case is Richard Hollien et al. v. Monster Beverage Corp. et al., case number 8:24-cv-01467, in the U.S. District Court for the Central District of California.

--Editing by Amy French

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