Former Employees Sue Bed Bath & Beyond Over $5 Million Losses
Two former Bed Bath & Beyond employees have filed a lawsuit against the committee in charge of the bankrupt company’s 401(k) retirement plan, alleging “imprudence” that led to losses totaling over $5 million.
Paul Harvey and Lela LaPlante filed the lawsuit, which is seeking class-action status, in a New Jersey federal district court last week. According to the complaint, the employees lost millions when the value of their MassMutual “guaranteed investment account” (GIA) fell 10 percent, most likely due to rising interest rates. The complaint also alleged that the committee could have pursued less risky investment alternatives and claimed that MassMutual had the right to make up for losses resulting from the termination of the GIA.
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The Bed Bath & Beyond Inc. 401(k) Savings Plan Committee, Laura Crossen, the retailer’s chief financial officer, and the fiduciaries of the plan are named as defendants in the lawsuit.
According to the complaint, the retailer terminated the plan on Aug. 1, three months after it filed for Chapter 11 bankruptcy. It also noted that the retailer launched a “transformation” campaign in 2020 after determining in 2019 that its business model was no longer viable. However, the 2019 loss was more than quadruple the 2018 loss, and the company further declined in 2020 and 2021.
The complaint said that the committee was required to monitor the risk of loss in case the retailer’s reinvention campaign failed and it declared bankruptcy. The plaintiffs claim that if the committee had monitored the risk, it “would have” ended the MassMutual contract and avoided the risk of plan losses stemming from a bankruptcy. If the plan been terminated earlier, the account value would not have suffered due to market value adjustments, particularly in 2023, according to the lawsuit.
The plaintiffs wants the court to find that the defendants violated the Employee Retirement Income Security Act, and it wants them to “make good” on the plan losses. They also want the court to appoint an administrator to distribute the recovered amounts, in addition to attorneys’ fees and other relief the court deems “just and equitable.”
Neither Bed Bath & Beyond’s bankruptcy counsel nor executives at MassMutual responded to a request for comment by press time.
Bed Bath & Beyond’s intellectual property assets were sold to Overstock.com, which is not a party to the lawsuit. Overstock has since rebranded itself as bedbathandbeyond.com.
