The U.S. District Court for the District of New Jersey has once again dismissed a class-action lawsuit filed against Johnson & Johnson (J&J), which alleged that the company breached its fiduciary duties under the Employee Retirement Income Security Act (ERISA) by mismanaging its prescription drug benefits plan, costing the plan and its participants millions of dollars due to higher out-of-pocket costs for prescription drugs and higher premiums, among other things.

The initial complaint was dismissed on Jan. 24, 2025, where the court ruled that the plaintiff (an employee of J&J) lacked standing to bring a lawsuit and granted the plaintiff leave to file an amended complaint. In March 2025, the plaintiff filed an amended complaint where a new plaintiff was added to the case and new allegations pertaining to premiums were asserted (specifically, that higher drug costs because of defendants’ fiduciary breaches inflated COBRA premiums). Despite these revisions, the court again granted the defendants’ motion to dismiss.

For employers, the J&J lawsuit highlights the importance of adhering to their fiduciary duties when managing their health plans. Under ERISA’s strict fiduciary standards, employers must prudently select and monitor their third-party service providers, including pharmacy benefit managers (PBMs). After the J&J lawsuit was filed, similar fiduciary litigation involving the management of prescription drug benefits followed, such as the Navarro v. Wells Fargo & Co. case discussed below. Like the J&J lawsuit, these cases are still making their way through the court system as scrutiny of the PBM industry intensifies.

The court reaffirmed that plaintiffs lacked standing to sue, finding their alleged economic harms “too speculative” to satisfy standing requirements. Relying on the U.S. District Court for the District of Minnesota’s Navarro v. Wells Fargo & Co. decision, where similar claims of mismanaged prescription drug benefits were deemed too speculative and not redressable, the District Court of New Jersey reached the same conclusion.

Specifically, the court found plaintiffs’ assertion that excessive PBM fees affected their premiums and out-of-pocket costs too speculative and deemed their attempts to show a direct link between these increased costs and the plan’s increased administrative fees unconvincing. Additionally, the court held that plaintiffs failed on redressability because defendants have sole discretion to set participant contributions rates, making it impossible to guarantee that any remedy (such as replacing fiduciaries or PBMs) would lower premiums or out-of-pocket costs.

Although these dismissals were based on procedural issues like standing, they underscore the importance of employers upholding their fiduciary duties when managing their group health plans, including the prudent selection and monitoring of service providers such as PBMs.