18th Annual Workplace Class Action Report - 2022 Edition

338 Annual Workplace Class Action Litigation Report: 2022 Edition Plan’s recordkeeping expenses; and (iii) allowing their recordkeeping affiliates to directly benefit from the Plan at the expense of their participants.” Id. at *3. Defendants filed a motion to dismiss on the grounds that Plaintiffs lacked Article III standing to challenge investment options in which they did not participate and that Plaintiffs failed to state a plausible claim for relief. The Court granted in part and denied in part Defendants’ motion. As to Defendants’ standing challenge, the Court found that Plaintiffs did have standing to file suit in light of Eighth Circuit case law clearly stating that Plaintiffs may challenge an entire retirement plan even if they did not enroll in all investment options at issue. Id. at *8. With respect to Plaintiffs’ substantive claims, they based their failure to investigate claim on four different theories related to the Plan’s alleged: (i) excessive fees; (ii) improper selection of share class; (iii) failure to pursue collective trusts; and (iv) failure to select lower cost passively managed funds. Id. at *13. The Court rejected three of Plaintiffs’ four theories on the basis that they failed to offer sufficient benchmarks against which the Plan’s investment selections could be compared. The Court did, however, accept Plaintiffs’ argument concerning Defendants’ selection of share class. The Court reasoned that different shares of the same fund can be a meaningful benchmark, especially given the Plan’s large pool of assets and presumed ability to obtain institutional class shares rather than investor class shares. Regarding Plaintiffs’ recordkeeping compensation claim, Defendants’ primary contention was that the Plan’s recordkeeping fees were not excessive because they were capped by contract between Defendants and their record-keepers. The Court rejected this argument because “the contract between Defendants and their record-keepers – to which Plaintiffs are not privy – cannot be used to defeat Plaintiffs’ claim at this stage.” Id. at *24. With regard to Plaintiffs’ allegation that Defendants breached their duty of loyalty, the Court opined that Plaintiffs merely plead that third-party record- keepers benefitted from Defendants’ actions, whereas they were required to plead that Defendants acted with the goal of benefitting the third-parties. Finally, the Court rejected Defendants’ argument that Plaintiffs’ failure to monitor claim should be dismissed as derivative of their breach of fiduciary duty claim. Therefore, the Court granted in part and denied in part Defendants’ motion to dismiss. Reetz, et al. v. Lowe ’ s Cos. , 2021 U.S. Dist. LEXIS 27076 (W.D.N.C. Feb. 12, 2021). Plaintiffs, a group of retirement plan participants, filed a class action alleging that Defendants breached their fiduciary duties under the ERISA by removing certain investment options from Lowe’s 401(k) retirement plan (the "Plan") and replacing them with an option to invest in a growth fund established and managed by Aon Hewitt ("Hewitt Growth Fund"). Plaintiffs contended that this fund performed poorly and had been selected because of its affiliation with the Plan’s investment consultant Aon Hewitt. The parties filed cross-motions for summary judgment, and the Court denied the motions. The Courts noted that there were over 250 pages of briefing on the motions, and numerous disputes of material facts. The Court concluded that with so many competing and differing sets of facts, the case must be decided by a trial. The Court therefore denied the motions for summary judgment. Savage, et al. v. Sutherland Global Services, 521 F. Supp. 3d 308 (W.D.N.Y. 2021). Plaintiffs, participants in Defendant’s defined contribution 401k plan (“the Plan”), filed a class action alleging Defendants breached their fiduciary duties to the Plan and Plan participants in violation of the ERISA by failing to properly minimize the reasonable fees and expenses incurred by the Plan. Defendants filed a motion to dismiss, which the Court denied. Plaintiffs specifically alleged three claims, including (i) breach of fiduciary duty; (ii) failure to monitor fiduciaries; and (iii) other remedies for breach of fiduciary duty. The Court ruled that Plaintiffs’ allegations were sufficient to state a breach of fiduciary duty claim under the ERISA. Plaintiffs alleged that the same shares were available to Defendants without any fees, and that Defendants breached their fiduciary duties by instead choosing share class options that caused the Plaintiffs to pay fees. Id . at 315. The Court thus held that because Plaintiffs alleged that "the only consequence was higher costs for the Plans’ participants," their claims were sufficient to survive a motion to dismiss. Id . Plaintiffs’ complaint also alleged that Defendants breached their duty to monitor by failing to ensure that, to the extent they delegated any of their fiduciary duties, they failed to properly monitor their appointees’ consideration and investigation of investment options. Id . at 319. Defendants argued that the failure to monitor claim was inconsistent with the breach of fiduciary duty claim. The Court reasoned that Plaintiffs may allege alternative theories of liability, and it may come to light that Defendants delegated its responsibilities to other Defendants or non-parties. Id . The Court thus declined to dismiss on this basis at this early stage of the litigation. For these reasons, the Court denied Defendants’ motion to dismiss. Turner, et al. v. Schneider Electric Holdings, Inc., 2021 U.S. Dist. LEXIS 59363 (D. Mass. March 26, 2021). Plaintiffs, a group of participants in the Schneider Electric 401(k) Plan (“the Plan”), brought a class action on