18th Annual Workplace Class Action Report - 2022 Edition

Annual Workplace Class Action Litigation Report: 2022 Edition 345 Mator, et al. v. Wesco Distribution, 2021 U.S. Dist. LEXIS 190577 (W.D. Penn. Oct. 4, 2021) . Plaintiffs, a group of participants in Defendants’ Retirement Savings Plan (“Plan”), filed a class action alleging claims for breach of duty and failure to monitor in violation of the ERISA. Defendants filed a motion dismiss, and the Court granted the motion. Plaintiffs contended that Defendant charged excessive fees and excessive share class expenses. The Court determined that Plaintiff failed to plausibly allege a breach of duty for charging excessive fees claims because they failed to provide any facts regarding the level of services provided to the Plan’s participants in exchange for the fees paid. Therefore, the Court determined that without pleading additional details as to fee structures and services provided, Plaintiffs’ allegations only inferred a possibility but not a plausibility that Defendants’ acted imprudently. Plaintiffs also contended that Defendants imprudently chose higher cost mutual fund share classes, even though less expensive share classes or the same Funds were available. Id . at *19. The Court ruled that Plaintiffs’ allegations were conclusory and contained insufficient facts to support the theory that Defendants’ choice of such share classes breached their duty of prudence to Plaintiffs. Finally, Defendants argued that Plaintiffs’ failure to monitor claim failed as a matter of law because it was derivative of the breach of fiduciary duty claims. The Court noted that case law authorities had held that derivative claims, such as failure to monitor, could not survive without a sufficiently underlying breach of fiduciary duty claim. Therefore, the Court concluded that because Plaintiffs’ underlying claims were dismissed, their derivative failure to monitor claim also failed. For these reasons, the Court granted Defendant’s motion to dismiss. Moon, et al. v. E.I. Du Pont De Nemours, 2021 U.S. Dist. LEXIS 115506 (D. Del. June 21, 2021). Plaintiff, a participant in Defendant’s retirement pension plan, filed a class action alleging violation of the ERISA with respect to the management of the plan. Defendant filed a motion to dismiss, which the Court denied. Plaintiff specifically alleged that Defendant sent him a notice stating that his "Benefit Commencement Date (BCD)" was in 1999, and accordingly, he could begin receiving benefits, but if he chose the option to start receiving them, he would receive smaller monthly payments. Id . at *3. The notice further explained that if Plaintiff waited until the "Earliest Unreduced BCD" in 2010, he would get the largest possible monthly payment. Id . Plaintiff contended that the notice also included his "Normal Retirement Date" in 2017, which misled him regarding when he could actually begin receiving pension benefits, and thereby he missed out on payments from 2010 to 2017, which amounted to $135,000. Id . The Court found that Plaintiff plausibly alleged that Defendant violated its fiduciary duties under the ERISA, as the duty not to mislead may include an "affirmative duty . . . to provide fund participants with relevant information regarding existing benefits." Id . The Court reasoned that although Defendant told him about the 2010 date, it allegedly did so only once, in 1999, and thereafter mentioned the 2017 Normal Retirement Date several times in subsequent notices. The Court ruled that a fiduciary might mislead a participant by selectively omitting important details, and it was plausible that a prudent fiduciary would have realized that Plaintiff did not understand when he could begin taking benefits. For these reasons, the Court denied Defendant’s motion to dismiss. Peterson, et al. v. Insurance Services Office, Inc., 2021 U.S. Dist. LEXIS 70877 (D.N.J. April 13, 2021). Plaintiffs, a group of participants in Defendants’ 401(k) Savings and Employee Stock Ownership Plan, filed a class action alleging that Defendants breached their fiduciary duties of prudence and loyalty in violation of the ERISA by imprudently managing the Plan’s investments and recordkeeping fees and that Defendants ISO and the Administrative Committee failed to adequately monitor Committee Defendants as Plan fiduciaries. Defendants filed a motion to dismiss pursuant to Rule 12(b)(6), which the Court denied. Plaintiffs contended that Defendants breached their fiduciary duties of prudence and loyalty by failing to: (i) manage the Plan’s investments; (ii) investigate other low-cost, alternative investment options; and (iii) monitor recordkeeping service fees. Id . at *6. Plaintiffs alleged that Defendants: (i) knew or should have known that cheaper share classes and other investment options existed; (ii) failed to investigate the availability of cheaper investment alternatives; and (iii) failed to utilize the Plan’s bargaining power to negotiate low-cost options. The Court found that Plaintiffs’ allegations plausibly asserted claims for breach of the fiduciary duties of prudence and loyalty. The Court determined that Plaintiffs’ allegations that most of the Plan’s funds charged higher-than-average fees, and that Defendants failed to investigate other options were sufficient to infer that the Committee Defendants failed to perform their fiduciary duties. The Court also held that Plaintiffs sufficiently alleged that the Committee Defendants failed to prudently monitor and control the Plan’s recordkeeping fees. Plaintiffs asserted that recordkeeping rates for large plans averaged about $35 per participant while the Plan’s recordkeeping fees