18th Annual Workplace Class Action Report - 2022 Edition

Annual Workplace Class Action Litigation Report: 2022 Edition 351 with respect to the management of the plan. Northrop Grumman, the plan sponsor, delegated administration of the plan to an Administrative Committee, which in turn contracted with Defendant Hewitt, a company that provided outside administrative services for the plan. Id . at 1022. After Plaintiffs filled out online questionnaires, Hewitt’s website provided statements showing their purported monthly pension benefit. Plaintiffs asserted that the estimates provided were greatly overestimated, which resulted in financial injury to them. Plaintiffs alleged that Hewitt, the Committee, and Northrop breached their fiduciary duties and that the Committee had failed to provide ERISA-required benefit information. The District Court granted Defendants’ motion to dismiss. On appeal, the Ninth Circuit affirmed in part and reversed in part. Plaintiffs contended that Northrop and the Committee "breached their fiduciary duties to Plaintiffs and the Class members by . . . that they . . . provided Plaintiffs with complete and accurate information regarding the amount of the Northrop Plan benefit" based on Hewitt’s erroneous calculations. Id at 1026. The Ninth Circuit agreed with the District Court’s finding that Plaintiffs had failed to allege that Hewitt was performing a fiduciary function in miscalculating retirement benefits. Id . As a result, the Ninth Circuit affirmed the District Court’s ruling that Northrop and the Committee did not breach a fiduciary duty by failing to ensure that Hewitt correctly calculated Plaintiffs’ benefits. Id . Plaintiff further alleged that Hewitt was a fiduciary because it exercised discretionary control, authority, or responsibility for the Plan’s administration or management. The Ninth Circuit determined that the allegations failed for the same reason, since the calculation of pension benefits was a ministerial function that did not have a fiduciary duty attached to it. With respect to Plaintiffs’ allegations pursuant to § 1025(a)(1)(B), the Ninth Circuit ruled that the District Court was correct to the extent that the bare allegation that Plaintiffs used an online platform to request a pension benefit estimate did not satisfy the "written request" requirement. However, the Ninth Circuit explained that since the statute did not limit adequate requests to only those written by hand on a piece of paper and conveyed in the postal system, Plaintiff could filed an amended motion as to this claim. Id . at 1029. Thus, the Ninth Circuit affirmed the District Court’s dismissal of Plaintiffs’ ERISA claims, but because Plaintiffs could plead facts adequate to allege they made written requests, Plaintiffs on remand should be permitted to file an amended complaint. Baird, et al. v. BlackRock Institutional Trust Co., 2021 U.S. Dist. LEXIS 5997 (N.D. Cal. Jan. 12, 2021). Plaintiffs, a group of participants in BlackRock’s Retirement Savings Plan ("the BlackRock Plan"), filed a class action alleging that the BlackRock Defendants violated various ERISA requirements and their fiduciary duties by improperly favoring their own proprietary funds when selecting investment options for the BlackRock Plan, and that BTC (a BlackRock subsidiary) paid itself excessive securities lending fees, all of which led to unfavorable returns for the participants. Id. at *4. Following discovery, the parties cross-moved for partial summary judgment, and the Court denied both motions. Plaintiffs argued that there were no questions of material fact with regard to whether Defendants violated their fiduciary duties under the ERISA by failing to follow the BlackRock Plan’s Investment Policy Statement ("IPS"); and whether Defendants violated 29 U.S.C. § 1106(b)(1) by paying themselves securities lending fees from ERISA-protected assets. Id . at *7. The Court disagreed. It found that several issues of material fact existed, including whether counsel was involved with offering opinions of funds to include in the Plan. The Court also determined that there were genuine disputes of material facts relevant to liability under 29 U.S.C. § 1106(b)(1) because analyzing the lawfulness of BTC’s compensation involved disputed questions of fact. Id. at *8. Accordingly, the Court denied Plaintiffs’ motion. Defendants moved for summary judgment on Plaintiffs’ claims for breaches of fiduciary duties. The Court, however, found that there was a genuine issue of material fact as to whether Defendants complied with advice of counsel as required by the IPS. Defendants argued that Plaintiffs’ claims brought under 29 U.S.C. § 1106 were subject to the ERISA’s statute of repose and thus time-barred because the only relevant transaction for claims based on the inclusion of a fund in a plan lineup was the date the fund was initially added. The Court rejected this argument. It determined that Plaintiffs’ claims were not based solely on the inclusion of the challenged funds in a plan line up. Id . at *10- 11. The Court also opined that Plaintiffs’ theory that Defendants’ purchase of units in a BlackRock fund and payment of fees created a genuine issue of material fact as to whether Defendants took affirmative actions under 29 U.S.C. § 1106(a)(1)(A) and § 1106(a)(1)(D). Defendants also contended that they were entitled to summary judgment on Plaintiffs’ prohibited transactions claims because their actions satisfied certain prohibited transaction exemptions. However, the Court reasoned that this finding would necessitate an analysis of the reasonableness of Defendants’ compensation, of which there were disputed issues of fact. The Court therefore denied the parties’ cross-motions for summary judgment.