18th Annual Workplace Class Action Report - 2022 Edition

Annual Workplace Class Action Litigation Report: 2022 Edition 361 *2. The Ninth Circuit explained that here, like Thole , Plaintiff failed to plead an injury-in-fact because his asserted injury of a reduction in his future benefits could not be redressed by a favorable decision. Plaintiff asserted that Defendants breached their fiduciary duties by allowing UVA to accrue and sought restoration to the Plan of all losses resulting from breaches of fiduciary duties, including payments of $73 million to the Plan to eliminate UVB and a return of lost investment income, as well as an injunction against incurring UVB in the future. Id . at *3. The Ninth Circuit reasoned that if Plaintiff’s prayer of relief was granted and the $73 million in UVB paid to the Plan, Defendants could not restore participants’ future retirement benefits to a higher periodic amount without incurring additional UVB. Id . at *3-4. Accordingly, the Ninth Circuit found that Plaintiff’s theory of standing required Defendants to restore potential future benefits that were cut before they had accrued. For these reasons, the Ninth Circuit affirmed the District Court’s ruling granting Defendant’s motion to dismiss for lack of standing. Gonzalez de Fuente, et al. v. Preferred Home Care Of New York, LLC, 2021 U.S. App. LEXIS 16814 (2d Cir. June 2, 2021). Plaintiffs, a group of certified home care aides participating in an employee benefit plan (the "Plan"), filed a class action alleging that Defendants misappropriated employer contributions to the Plan by retaining millions of dollars in HealthCap rather than using those funds to provide superior health benefits for Plan participants in violation of the ERISA. Defendants filed a motion to dismiss for lack of standing, which the District Court granted. On appeal, the Second Circuit affirmed the District Court’s ruling. The District Court applied the U.S. Supreme Court’s decision in Thole v. U.S. Bank N.A., 140 S. Ct. 1615 (2020) which held that a Plaintiff must claim “concrete harm” under the ERISA to state a viable claim and an alleged violation of the ERISA’s duties of loyalty and prudence “does not alone confer standing." Id . at *2. Plaintiffs contended that their case was distinguishable from Thole because the New York Wage Parity Law made their healthcare benefits "more akin to a defined contribution than a defined benefit plan," such that the alleged misappropriation of Plan funds caused them concrete injuries in the form of increased out-of-pocket costs and reduced coverage. Id . at *3. The Second Circuit determined that the District Court correctly found that Plaintiffs lacked standing to bring the ERISA claims. The Second Circuit explained that the ERISA requires fiduciaries to discharge their duties "in accordance with the documents and instruments governing the plan" rather than any particular accounting formula. Id . at *4. The Second Circuit reasoned that Plaintiffs did not allege that they were denied any health benefits promised under the Plan, or that the Plan was insolvent or otherwise incapable of continuing to provide covered health benefits. Id . The Second Circuit opined that the allegations that HealthCap’s retention of Plan funds might have provided them better health benefits or a cash alternative was not sufficient for standing. The Second Circuit reasoned that under the ERISA, Plaintiffs had received all benefits promised to them. Therefore, the Second Circuit conclude that because winning or losing on their ERISA claims “would not change the Plaintiffs’ [health] benefits,” they had “no concrete stake in this dispute and therefore lack Article III standing.” Id. at *5. Accordingly, the Second Circuit affirmed the District Court’s ruling granting Defendants’ motion to dismiss. Lange, et al. v. Infinity Healthcare Physicians, 2021 U.S. Dist. LEXIS 133195 (W.D. Wis. July 16, 2021). Plaintiff filed a class action alleging that several fiduciary Defendants (“Infinity fiduciaries”) failed to manage her employer-sponsored retirement plan in accordance with the ERISA. The Infinity fiduciaries filed a motion to dismiss, which the Court granted. Plaintiff asserted that the Infinity fiduciaries offered a set of actively managed investment funds to plan participants without "mak[ing] a specific and informed finding" that the funds would outperform passively managed lower-cost index funds. Id . at *3. The Infinity fiduciaries contended that Plaintiff did not participate in the specific fund in which she alleged mismanagement, and therefore she did not incur an injury-in-fact sufficient to establish standing. The Infinity fiduciaries contracted with Great-West Life & Annuity for recordkeeping and administrative services, including maintaining plan records, tracking participants’ account balances and investment choices, processing transactions, and the like. Plaintiff also contended that the Infinity fiduciaries failed to solicit quotes or obtain competitive bids for these services, thereby causing the plan to pay unreasonable, above-market fees to Great-West. Defendant asserted that no managed fund paid recordkeeping fees to Great-West. In support of their contentions, Defendants relied on Plaintiff’s retirement plan statements, publicly available government filings, and plan prospectuses. The Court reasoned that the Infinity fiduciaries’ evidence regarding Plaintiff’s investments called into question Plaintiff’s standing to assert her ERISA claims, so the burden shifted to Plaintiff to adduce "competent proof that standing exists." Id . at *8. The Court determined that Plaintiff failed to meet this burden, as she merely offered speculation that fees paid under other funds could have affected the value of the fund in question. Plaintiff also failed to explain her allegation that the Infinity