18th Annual Workplace Class Action Report - 2022 Edition

330 Annual Workplace Class Action Litigation Report: 2022 Edition sharing so that they could use a portion of the fees to pay inflated fees and to favor the record-keepers over the plan participants. The Court, therefore, held that Plaintiffs included allegations that Defendants may not have acted singularly toward benefitting the plan beneficiaries and have sufficiently stated a viable claim for breach of loyalty. Id . at *33. For these reasons, the Court denied Defendants’ motion to dismiss. Davis, et al. v. Salesforce Inc., 2021 U.S. Dist. LEXIS 73017 (N.D. Cal. April 15, 2021). Plaintiff, a participant in Defendant’s defined contribution 401k plan (“the Plan”), filed a class action alleging that Defendants breached their fiduciary duties to the Plan and Plan participants in violation of the ERISA by selecting and retaining investment options with high costs relative to other, comparable investments and by failing to adequately monitor the Committee Defendants. Defendants filed a motion to dismiss, which the Court granted. Plaintiffs asserted that Defendants were imprudent in retaining 11 actively managed funds with expense ratios that were higher than the ICI Median Fee and ICI Average Fee for "comparable investments found in similarly-sized plans." Id . at *3. The Court found Plaintiffs failed to state a viable claim based on such comparisons to the ICI Median Fee because "the ICI Median Fee reflects the fees of both passively and actively managed funds" and passively managed funds were not "meaningful benchmarks" for actively managed funds. Id . at *3-4. The Court further determined that Plaintiffs’ comparisons were insufficient to support an imprudence claim. Plaintiffs alleged that Defendants were imprudent in failing to substitute the lowest-cost share class for the actively managed mutual funds offered in the Plan. However, the Court opined that Plaintiffs’ conclusory allegations that, given the "discrepancy in prices of the share classes," there was "no benefit to “choosing a more expensive share class," did not suffice to render Plaintiffs’ imprudence claim plausible. Id . at *9-10. Even assuming, arguendo , the funds could be used as a comparison, the Court noted that Plaintiffs’ allegations of outperformance were based on one-year, three-year, and five-year returns and, such returns were not “sufficiently long-term to state a plausible claim of imprudence.” Id. at *14. Finally, with respect to Plaintiffs’ claims that the Committee Defendants acted imprudently by failing to investigate collective trusts as less costly alternatives to funds offered in the Plan, the Court ruled that Plaintiffs failed to establish that the funds were "materially similar" to support a claim for relief. Id . at *18. For these reasons, the Court granted Defendants’ motion to dismiss. Dover, et al. v. Yanfeng US Automotive Interior Systems I LLC, 2021 U.S. Dist. LEXIS 185205 (E.D. Mich. Sept. 28, 2021). Plaintiffs, a group of participants in Defendants’ retirement plan, filed a class action alleging that Defendants breached their fiduciary duties toward plan participants, and failed to adequately monitor other fiduciaries, resulting in tangible losses to the retirement savings accounts of Plaintiffs in violation of the ERISA. Defendants filed a motion to dismiss for failure to state a claim, which the Court denied. Plaintiffs alleged that Defendants violated the ERISA’s duty of prudence by failing to select lower-cost share classes. Plaintiffs offered a chart listing 16 funds in the Plan, which indicated a higher net expense ratio than another available share class in the same fund. Plaintiffs thus contended that Defendants breached their duty of prudence by not moving the Plan investments into the less expensive share classes. Id . at *14. The Court found that Plaintiffs sufficiently alleged a viable claim, as they provided evidence that there were lower cost options available in the same funds, and alleged that the Plan would qualify for the low cost share classes and there were no demonstrated benefits flowing to them that would justify Defendants choosing the higher cost options. Id . at *15. Plaintiffs also contended that the Plan included too many actively managed funds, rather than comparable alternative passively managed funds at much lower cost. The Court held that Plaintiffs’ allegations were sufficiently plausible to support the claim. Finally, Plaintiffs contended Defendants failed to undertake the requisite recordkeeping duties. The Court ruled that Plaintiffs did not allege that the recordkeeping fees exceeded the amounts they say would be reasonable. The Court also determined that Plaintiffs did not sufficiently allege a breach of the duty of loyalty through the hiring of the plan’s investment advisors. However, the Court opined that the claims alleged were sufficient to survive the motion to dismiss as to both counts. For these reasons, the Court denied Defendants’ motion to dismiss. Drake, et al. v. BBVA USA Bancshares Inc. , 2021 U.S. Dist. LEXIS 162603 (N.D. Ala. Aug. 27, 2021). Plaintiff, a participant in a defined contribution plan sponsored by her employer, BBVA USA Bancshares, Inc. ("BBVA"), filed a class action alleging breach of fiduciary duty in violation of the ERISA against Defendants, BBVA, the company BBVA contracted with (“EAM”) to provide consulting, investment research, and recommendation assistance, and various individual members of BBVA’s Retirement Committee. EAM filed a