18th Annual Workplace Class Action Report - 2022 Edition

Annual Workplace Class Action Litigation Report: 2022 Edition 331 motion to dismiss for failure to state a claim, which the Court granted. EAM served as the Plan’s investment consultant, and in the services agreement between the parties agreed to: (i) assist with the "review, evaluation and preparation of investment policies, objectives, and guidelines for the Plan;" (ii) assist "with identifying mutual funds that are consistent . . . with the Plan’s investment policies, objectives and guidelines;" and (iii) "complete a full review of the mutual funds offered" and report those findings on a quarterly basis. Id . at *5. The services agreement explicitly stated that the information offered by EAM did not constitute investment advice but was instead only for informational purposes. Plaintiff contended that EAM breached the fiduciary duties it owed her as a Plan participant by failing to properly monitor both the stable value and active management classes, using imprudent benchmarks, and investing in funds with high expense ratios. Id . at *6. In moving to dismiss, EAM asserted that Plaintiff lacked standing to bring claims relating to BBVA’s investment in the JPMorgan MidCap Growth Fund and the Principal MidCap Value Fund because she did not invest in them. The Court agreed with EAM that Plaintiff lacked standing to bring claims about investment in funds in which she did not invest, and therefore it granted the motion to dismiss with respect to those funds. In addition, EAM asserted that Plaintiff failed to pled facts to support her contention that it was an investment advice fiduciary under the ERISA. The Court again agreed, finding that Plaintiff failed to establish that EAM’s advice would serve as the primary basis for the investment decision, and failed to allege any facts supporting a reasonable inference that EAM’s advice was the primary basis for BBVA’s investment decisions. Id . at *10. The Court opined that the Plan authorized the Board to delegate its authority and responsibilities to a committee and the Board elected to make that delegation to the Retirement Committee. Id . The duties and responsibilities delegated to the Retirement Committee included the duty to develop an investment program, identify the program options, select managers and/or funds, monitor investments through regular reviews and analyses, and decide whether to take action if objectives are not being met or policies and guidelines are not being followed. Id . at *10-11. The Court determined that the services agreement was clear that the Retirement Committee retained those responsibilities and that EAM did not make or offer investment advice. Accordingly, the Court concluded that the EAM and BBVA did not mutually agree for EAM’s advice to be the primary basis for the Plan’s investment decisions, and therefore Plaintiff failed to allege facts to support a plausible inference EAM was an investment advice fiduciary. The Court therefore granted EAM’s motion to dismiss. Feinberg, et al. v. T. Rowe Price Group, Inc., 2021 U.S. Dist. LEXIS 26549 (D. Md. Feb. 9, 2021). Plaintiffs, a group of current and former employees who participated in Defendants’ T. Rowe Price U.S. Retirement Program (“the Plan”), filed a class action alleging that Defendants favored their own proprietary investment options over unaffiliated alternatives in violation of the ERISA. Plaintiffs asserted seven causes of action, including claims that Defendants breached their fiduciary duties of prudence and loyalty, offered self-interested investment advice to the Plan’s trustees, and engaged in prohibited transactions under § 1106 of the ERISA. The crux of Plaintiffs’ complaint concerned the fact that the Plan offered only investment funds created and managed by Defendants. Plaintiffs filed a motion for partial summary judgment, which the Court denied. Defendants also filed a cross-motion for summary judgment that the Court granted in part and denied in part, holding that while “this Court deems total victory improbable, and recovery on the scale suggested by Plaintiffs highly improbable, Plaintiffs have largely cleared the low bar that avoids summary judgment in favor of their opponent.” Id. at *4. With regard to Defendants’ alleged breach of their fiduciary duties, Plaintiffs claimed that Defendants failed to obtain independent advice to mitigate their alleged conflicts of interest and improperly offered only their own investment vehicles without considering alternative investment options. Defendants countered that they were under no obligation to seek independent advice, and the Court agreed since Plaintiffs cited no authority maintaining that the ERISA requires securing independent investment advice. The Court also noted that, contrary to Plaintiffs’ assertions, there was no “uniform checklist” for assessing prudence, and over the last decade, the Plan’s assets tripled under Defendants’ management. Id. at *22-23. However, the Court found summary judgment inappropriate at this stage because Plaintiffs offered sufficient evidence to allow a fact-finder to assume imprudence given the testimony of Plaintiffs’ expert witness. In terms of the investment advice claim, the Court held that Defendants were entitled to summary judgment, as Plaintiffs never offered any evidence to rebut Defendants’ contention that it never provided any true investment advice to the Plan’s trustees. The Court also addressed the allegedly prohibited transactions under § 1106(b), and concluded that neither party offered sufficient evidence about the transactions at issue to warrant summary judgment. Though Plaintiffs provided some evidence of situations where Defendants allegedly delayed the transition of lower-cost share classes and offered low-performing investment vehicles with relatively high fees, the Court declined to enter a summary