18th Annual Workplace Class Action Report - 2022 Edition

332 Annual Workplace Class Action Litigation Report: 2022 Edition judgment ruling on this claim in light of the parties’ ongoing factual disputes. Accordingly, the Court denied Plaintiffs’ motion for partial summary judgment and granted in part and denied in part Defendants’ cross-motion. Garcia, et al. v. Alticor, Inc., Case No. 20-CV-1078 (W.D. Mich. Aug. 9, 2021). Plaintiffs, a group of former employees and participants in Defendant’s defined-contribution 401(k) plan, filed a class action alleging that the Plan’s Committee failed to give adequate attention to the investments in the Plan in violation of the ERISA. Defendants filed a motion to dismiss for failure to state a claim, and the Court denied the motion. Plaintiffs specifically alleged that the Committee failed to provide better investment options and that Amway, their former employer and its Board, failed to sufficiently monitor the Committee’s decisions and actions. Plaintiffs contended that Defendants failed to select the best investment options, either because the options offered had excessive fees, or because preferable alternatives were available. Plaintiffs also asserted that the recordkeeping and administrative fees for the Plan were excessive, the majority of funds chosen by the Committee were more expensive than comparable funds, some funds under-performed, the Committee should have considered whether lower-cost comparable collective trusts were available, the Committee could have selected at least one identical but lower-cost share class, the Committee failed to consider materially similar but cheaper, passively managed alternatives, and that a reasonable investigation would have revealed the existence of alternatives. Id . at 7-8. The Court found that at the motion to dismiss stage, Plaintiffs’ allegations were sufficient. The Court opined that, taking the complaint’s allegations as a whole, Plaintiffs plausibly alleged that the Committee breached its duty under the ERISA. For these reasons, the Court denied Defendants’ motion to dismiss. Gotta, et al. v. Stantec Consulting Services, 2021 U.S. Dist. LEXIS 94551 (D. Ariz. May 18, 2021). Plaintiffs, a group of participants in Defendant Stantec’s 401k Plan ("Plan"), alleged that Defendants violated their duty to prudently select and monitor the Plan’s investments in violation of the ERISA. Defendant filed a motion to dismiss for failure to state a claim, which the Court denied. Plaintiffs asserted that Defendants failed to prudently monitor the Plan to determine whether the Plan was invested in the lowest-cost share class available for the Plan’s mutual funds, and that the expense ratios in the Plan’s investment options were significantly higher than the other, comparable funds. Id . at *2. Plaintiffs identified several other comparable funds with lower costs. Finally, Plaintiffs alleged that the recordkeeping and administrative costs of the Plan were excessive, at least $75 per participant annually, and contended that a more reasonable fee of $25 per participant annually was appropriate. The Court found that Plaintiffs’ claim was not, as asserted by Defendants, defeated by their failure to allege which processes led to a breach of fiduciary duties, as the Ninth Circuit had acknowledged that "circumstances surrounding alleged breaches of fiduciary duty may frequently defy particularized identification at the pleading stage" because Plaintiffs may not "be in a position to describe with particularity the events constituting the alleged misconduct." Id . at *7. The Court determined that Plaintiffs’ allegations that the bargaining power of the Plan should have allowed for Defendants to select less expensive classes was sufficient to state a claim. The Court also ruled that Plaintiffs sufficiently alleged that Defendants failed to offer "identical" investment options which offered lower net expense ratios, and that the more expensive options did not offer any further benefit. Id . As to the failure to monitor claim, the Court ruled that Plaintiffs’ assertions that that Defendants failed to "monitor the processes by which Plan investments were evaluated," "remove Committee members whose performance was inadequate," or "monitor and evaluate the performance of the Committee Defendants or have a system in place for doing so" were also sufficient to state a claim. Id . at *8. For these reasons, the Court denied Defendants’ motion to dismiss. Harmon, et al. v. Shell Oil Co., 2021 U.S. Dist. LEXIS 66312 (S.D. Tex. March 30, 2021). Plaintiffs, a group of Defendant Shell Oil’s employees who participated in the Shell Provident Fund 401(k) Plan (“the Plan”), filed a class action against Defendants asserting violations of the ERISA. Plaintiffs alleged that Defendant Fidelity Investments Institutional Operations Co., Inc. (“Fidelity”) breached its fiduciary duty as the Plan’s record-keeper by using “participant data” to market financial products and services not related to the Plan. Id. at *8-9. Plaintiffs further alleged that Defendant Fidelity obtained significant revenue from the use of participant data, which included personal information such as a participants’ names, ages, and Social Security numbers. A key component of Plaintiffs’ theory of liability was that participant data constituted “plan assets” under the ERISA, thereby making Defendant Fidelity a fiduciary of the Plan participants. Id. at *9. Plaintiffs thus claimed that both Defendants Shell Oil and Fidelity breached their fiduciary duties and engaged in prohibited transactions under the ERISA. Defendant Fidelity filed a motion to dismiss, which the Court granted. The Court noted that, for