18th Annual Workplace Class Action Report - 2022 Edition

Annual Workplace Class Action Litigation Report: 2022 Edition 333 Defendant to constitute a fiduciary of the Plan, participant data must be a “plan asset” under the ERISA. Id. To that end, the Court examined the plain language of the ERISA, which suggested that the term “plan assets” should be defined by U.S. Department of Labor (“DOL”) regulations. Id. at *10. The Court also reviewed two relevant DOL regulations, neither of which made any mention of data when defining “plan assets.” Id . With respect to the case law on this topic, the Court also referenced a decision where the Seventh Circuit found that participant data did not amount to “plan assets” under virtually identical circumstances. Id. at *13-14. In light of these case law authorities, the Court reasoned that Plaintiffs’ prohibited transaction claim must also fail, since this claim depended on participant data constituting “plan assets” as well. Id. at *14. For these reasons, the Court granted Defendant Fidelity’s motion to dismiss. In Re Biogen, Inc. ERISA Litigation, 2021 U.S. Dist. LEXIS 136919 (D. Mass. July 22, 2021). Plaintiffs, a group of participants in Defendants’ 401(k) Savings Plan (the "Plan"), brought a class action alleging that Defendants breached certain of their fiduciary duties under the ERISA. Plaintiff’s three-count complaint alleged breaches of: (i) the fiduciary duty of loyalty (Count I); (ii) duty to monitor (Count II); and (iii) an alternative knowing breach of trust claim (Count III). Defendants moved to dismiss pursuant to Rule 12(b)(6). The Court granted in part and denied in part Defendants’ motion to dismiss. At the outset, the Court addressed Defendants’ argument that Plaintiffs’ claims were time-barred under Massachusetts law, which provided a six- year limitations period for contract actions. The Court concluded that Plaintiffs’ allegations pertained to Defendants’ ongoing investment in certain options once the funds began to underperform and were not limited to when Defendants first selected the funds. Accordingly, the Court ruled that to the extent Plaintiffs challenged the investment fund selections that occurred prior to July 14, 2014, their claims were time-barred. However, Plaintiffs’ allegations with respect to the continued investment and retention of these funds within the past six years remained valid. As to Count I, Plaintiffs alleged that Defendants breached the duty of prudence by continuing to offer the Active suite as an investment option, despite its alleged deficiencies. To demonstrate Defendants’ failings, Plaintiffs use the Index suite as a benchmark to demonstrate that the Freedom Funds underperformed. Viewing the complaint in Plaintiffs’ favor, the Court found that Plaintiffs’ allegations that a prudent fiduciary would have monitored and removed the specified underperforming funds earlier were sufficient to infer that Defendants breached their fiduciary duty of prudence. However, as to Plaintiffs’ claim that Defendants violated their duty of loyalty by selecting and retaining the challenged investment because the Freedom Funds were offered solely to generate funds for Fidelity, the Court ruled that without more, this allegation was merely conclusory and did not give rise to a plausible inference that Defendants’ concern about the stock price was self-serving. In Count II, Plaintiffs also alleged that Defendant Biogen failed in its fiduciary responsibility to monitor the performance of the Committee and its members. However, for the same reasons that the Court had denied Defendants’ motion as to the duty of prudence claim, the Court denied Defendants’ motion to dismiss as to Count II for failure to monitor. Finally, Plaintiffs alleged in the alternative, to the extent that any of Defendants were not deemed a fiduciary or co-fiduciary under ERISA, that each such Defendant should be enjoined or otherwise subject to equitable relief as a non-fiduciary from further participating in a knowing breach of trust. Defendants argued that because there was no predicate basis for these derivative claims, and because Plaintiffs failed to plead facts to support this claim, Count III should be dismissed. However, the Court was unpersuaded given that it had assumed as alleged that Defendants were fiduciaries and certain of the breach of fiduciary duty claims survived. As such, the Court concluded that dismissal of this alternate theory under Count III at this juncture was not warranted. For these reasons, the Court granted in part and denied in part Defendants’ motion to dismiss. In Re Fidelity ERISA Fee Litigation, 2021 U.S. App. LEXIS 6481 (1st Cir. March 5, 2021). Plaintiffs, a group of T-Mobile employees, filed a class action claiming that Defendant, a third-party retirement plan manager, improperly charged kickback fees disguised as “infrastructure fees,” and thereby breached its fiduciary duty under the ERISA. Defendant operated a “supermarket” of mutual fund investment options named the FundsNetwork. Id. at *3. Within this network, thousands of employer-established retirement plans could select mutual funds in which their participants can invest, and in exchange for access to the FundsNetwork, the plans paid Defendant certain agreed-upon service fees. Id. at *4-5. According to Plaintiffs, Defendant constituted a fiduciary in its management of the FundsNetwork, and Defendant breached its duty as a fiduciary by implementing an infrastructure fee and tripling that fee amount over a two-year span. Defendant filed a motion to dismiss, which the District Court granted. In dismissing Plaintiffs’ action, the District Court held that Defendant