18th Annual Workplace Class Action Report - 2022 Edition

Annual Workplace Class Action Litigation Report: 2022 Edition 337 McGinnes, et al. v. FirstGroup America, Inc., 2021 U.S. Dist. LEXIS 50902 (S.D. Ohio March 18, 2021). Plaintiffs, a group of participants in FirstGroup America, Inc. Retirement Savings Plan (the "Plan"), brought a putative class action alleging that Defendants breached their fiduciary duties by replacing 95% of the Plan’s well-established investments with a series of new untested funds despite significant losses to the Plan in violation of the ERISA. Specifically, Plaintiffs alleged that Defendants: (i) breached the duties of prudence and loyalty under 29 U.S.C. § 1104(a)(1)(A)-(B); (ii) breached the duty to follow plan documents under 29 U.S.C. § 1104(a)(1)(D); and (iii) breached the duty to monitor the Plan’s other fiduciaries under the standards set forth in the ERISA. Defendants sought to dismiss the complaint in its entirety on the basis that: (i) the majority of Plaintiffs’ claims were barred by the ERISA’s statute of limitations; and (ii) as dismissal was warranted under Rule 12(b)(6) for failure to state a claim upon which relief could be granted. The Court found that it could not conclude that Plaintiffs’ claims were barred by § 1113(2) at this preliminary juncture. As to the issue of whether Counts I, II, and III stated a claim upon which relief could be granted, the Court opined that Counts I and III stated a claim, but that Count II did not. In Count II, Plaintiffs alleged that Defendants breached their duty to follow the Plan’s governing documents. Specifically, Plaintiffs alleged that, by agreeing to use Hewitt (as investment manager) and its Funds (as plan assets), Defendants violated the 2012 IPS’s requirement that all Plan managers/funds have a track record at least three years long. However, looking to the allegations in the complaint, the Court determined that it could not allow Plaintiffs to maintain a claim for breach of the 2012 IPS, when, based upon their own allegations, the 2012 IPS was not an operative document at the time of the alleged breaches. Moreover, neither party had submitted the February 2013 revision to the Court for review, and the Court was unwilling to speculate that it contained the same requirement as the 2012 IPS. For all these reasons, the Court found that Count II must be dismissed. However, the Court concluded that Plaintiffs advanced sufficient facts to indicate that the FirstGroup Defendants’ own actions (as opposed to Hewitt’s alone) facilitated the Plan’s 2013 overhaul. As the FirstGroup Defendants’ own actions were at issue, the Court could not determine that the ERISA’s safe harbor provision exempted the FirstGroup Defendants from Count I-related liability. With respect to Count III , the Court found that Plaintiffs’ allegations pertaining to its claim that Defendant FirstGroup did not live up to its monitoring-related duties, while not overwhelmingly specific, were still sufficient at this juncture to state a claim. For these reasons, the Court granted in part and denied in part Defendants’ motion to dismiss pursuant to Rule 12(b)(6). Nunez, et al. v. B. Braun Medical, Inc. , Case No. 20-CV-4195 (E.D. Penn. June 4, 2021). Plaintiffs, a group of participants in Defendant’s 401(k) plan, filed a class action alleging that Defendants improperly selected high- cost investments and incurred excessive recordkeeping fees in violation of the ERISA. Defendants filed a motion to dismiss, which the Court granted in part and denied in part. The Court granted Defendants’ motion with respect to Plaintiffs’ breach of fiduciary duty of loyalty and failure to monitor claims, but denied the motion as to Plaintiffs’ claim that Defendants breached their duty of prudence. The Court held that Plaintiffs plausibly alleged that Defendants failed to manage and select investments with the level of care, skill, prudence, and diligence required under the ERISA. The Court ruled that Plaintiffs’ allegations that lower class shares were available during the class period, that the plan investments “did not receive any additional services or benefits based on its use of more expensive share classes," and that Defendants "knew or should have known about the availability of cheaper shares," was sufficient to allege a breach of fiduciary duty of loyalty. Id . at 6. As for the failure to monitor claims, Plaintiffs asserted that Defendants failed to monitor and control recordkeeping fees paid to T. Rowe Price and Milliman, which generally exceeded $120 per participant annually while "recognized reasonable rates for large plans" usually averaged around $35 a year. Id . at 7. The Court concluded that whether or not the recordkeeping fees reached a level of imprudence was a question of fact that was inappropriate to resolve at the motion to dismiss stage. The Court further opined that with respect to the duty of loyalty claim, Plaintiffs failed to sufficiently allege that Defendants acted to benefit themselves or another party. As to the failure to monitor claim, the Court ruled that Plaintiffs failed to adequately explain the monitoring process and how Defendants failed within that process. Parmer, et al. v. Land O ’ Lakes, Inc., 2021 U.S. Dist. LEXIS 24023 (D. Minn. Feb. 9, 2021). Plaintiffs, two former employees who participated in Defendants’ Employee Savings and Supplemental Retirement Plan (“the Plan”), filed a class action lawsuit alleging that Defendants breached their fiduciary duties of loyalty and prudence in violation of the ERISA. Specifically, Plaintiffs claimed that Defendants breached their fiduciary duties by: “(i) failing to investigate and select lower cost alternative funds; (ii) failing to monitor or control the