Duane Morris ERISA Class Action Review – 2024

Similarly, the Ninth Circuit affirmed the district court ’ s finding that the plaintiffs in Wit, et al. v. United Behavioral Health, 2023 U.S. App. LEXIS 22122 (9th Cir. Aug. 22, 2023), had Article III standing to bring their claims of a breach of the fiduciary duty of loyalty and their claim of denial of healthcare benefits. The plaintiffs alleged that the defendants’ denial of mental health and substance abuse treatment caused an injury to their interests in their contractual benefits. The defendants challenged the plaintiffs’ standing, arguing that their allegations did not show concrete and particularized injuries and the alleged, insufficiently demonstrated injuries were not “fairly traceable” to their alleged improper denial of benefits because the plaintiffs “did not show proof of benefits denied.” Id. at 1082. The Ninth Circuit found the alleged injuries were concrete because the ERISA provides the right of participants “to have their contractual benefits interpreted and administered in their best interest and in accordance with their Plan terms” and a breach of the fiduciary duty of loyalty would offend that right. Id. at 1082-83. Further, the defendants’ alleged violations could impermissibly intrude on the plaintiffs’ right to healthcare coverage and destroy clarity as to what healthcare was covered by the plan. Therefore, the Ninth Circuit concluded that the plaintiffs alleged a concrete and material risk of improper denial of benefits and need not have alleged that they actually were or would be entitled to the benefits at issue. The Ninth Circuit also found that the plaintiffs’ alleged injuries were particularized because the guidelines as to the provision of benefits to which the plaintiffs alleged the defendants were bound applied to the benefits owed to each individual class member. Finally, the Ninth Circuit opined the alleged harm was “fairly traceable” to the defendants’ actions because the denial of benefits and lack of clarity of the healthcare coverage provided were caused by the defendants’ alleged self-dealing in not implementing the proper guidelines, which would have required the provision of more benefits and provided more clarity. In Sigetich, et al. v. Kroger Co., 2023 U.S. Dist. LEXIS 40359 (S.D. Ohio Mar. 9, 2023), the court likewise addressed the plaintiffs’ standing to bring a claim of a breach of the duty of prudence due to excessive recordkeeping fees in a defined contribution plan. Although the defendants argued that the named plaintiff did not suffer an injury-in-fact because the plaintiff paid a low recordkeeping fee, the court found that the plaintiffs plausibly alleged that there was a possibility they could have been charged no recordkeeping fee whatsoever and thus did suffer an injury-in-fact. The court also found that the causation element of standing was satisfied because the challenged conduct was a failure to solicit lower recordkeeping fees and such conduct would result in the plaintiffs’ injury. Finally, the court found that the plaintiffs’ injury was redressable because the plaintiffs could receive damages for the injury. Other ERISA defendants had more success on standing challenges over the past year. In Davis, et al. v. Old Dominion Freight Line, Inc ., 2023 U.S. Dist. LEXIS 157048 (M.D.N.C. Sep 6, 2023), the court held that the plaintiff did not have standing under Article III of the Constitution. The plaintiff claimed the defendant breached its fiduciary duty of prudence by providing high-cost investments and actively managed funds. The defendant argued that the plaintiff did not suffer an individual injury because he did not invest in any of the challenged funds offered in the defined contribution plan. The plaintiff did not allege excessive recordkeeping fees in his complaint, but he tried to rely on excessive record-keeper compensation to demonstrate an injury despite his failure to invest in any of the challenged funds. Absent any fee paid by the plaintiff or other allegations of injury to the plaintiff, the court found that the plaintiff did not state any plausible claims of actual injury to his retirement account and had no Article III standing. In Locascio, et al. v. Fluor Corp., 2023 U.S. Dist. LEXIS 9162 (N.D. Tex. Jan. 18, 2023), the court dismissed all of the plaintiffs’ claims based on funds in which they did not personally invest due to lack of Article III standing. While the court explained that the Fifth Circuit has not yet determined whether standing requires personal investment in each challenged fund offered in a defined contribution claim, it applied “guideposts” articulated by circuit case law to determine that the plaintiffs did not have standing to bring such claims. Id. at 8-9. The court reasoned that the Fifth Circuit required the plaintiffs to have standing for themselves rather than simply establishing standing of the class that they represent. Thus, the plaintiffs’ reliance on alleged injuries to the plan and its other participants did not establish the plaintiffs’ own

Made with FlippingBook - professional solution for displaying marketing and sales documents online