Duane Morris ERISA Class Action Review – 2024

particularized injury. Therefore, only the claims regarding funds in which one of the potential other named plaintiffs invested survived. In Singh, et al. v. Deloitte LLP, 2023 U.S. Dist. LEXIS 6910 (S.D.N.Y. Jan. 13, 2023), the plaintiffs filed a class action alleging that the defendants breached their fiduciary duty of prudence under the ERISA. The defendants moved to dismiss on standing grounds under Rule 12(b)(1), and the court granted the motion. The plaintiffs claimed that the defendant Committee breached its duty of prudence by failing to ensure that the investment options for its retirement plans were appropriate, reasonably priced, and performed well compared to their peers. The 401(k) Plan was available to regular full-time employees, while a Profit Sharing Plan (PSP) was limited to high-level employees. Each plaintiff had invested in the 401(k) Plan and alleged that the recordkeeping fees for the Plans were higher than those of comparable plans and that the costs depended on the number of participants rather than the assets under management. The plaintiffs contended that prudent fiduciaries would negotiate fixed annual compensation for recordkeeping based on a per-participant rate rather than as a percentage of assets, and that the defendants acted imprudently by failing to do so. Additionally, the plaintiffs argued that because certain funds offered by the Plans had excessively high expense ratios compared to industry medians and averages and that the high costs, therefore the defendants acted imprudently in managing the Plans. While the plaintiffs brought claims based on the PSP, the court found that they lacked standing to do so because none had invested in it. As to the 401(k) plan, the court specified that it was a defined contribution plan and thus it found that the plaintiffs did not have standing with regards to individual funds in which they did not invest because poor performance of those funds would not have affected their accounts. Therefore, the court granted the defendants’ motion to dismiss. In Winsor, et al. v. Sequoia Benefits & Insurance Services, LLC , 62 F.4th 517 (9th Cir. 2023), the Ninth Circuit affirmed the district court ’ s dismissal on standing grounds relative to the plaintiffs’ claims of a breach of fiduciary duties based on the defendants’ denial of health benefits and excessive contribution requirements. The plaintiffs sought recovery from the relevant insurance agencies rather than from their current or former employer. The district court found that because the plaintiffs did not make out a claim against the employer, they failed to meet the causation requirement of Article III standing, as the employer, not the insurance company, determined the coverage options in this case. The Ninth Circuit affirmed this ruling on the grounds that the allegations were not “fairly traceable” to the defendant insurance company. Id. at 524. Additionally, the Ninth Circuit found that the plaintiffs failed to establish redressability because their allegation that the insurance company benefitted from the denial of coverage through profits did not demonstrate that disgorging those profits as damages to the plaintiffs redressed the injury of having been denied coverage and paying higher contributions to the company. The plaintiffs alternatively argued that they had Article III standing based on their equitable ownership in one of the defendant ’ s trust funds. However, the Ninth Circuit found that the fund was a defined benefit plan and that recovery was foreclosed because such a plan provides a fixed set of benefits and, absent any impact on the defined benefit that the plaintiffs received, they could not allege a concrete injury. The court granted a motion to dismiss based on the plaintiffs’ lack of standing in Smith, et al. v. UnitedHealth Group Inc., 2023 U.S. Dist. LEXIS 9962 (D. Minn. May 4, 2023 ) . The plaintiffs, a group of participants in employer-sponsored health-insurance plans administered by the defendants, filed a class action alleging that the defendants’ practice of “cross-plan offsetting,” in which the defendant recovered overpayments to healthcare providers by deducting any overpayment from a subsequent payment to that provider (even if that payment was owed on behalf of a different plan), violated the ERISA. The defendants filed a motion to dismiss for lack of Article III standing. The court found that the plaintiffs lacked standing and thereby granted the motion. The plaintiffs specifically alleged that cross-plan offsetting directly benefited the defendants to the detriment of self-funded Plans, particularly when self-funded Plan assets were transferred to the defendants to reimburse them for overpayments it retroactively concluded “it had made from its own fully insured Plans.” Id. at *6. The plaintiffs asserted that the defendants did not pay their approved Plan benefits when it applied the cross-plan offsets, equating to a benefit denial, and injuries to them personally (and not to the Plans). Id. at *18. However, the court treated the plan as a

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