Duane Morris ERISA Class Action Review – 2024

For these reasons, the court granted the plaintiff ’ s motion for class certification. Likewise, in Gotta, et al. v. Stantec Consulting Services Inc., 2023 U.S. Dist. LEXIS 76468 (D. Ariz. May 2, 2023), the court conducted its own evaluation of the plaintiffs’ motion for class certification. The plaintiffs, a group of participants in the defendant ’ s 401(k) plan, filed a class action alleging that the defendant breached its fiduciary duties with respect to the plan in violation of the ERISA. The plaintiffs filed a motion for class certification, which the court granted. The defendants did not directly oppose the motion for class certification because they filed a motion for summary judgment (which was denied) at the same time. The plaintiff sought to certify a class consisting of: “all persons, except the defendants and their immediate family members, who were participants in or beneficiaries of the Plan, at any time between September 24, 2014, and the date of judgment.” Id. at *2. The court found that each Rule 23(a) and (b)(1) requirement was met. The court determined that the class met the numerosity requirement as their proposed class contained over 10,000 members. The court also held that the commonality requirement was met because the plaintiffs’ claims were virtually the same for every member of the class, as the allegations of fiduciary mismanagement would apply in roughly the same way to every class member. Id. at *3. The court also stated that “the key issues in this case concern the defendants’ conduct, not individual actions taken by the plaintiffs,” and therefore the typicality requirement was also met. Id. The court also ruled that the plaintiffs showed that they and their counsel had no conflicts of interest. Likewise, the court stated that the plaintiffs made the requisite showing under Rule 23(b) because breach of fiduciary duty claims under the ERISA are properly certified under Rule 23(b)(1)(A). Accordingly, the court granted the plaintiffs’ motion for class certification. 11. Rulings Denying Class Certification The district court found individualized issues predominated over class issues and defeated the plaintiffs’ request for class certification in Haley, et al. v. Teachers Insurance & Annuity Association, 2023 U.S. Dist. LEXIS 110544 (S.D.N.Y. June 27, 2023). The plaintiff, a participant in the defendant ’ s 401(k) plan, filed a class action alleging that the defendant engaged in prohibited transactions with various retirement plans in violation of the ERISA. Specifically, the plaintiff contended that the defendant ’ s loan structure deviated from industry practices in that participants borrowed money from the defendant ’ s general account rather than from their own accounts. If participants had borrowed from themselves, they would have avoided fees. The plaintiff asserted that the defendant ’ s loan practice resulted in decreased earned interest. While the district court granted class certification, the Second Circuit subsequently vacated and remanded the ruling. The Second Circuit instructed the district court to consider whether the defendant ’ s affirmative defenses invoking § 408 of ERISA, which allows certain transactions otherwise prohibited under the Act when the plan “accepts no more and pays no less than ‘ adequate consideration, ’ ” made class treatment unwarranted due to individual issues predominating over common issues. Id. at 13. On remand, the district court denied the plaintiff ’ s motion for class certification. It ruled that the individualized issues related to various affirmative defenses under the ERISA, including the “adequate consideration” defense and the “reasonable rate and adequately secured” defense, made class certification impractical. The court opined that whether the defense applied to each individual plan participant ’ s loan transactions would require individualized inquiries into fair market value, such as the relevant geography, timing, economics, and methodology of each individual transaction and what knowledge and information each participant had at the time of each transaction. Therefore, the court concluded that the plaintiff ’ s proposed class failed to meet the commonality and predominance requirements for class certification. In Haley, et al. v. Teachers Insurance & Annuity Association, 2023 U.S. Dist. LEXIS 110544 (S.D.N.Y. June 27, 2023), the plaintiff filed a putative class action against the Teachers Insurance and Annuity Association (TIAA) alleging certain retirement loans violated § 406 of ERISA. The plaintiff alleged liability on both ERISA fiduciary and non-fiduciary grounds, but the court dismissed the ERISA fiduciary claims. The plaintiff then moved for class certification under Rule 23(b)(1) and 23(b)(2), and also for certification of an opt-out class under 23(b)(3). The court undertook a non-fiduciary liability analysis under § 406 where a plaintiff is required to prove that: (i) an actual plan fiduciary caused the challenged transaction to occur; (ii)

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