Duane Morris ERISA Class Action Review – 2024

the fiduciary did so with full knowledge of the relevant facts indicating that the transaction was prohibited; (iii) the defendant knew that the individual who caused the transaction is an ERISA fiduciary; and (iv) the defendant knew that the fiduciary caused the transaction with the knowledge of the relevant facts. Id. at *8. The court focused its opinion on certain ERISA defenses in its predominance analysis, including the adequate consideration defense. The court criticized the plaintiff ’ s reliance on using an average plan value throughout the class because such a calculation method resulted in trial by formula and was impermissible. Moreover, the court did not reach the issue of the additional defenses because the adequate consideration defense defeated predominance. For these reasons, the Court denied the plaintiff ’ s class certification motion. In Davis, et al. v. Magna International Of America, Inc. , 2023 U.S. Dist. LEXIS 51654 (E.D. Mich. March 27, 2023), the plaintiffs were individuals who invested in the defendant ’ s 401k plan during their employment, and the plaintiffs brought a class action against the plans fiduciaries alleging that during the class period, the defendants breached their duties by “(i) failing to objectively and adequately review the Plan ’ s investment portfolio with due care to ensure that each investment option was prudent, in terms of cost; and (ii) maintaining certain funds in the Plan despite the availability of identical or similar investment options with lower costs and/or better performance histories as required by the Plan ’ s investment policy.” Id. at *3. Based on these allegations, the plaintiff brought causes of action for breach of the fiduciary duties of loyalty and prudence and failure to adequately monitor fiduciaries. The defendants initially filed a motion to dismiss pursuant to Rule 12(b)(1) based on lack of standing, but the court denied the motion. Thereafter, the plaintiffs brought a motion for class certification. They argued that certification was appropriate under Rule 23(b)(1)(B) because prosecuting separate actions for each individual class member ran the risk of adjudication of the claims of some class members, which would be dispositive of the interests of other class members not present. Id. at *5. The plaintiffs also argued that class certification was warranted under Rule 23(b)(1)(A) because prosecuting separate actions would create a risk of “inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class.” Id. The defendants challenged the typicality and adequacy of representation of the named plaintiffs. The court noted that one of the named plaintiffs previously pled guilty to insurance fraud, and this type of evidence may cause a fact-finder to concentrate on credibility issues at the expense of the class. The defendants also argued that the named plaintiffs failed to demonstrate a basic understanding of the claims, and argued that pertinent case law precedent supported denial of class certification when the class representatives have little to no knowledge of and involvement in the class action, or would be unable or unwilling to properly protect the interests of the class against their attorney ’ s competing monetary interest. The court was persuaded by defendant ’ s arguments, and denied the motion to certify a class, but granted the plaintiff ’ s leave to amend to name new class representatives. In Wit, et al. v. United Behavioral Health, 2023 U.S. App. LEXIS 22122 (9th Cir. Aug. 22, 2023), the Ninth Circuit affirmed the district court ’ s certification of the plaintiffs’ classes with regards to their claim of a breach of fiduciary duties, but reversed certification of the classes alleging denial of benefits. The plaintiffs, a group of participants in the defendant ’ s health benefits plan, filed a class action alleging that the defendant denied mental health and substance use disorder treatments in violation of the ERISA. The district court had certified three classes claiming a breach of fiduciary duties and three classes claiming denial of benefits. The Ninth Circuit affirmed the district court ’ s ruling granting three classes on the plaintiffs’ ERISA fiduciary breach claim. However, the it overturned the order certifying the classes claiming a denial of benefits for three reasons. First, some of the class members were denied coverage based on provisions in the Coverage Determination Guidelines that were not challenged in the complaint. The complaint challenged only parts of the guidelines set forth by the defendant to determine what benefits were covered, and because not every provision was challenged, some of the included class members were denied coverage based on excluded provisions. Second, the plaintiffs did not demonstrate that those class members who were denied coverage based on guidelines not challenged in the complaint were also denied a full and fair review of their need for coverage. Finally, some claims were denied only in part based on the challenged provisions. The Ninth Circuit found that a reference to the challenged provisions in the

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