ERISA Class Action Review – 2025

(2022), it ultimately issued a very narrow 8-0 opinion in that case that offered only nominal guidance to lower federal courts. The continuing fallout from the Supreme Court’s decision to punt can be seen in a number of cases decided in 2024. For example, in Mator, et al. v. Wesco Distribution , 102 F.4th 172 (3d Cir. May 16, 2024), the Third Circuit ruled that the plaintiffs could proceed with a case involving allegations that 401(k) plan managers had breached their fiduciary duties under the ERISA by, among other things, paying excessive recordkeeping fees. Id. at 178. According to the plaintiffs, their plan paid an average of $153 to $154 per participant, while the industry average was in the $40 to $60 range. Id. at 180. A responsible fiduciary, they argued, would have periodically evaluated fees and switched recordkeepers where appropriate. Id. The plaintiffs introduced a number of comparisons to other plans, but they had to extrapolate figures from publicly available data to make these comparisons. Id. at 181. The district court held that the plaintiffs had failed to provide the “apples-to-apples” comparison required at the motion to dismiss stage. Id. at 182. The Third Circuit, however, reversed and remanded. According to the Third Circuit, the plaintiffs had made out a sufficient claim by demonstrating that the comparator plans offered a similar, though not identical, range of services, that the comparator plans were similar in size, and that the fee comparisons based on publicly available data, though imperfect, were adequate. Id. at 185-188. In Guyes, et al. v. Nestle United States Inc. , 2024 U.S. Dist. LEXIS 9801 (E.D. Wis. Jan. 9, 2024), the court reached the opposite conclusion. There, the court accepted a Magistrate Judge’s recommendation to dismiss a case based on the absence of adequate comparators. Like the plaintiffs in Mator, the plaintiff in Guyes complained about allegedly excessive recordkeeping. And, like in Mator , the plaintiff in Guyes lacked insight into the decision-making process itself, and therefore had to rely on comparisons to other plans based on publicly available data. Id. at *6. In contrast with the court in Mator , however, the Magistrate Judge in Guyes focused on the differences between the plaintiff’s proposed comparators rather than the similarities. He concluded that the plaintiff failed to demonstrate that the comparator plans offered the same services or that they were similar in size. Id. at *14-15. Moreover, the Magistrate Judge took issue with the manner in which the plaintiff had calculated fees. All of this meant that no apples-to-apples comparison could be made. Accordingly, the plaintiff was, in the eyes of the Magistrate Judge and the court, unable “to cross the line from possibility to plausibility.” Id. at *16. Where exactly that line should be drawn, though, remained unresolved. The Second Circuit in Singh, et al. v. Deloitte LLP , 2024 U.S. App. LEXIS 31219 (2d Cir. Dec. 10, 2024), affirmed the district court’s ruling granting the defendant’s motion to dismiss and denying the plaintiffs’ motion to file an amended complaint. The plaintiffs were participants in the defendant’s 401(k) Plan, where employees could contribute a portion of their salary, and the defendant would make a matching contribution. Vanguard provided recordkeeping and administrative services for the Plan, and the Plan incurred fees for these services, including both direct fees and indirect fees through revenue sharing. The plaintiffs alleged that the Plan’s recordkeeping fees were excessive compared to other similar plans. They argued that the Plan’s fiduciaries violated the ERISA because they failed to negotiate favorable rates, and that the Plan could have obtained comparable services for a lower cost by soliciting competitive bids at reasonable intervals. The district court dismissed the complaint, ruling that the plaintiffs had failed to adequately allege that the recordkeeping fees were excessive relative to the services provided for purposes of stating a viable claim under the ERISA. The plaintiffs had compared only the direct costs of the Plan with the direct costs of other plans, omitted indirect costs, and had not provided enough detail on the quality of services received by the Plan or the comparator plans. The district court noted that to allege a plausible claim for excessive fees, the plaintiffs would need to show that the services and fees were comparable or provide additional context supporting the claim of imprudence. The plaintiffs filed an amended complaint with additional allegations, including expert opinions and additional comparisons, but the district court again dismissed the plaintiffs’ complaint. The district court ruled that the plaintiffs failed to specify the type and quality of services provided by the Plan or the comparator plans, and their comparison of costs was incomplete, because it compared only direct costs for some plans without considering other factors such as indirect fees or differences in services provided. The district court concluded that the plaintiffs did not provide enough context to make their claim plausible. On appeal, the Second Circuit agreed with the district court’s ruling. It determined that the plaintiffs’ allegations were too general and lacked sufficient detail to support a claim of imprudence. The Second Circuit noted that comparing costs alone, without context on the services provided or other relevant factors, was not enough to raise a plausible claim of excessive fees under the ERISA. Finally, the plaintiffs also alleged that the defendant and its Board failed to monitor fiduciaries adequately, but the Second Circuit determined that the claim was derivative of the prudence

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