claim, and since that claim had been dismissed, the failure to monitor claim also failed. For these reasons, the Second Circuit affirmed the district court’s dismissal of both the prudence and failure to monitor claims. The Sixth Circuit in Johnson, et al. v. Parker-Hannifin Corp ., 2024 U.S. App. LEXIS 29500 (6th Cir. Nov. 20, 2024), reversed the district court’s ruling granting the defendant’s motion to dismiss. The plaintiffs were among approximately 32,000 participants in the Parker Retirement Savings Plan (the Plan), a defined contribution pension plan governed by the ERISA. The Plan, with $4.3 billion in assets, is one of the largest defined contribution plans in the U.S. It offers various investment options, including the Northern Trust Focus Funds (Focus Funds), a suite of target date funds. These funds, launched in 2009, were intended to provide a diversified investment strategy with a glide path that adjusts the asset allocation as the participant nears retirement. However, the Focus Funds significantly underperformed compared to industry benchmarks and had high turnover rates, causing additional transaction costs. Despite the underperformance and high turnover, the funds remained in the Plan until 2019. The plaintiffs alleged that Parker-Hannifin, as the Plan’s fiduciary, breached its duty by retaining the underperforming Focus Funds and failing to negotiate for lower-cost share classes of the funds. The plaintiffs asserted that Parker-Hannifin’s decision to invest in higher fee share classes resulted in millions of dollars in unnecessary fees, which harmed participants’ retirement savings. Parker- Hannifin contended that the plaintiffs only compared the Focus Funds to better-performing alternatives without demonstrating a flaw in the fiduciaries’ process. The defendants also argued that the plaintiffs failed to establish a meaningful benchmark. As to the plaintiffs’ claim that Parker-Hannifin breached its duty of prudence when it retained the Focus Funds, the district court found that the plaintiffs did not state a viable claim of breach of fiduciary duty because they did not identify other plans that could serve as meaningful benchmarks. Id. at *10- 11. As to the plaintiffs’ second claim that Parker-Hannifin breached its duty of prudence by obtaining higher-cost shares, the district court ruled that the plaintiffs’ “lone allegation that the investment thresholds would have been waived upon request is speculative and conclusory,” and thus insufficient to state a claim. Id. at *11. The plaintiffs then appealed. The Sixth Circuit determined that a prudent fiduciary would have considered the funds’ performance, including high turnover and underperformance, when deciding whether to retain them after 2015. The Sixth Circuit also found that the plaintiffs’ comparison of the funds to the S&P target date fund benchmark was valid, as the Focus Funds were designed to track such benchmarks. The Sixth Circuit therefore concluded that the plaintiffs’ allegations, if proven true, could show that Parker-Hannifin failed in its fiduciary duty to prudently monitor and remove the Focus Funds. The Sixth Circuit further opined that the plaintiffs’ claims that Parker-Hannifin failed to negotiate effectively or even ask for lower-cost shares were sufficient to allege a breach of the duty of prudence. The Sixth Circuit held that at this stage of the litigation, the plaintiffs need not provide exhaustive details, as such information is typically gathered during discovery. For these reasons, the Sixth Circuit reversed and remanded the district court’s ruling granting the defendants’ motion to dismiss. Binder, et al. v. PPL Corp. , 2024 U.S. Dist. LEXIS 43927 (E.D. Penn. Mar. 12, 2024), speaks to the varying pleading standards that different federal circuits have applied at the motion to dismiss stage. In Binder , the plaintiffs were participants in retirement plans sponsored by defendants. They alleged that the defendants failed to prudently monitor and remove underperforming investments, paid excessive transaction costs, and purchased higher-cost shares when substantially identical lower-cost alternatives were available. Id. at *2-4. To support their claims, the plaintiffs drew comparisons between their plans’ performances and the performances of rival plans administered by Vanguard, T. Rowe Price, and TIAA-CREF. Id. at *8. The defendants argued that these comparisons were inapt and urged the court to apply the “meaningful benchmark” standard developed by the Eighth Circuit in Meiners v. Wells Fargo & Co. , 898 F.3d 820, 822 (8th Cir. 2018) (holding that in order to demonstrate that a “prudent fiduciary in like circumstances” would have selected a different fund, a plaintiff must provide a “meaningful benchmark” that offers “a sound basis for comparison.”). Although the court in Meiners was somewhat vague in clarifying the requirements for a benchmark to be meaningful, the opinion suggested that a close correspondence between the features of the challenged investment and the comparator investment would be required. Id. at 823. But while the court in Binder acknowledged that a number of other courts had also applied the meaningful benchmark standard, it noted that this is not the standard in the Third Circuit. In that circuit, courts apply a somewhat looser “holistic” standard that merely requires plaintiffs to “provide substantial circumstantial evidence” of a breach. Binder, LEXIS 43927 at *10 (quoting Sweda v. University of Pennsylvania, 923 F.3d 320, 322 (3d Cir. 2019)). The plaintiffs’ claims, the court held, passed muster under this standard.
In other circuits, courts apply a still-looser “totality of the circumstances” test. For example, in Daggett, et al. v.
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ERISA Class Action Review – 2025
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