ERISA Class Action Review – 2025

Waters Corp ., 2024 U.S. Dist. LEXIS 70858 (D. Mass Apr. 18, 2024), the plaintiff in a putative class action asserted a number of complaints concerning multiple defendants’ alleged breaches of fiduciary duty and failure to monitor underperforming investment funds. Id. at *2. He argued that the defendants should have leveraged the plan’s substantial size to acquire cheaper recordkeeping fees, should have periodically solicited competitive bids for such services, and that they invested in funds that were too risky. Id. at *21-31. Although the defendants offered 350 pages of detailed exhibits to demonstrate why the plaintiff’s proffered comparators were inapt, the court held that these disputes raised merits issues that were inappropriate to consider at the motion to dismiss stage. Id. at *3. The court applied the totality of the circumstances test, held that the “the facts alleged [told] a plausible story,” and allowed the claim to proceed. Id. at *37 (quoting Allen v. GreatBanc Trust Co. , 835 F.3d 670, 678 (7th Cir. 2016)). Even after winning a motion to dismiss, ERISA class actions can sometimes be difficult for defendants to put to bed. For example, in Fitzpatrick, et al. v. Does, 2024 U.S. Dist. LEXIS 16671 (D. Neb. Jan. 31, 2024), the court gave the plaintiffs “one last bite at the apple” and allowed them to file an amended complaint due to the complex nature of the ERISA claims. The plaintiffs, a group of individuals in the Nebraska Methodist Health Systems Defined Contribution Plan, filed a class action against the defendants, the Nebraska Methodist Health Systems, Inc., its Board of Directors and Participant Directed Investment Committee, as well as unidentified members of the committee and Board of Directors, alleging that defendants “did not try to reduce the [p]lan’s expenses or exercise appropriate judgment to scrutinize each investment option that was offered in the [p]lan,” resulting in plaintiffs’ plan investments underperforming in violation of the ERISA. Id. at *2. The defendants filed a motion to dismiss and the court granted the motion, finding that plaintiffs failed to allege “meaningful benchmarks for the court to reasonably evaluate the plausibility” of their claim that defendants imprudently invested their money in underperforming funds. Id. The court also denied plaintiffs’ request for leave to file an amended complaint. However, the plaintiffs filed a motion to reconsider, and the court granted the motion. Although the defendants contended the proposed amended complaint was untimely and futile, the court found that allowing the plaintiffs to file an amended complaint was proper and granted plaintiffs leave to do so. The court stated that the plaintiffs attached to their motion a proposed amended complaint demonstrating the additional detail they intend to add to meet the heightened pleading standards applicable to these types of complex ERISA claims. Id. at *6. The court reasoned that given the complexity and highly case-specific nature of plausibly pleading an imprudence claim, justice required giving the plaintiffs an opportunity to rectify their complaint. For these reasons, the court granted the motion for reconsideration. As the cases discussed above indicate, courts apply a patchwork quilt of standards at the motion to dismiss stage, and it can often be difficult to determine in advance whether a court will accept a plaintiff’s proffered comparators. In the absence of further guidance from the Supreme Court, litigators on both sides of the ERISA bar must continue to carefully consider the case law of the jurisdiction in which they are litigating. 3. Rulings On Challenges To Standing In order to proceed with a lawsuit, plaintiffs must first demonstrate that they have standing to sue. Under Article III, Section II of the U.S. Constitution, as interpreted by the U.S. Supreme Court, plaintiffs must establish: (i) that they have suffered or will suffer a concrete injury; (ii) that the injury was or will be “fairly traceable to the challenged conduct;” and (iii) that court will be able to provide redress for the injury if it grants plaintiffs’ requested relief. Lujan, et al. v. Defenders Of Wildlife , 504 U.S. 555 (1992). In 2024, the defendants in putative ERISA class actions persisted in their efforts to challenge the plaintiffs’ claims on standing grounds. Consistent with rulings in prior years, however, many courts rejected these arguments, reasoning that where plaintiffs assert that defendants’ conduct caused a common injury, the requirements of standing have been met for the class-wide injury asserted. In Johnson, et al. v. Carpenters Of West Washington Board Of Trustees , 2023 U.S. Dist. LEXIS 82198 (W.D. Wash. May 10, 2023), the plaintiffs alleged that the defendants had incurred over $250 million in losses during the March, 2020 COVID-related market crash by investing in “highly speculative indexes.” Id. at *5. Following

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