Duane Morris Class Action Review - 2023 - Report - Page 189
CHAPTER 11
ERISA Class Actions
I.
Executive Summary
The surge of class action litigation filed under the Employee Retirement Income
Security Act (ERISA), 29 U.S.C. §§ 1001 et seq. persisted in 2022, with class action
litigators in the plaintiffs’ bar continuing their focus on challenging ERISA fiduciaries’
management of 401(k) and other retirement plans.
Indeed, the bulk of cases in this area over the last 2 to 3 years assert that ERISA
fiduciaries breached their fiduciary duties of prudence and loyalty by, among other
things, offering expensive or underperforming investment options and charging
participants excessive recordkeeping and administrative fees. In fact, more than 200 of
these fee and expense class actions have been filed since 2020, in part owing to a
handful of new and active plaintiffs’ firms entering the space.
Class certification can be challenging to defeat outright in these and other ERISA cases
given the nature of the claims, which typically assert that discrete types of alleged plan
mismanagement led to common injuries affecting large numbers of plan participants in
similar ways.
Indeed, courts often reject challenges to standing and the requirements of Rules 23(a)
and (b), concluding that factual differences in the type of benefits or investments at
issue are merits or damages issues less relevant to certification than allegations that the
defendants’ conduct produced similar, broad-based injuries.
As such, defendants pour significant resources into attacking these cases in their
infancy. Both sides know that early dismissal may be the defendants’ best hope of
avoiding the burden and expense of the protracted discovery that will come before and
after class certification, which is often viewed as a foregone conclusion.
In fact, this dynamic is central the strategy of the plaintiffs’ bar in many of these cases. If
the plaintiffs can overcome initial challenges, they can then leverage the prospect of
substantial defense costs to obtain an early seven-figure settlement that still costs less
than defending the case through summary judgment and trial.
To defeat these claims, many defendants argue that putative class action complaints fail
to state plausible claims under Rule 12(b)(6). Specifically, defendants often contend that
plaintiffs simply label any plan’s failure to select cheaper or better performing
investment options a breach of fiduciary duty, but do so without alleging anything to
support a plausible inference that the fiduciaries’ decision-making process was flawed.
For their part, the plaintiffs’ bar argues that their lack of access to confidential
information about the relevant fiduciary processes unfairly handicaps their ability to offer
the more detailed allegations that the defendants demand. Historically, the results of
these disputes have been mixed.
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Duane Morris Class Action Review – 2023
