Duane Morris Class Action Review - 2023 - Report - Page 194
claims concerning excessive recordkeeping fees, holding that the plaintiff “fails to give
the kind of context that could move this claim from possibility to plausibility” where the
plaintiff failed to plead any facts to suggest that the services the defendants received
were equivalent to those for which the plaintiff’s proffered comparators allegedly paid
less. Id. at 1169. For these reasons, the Sixth Circuit affirmed dismissal of plaintiff’s
complaint.
Shortly after Smith, the Seventh Circuit in Albert, et al. v. Oshkosh Corp., 47 F.4th 570
(7th Cir. 2022), affirmed dismissal of all of the plaintiffs’ claims, which asserted that the
defendants breached their fiduciary duties by “authorizing the Plan to pay unreasonably
high fees for recordkeeping and administration, failing to adequately review the Plan’s
investment portfolio to ensure that each investment option was prudent, and
unreasonably maintaining investment advisors and consultants for the Plan despite the
availability of similar service providers with lower costs or better performance histories.”
Id. at 573. Acknowledging that Hughes had reversed the Seventh Circuit’s underlying
decision in that case, it pointed to Hughes admonishment that the inquiry is “contextspecific” and must “give due regard to the range of reasonable judgments a fiduciary
may make.” Id. at 575. While the plaintiff relied on Hughes as effecting a sea chance in
the area, the Seventh Circuit sided with the defendants’ view that the narrow holding in
Hughes “did not radically reinvent this area of law or upend years of precedent.” Id.
Indeed, the Seventh Circuit rejected the plaintiff’s excessive recordkeeping fees claims
as “devoid of allegations as to the quality or type of recordkeeping services” provided by
the alleged comparators cited by the plaintiff, emphasizing that the cheapest option “is
not necessarily the one a prudent fiduciary would select.” Id. at 579. As such, the
plaintiff’s claim complaint “simply [did] not provide the kind of context that could move
this claim from possibility to plausibility” under Twombly and Iqbal.” Id. at 580 (quoting
Smith, 37 F.4th at 1169). The Seventh Circuit ruled similarly with respect to the several
categories of the plaintiff’s investment management fee claims, concluding that “Hughes
does not require a radically different approach” to such claims, and finding that the
plaintiff’s allegations and undeveloped comparisons to proposed alternative investments
lacked the “more detailed allegations” necessary to state plausible claims. Id. at 580-82.
For these reasons, the Seventh Circuit affirmed dismissal of these and plaintiff’s other
claims.
Thus, despite the significance of the motion to dismiss in ERISA class action litigation,
the legal landscape post-Hughes is as uncertain as it ever was. It remains the case that,
absent further guidance from the Supreme Court, plaintiffs’ success in overcoming Rule
12(b)(6) challenges may depend as much on the level of substantiating detail a
complaint provides to state plausible claims as it will on the court deciding the motion.
Regardless, the motion to dismiss remains a critical gatekeeping tool for the defense
bar in ERISA class action litigation.
B.
Motions To Compel Arbitration And Enforce Class Action Waivers
Despite the increasingly successful reliance on arbitration and class action waiver
provisions to defeat class litigation elsewhere in the law, federal courts have not
consistently enforced them in the ERISA context. Indeed, while some federal courts of
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Duane Morris Class Action Review – 2023
