Duane Morris Class Action Review - 2023 - Report - Page 197
impermissible fail-safe class and, for that reason, it denied class certification. The
plaintiffs, a group of the defendants’ former employees and putative beneficiaries of the
defendants’ retirement plan, filed a putative class action challenging certain vesting
determinations made by the plan and that the defendants failed to keep proper
documentation related to their claims. The plaintiffs sought to certify a class of plan
participants who submitted claims for “vested retirement benefits” and “have been
denied vested rights to retirement benefits that have been denied” by the defendants in
various ways. Id. at *6-7. In evaluating the class certification motion, the court explained
that the implied requirement of “definiteness” under Rule 23 requires that the plaintiffs
are able to establish that the general outlines of class membership are determinable at
the outset of litigation. Id. at *9. The court explained that, in other words, an individual
must be able to determine whether he or she is a member of the proposed class simply
be reading the class definition. Id. The court determined that, insofar as the plaintiffs’
class definition depended on whether an individual had “vested retirement benefits,” it
was an impermissible fail-safe class because “the question of whose rights have vested
is central to the merits of this action.” Id. at *10-11. For example, the court explained
that the question of whether one of the named plaintiffs had “vested retirement benefits”
depended on whether “the court agrees with her merits assertion that fractional years of
service must be ‘rounded up’” because vesting occurs only upon 10 years of vesting
service, of which the plaintiff only had 9.5 years. Id. Because the court “must first make
legal determinations on the propriety of the [the defendants’] alleged actions” before
class membership could be determined, the classes that the plaintiffs sought to certify
were impermissibly fail-safe. As such, the court denied the plaintiffs’ motion. Id. at *1114.
D.
Rulings Granting Class Certification Over Standing And Related
Challenges
Defendants in putative ERISA class actions in 2022 persisted in their efforts to
challenge the plaintiffs’ claims and certification efforts on standing grounds, arguing that
the plaintiffs could not assert breaches of fiduciary duty in connection with the
management of defined contribution plans unless they had personally invested in the
challenged investment options. In so doing, the defendants argued both that the
plaintiffs lacked standing because they suffered no injury with respect to funds in which
they were not invested, and that the plaintiffs could not establish typicality under Rule
23(a) for the same reason. Consistent with past practice, however, many courts rejected
these arguments, reasoning that where the plaintiffs assert that the defendants’ conduct
caused a common injury, the requirements of standing and typicality have been met for
the class wide injury asserted.
In Boley, et al. v. Universal Health Services, 36 F.4th 124 (3d Cir. 2022), the Third
Circuit affirmed the district court’s decision certifying a class of participants in the
defendants’ defined contribution plan. As framed by the Third Circuit, “[a]t issue in this
case is whether the typicality requirement of Federal Rule of Civil Procedure 23(a) is
satisfied when the class representatives did not invest in each of a defined contribution
retirement plan’s available investment options.” Id. at 128. Answering affirmatively, the
Third Circuit held that “[b]ecause the class representatives allege actions or a course of
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Duane Morris Class Action Review – 2023
