Duane Morris Class Action Review - 2023 - Report - Page 205
the entire Plan.” Id. The court disagreed. It explained that the details of the settlement
made clear that the case was “not an action brought on behalf of the Plan but is instead
an action brought on behalf of each of the thirty-nine individuals invested in the Plan.”
Id. at *9. Specifically, the settlement agreement made clear that settlement funds would
not be distributed to the Plan as a whole, but to the class members on an individual
basis, either directly into their active accounts or by check. Id. at *9-10. While the
plaintiffs’ argued that the allocation of settlement funds on an individual basis did not
convert the case to “one for individual money damages,” the court disagreed on the
grounds that the method of allocation did not disburse the funds to the plan in general
such that they would benefit the plan as a whole and then “eventually trickle down to the
investors by way of better returns. Instead, settlement funds would be disbursed to each
individual employee, to be invested by the Plan Administrator according to a rigid set of
directions.” Id. at *10-11. As such, the court held that “individual employees would
thereby receive individual amounts meant to make them whole and individually
compensate them” for defendants’ breaching conduct. Id.
Having concluded that the case was one for individual damages, the court held that
certification under Rule 23(b)(1) was not appropriate. It explained that certification under
that rule is reserved for cases where, absent certification, there is a risk of establishing
incompatible standards of conduct for defendants. Id. at *11-12. The court explained
that this risk refers to more than the chance that one claim might have a precedential
effect on another; it refers to situations in which different results in separate cases
would impair a defendant’s ability to “pursue a uniform continuing course of conduct.” Id.
The court found no such risk here, explaining that where the plaintiffs and putative class
members simply sought individual damages to make themselves whole, if their claims
were tried separately, there would “be no incompatible standard of conduct” for the
defendant.” Instead, the defendants “would simply deposit funds into one employee’s
retirement account and not do so for the other employee.” Because “[i]t is possible for
[the defendant] to take both actions simultaneously,” there was no risk that the
defendants would be unable to pursue a uniform course of conduct, rendering Rule
23(b)(1) certification inappropriate. Id. at *12-13.
The court also outlined the due process concerns associated with a non-opt-out class.
Insofar the class settlement would “provide class members with 68-76% of the damages
they could have recovered at trial,” it would be unfair to require individuals to participate
in the lawsuit (by certifying a mandatory class) “when they might be able to get a
complete recovery by pursuing their claims individually.” Id. at*17-18. The court
reasoned that it could not “simply assume that such employees [who might be able to
get a larger recovery] do not exist, and it is not free to simply take counsel’s word on the
matter.” Id. “Thus, in order to comport with both the Rules and constitutional due
process,” the court held that “this class must be an opt-out class. Id.
H.
Other Class Certification Decisions
While cases challenging the management of 401(k) plans once again dominated the
ERISA class litigation landscape in 2022, it is worth noting that courts also addressed
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Duane Morris Class Action Review – 2023
