Three participants in their former employer’s defined contribution plan have won class certification in a case alleging that the plan’s fiduciaries breached duties they owed to investors under the Employee Retirement Income Security Act of 1974 (ERISA). The Eastern District of Pennsylvania’s Monday opinion explained that the plaintiffs satisfied Federal Rules of Civil Procedure 23(a) and 23(b)(1), thus warranting certification.
In June 2020, the plaintiffs brought a civil ERISA suit against their former employer and plan sponsor Universal Health Services, Inc., and others (collectively, fiduciaries). The court filing alleged that Universal Health Services’ retirement plan allows qualified employees to invest a portion of their paycheck in one or more of thirty available options, which it partly matches.
The plan participants complained that the fiduciaries retained more expensive and underperforming funds despite the availability of lower-cost funds, failed to monitor excessive record keeping and administrative fees and costs relative to similar plans, and offered an excessively expensive menu of investment options. The court denied the fiduciaries’ partial motion to dismiss in late October last year. Following discovery, the plaintiffs filed their motion for class certification.
The fiduciaries opposed, arguing individualized defenses under ERISA and potentially differing limitations periods. They also contended that the three participants’ investments in different funds rendered their claims atypical, creating issues impossible to resolve on a class-wide basis.
Over these contentions, and with “persuasive reasoning from courts around the country rejecting the fiduciaries’ arguments at this stage,” the court granted the plaintiffs’ motion to certify and represent a class of over 60,000 active participants. With regards to the typicality requirement, the court found that the plaintiffs’ claims focused on the fiduciaries’ plant-wide conduct, instead of on the investment decisions of individual plan participants.
As to the alleged varying limitations period, the court reasoned that the defendants’ argument rested on their “speculative theory” that individualized statute of limitations issues may arise. Without more, the court concluded that this argument could not defeat class certification. In addition, the court noted that while varying plan choices may impact putative class members’ recovery, that factor did not bear on the instant analysis.
The plan participants are represented by Capozzi Adler, P.C. and Shepherd Finkelman Miller & Shah, LLP, and the fiduciaries by Morgan, Lewis & Bockius LLP.
