United States District Court, D. Rhode Island
DIANE G. SHORT; SAMIRA PARDANANI; JUDITH DAVIAU; and JOSEPH BARBOZA, Individually and as Representatives of a Class of Participants and Beneficiaries in and on Behalf of the BROWN UNIVERSITY DEFERRED VESTING RETIREMENT PLAN, and the BROWN UNIVERSITY LEGACY RETIREMENT PLAN, Plaintiffs,
BROWN UNIVERSITY in Providence in the State of Rhode Island and Providence Plantations, Defendant.
MEMORANDUM AND ORDER
William E. Smith Chief Judge
case is one of many, look-alike lawsuits filed nationwide by
current and former members of faculty and staff of private
(mainly elite) universities in which it is alleged that the
universities imprudently managed retirement accounts to the
detriment of their employee-plan participants. Plaintiffs
Diane G. Short, Samira Pardanani, Judith Daviau, and Joseph
Barboza (collectively, “Plaintiffs”), eligible
faculty and staff at Defendant Brown University
(“Brown” or “Defendant”), and vested
participants in one of Brown's two retirement plans, sue
individually and as representatives of a class of
participants and beneficiaries of the Brown University
Deferred Vesting Retirement Plan (“Deferred Vesting
Plan”) and the Brown University Legacy Retirement Plan
(“Legacy Plan”) (collectively,
“Plans”). Plaintiffs suggest they were
short-changed by Brown in saving for their retirement. More
precisely, Plaintiffs allege that Brown, as the Plans'
named fiduciary and plan administrator, has breached its
duties of prudence and loyalty contra to the Employee
Retirement Income Security Act of 1974 (“ERISA”),
29 U.S.C. §§ 1001-1461. Brown moves to dismiss (ECF
No. 21), suggesting Plaintiffs have not overcome the pleading
standard of Rule 12(b)(6) of the Federal Rules of Civil
Procedure. For the below reasons, Brown's Motion is
granted in part and denied in part.
plan-participants, bring this action, individually and on
behalf of a class of participants and beneficiaries of the
Plans, under 29 U.S.C. § 1132(a)(2) and (3). (Compl.
¶ 1, ECF No. 1.) Brown's Plans are defined
contribution, individual account, employee pension benefits
plans, defined under 29 U.S.C. § 1002(2)(A) and §
1002(34). (Id. ¶ 11.) The Plans, under which
eligible faculty and staff members at Brown may participate,
provide the principal source of retirement income for
Brown's employees and are premised on deferrals of
employee compensation and employer matching contributions.
(Id. ¶ 13.)
assets above $1 billion as of December 31, 2015, the Legacy
Plan constitutes a “Mega” plan. (Id.
¶¶ 14-15.) That Plan had 6, 325 participants as of
December 31, 2014, and a year later it had 4, 535
participants. (Id. ¶ 15.) With more than $244
million in assets as of December 31, 2015, 8, 054
participants as of December 31, 2014, and 9, 594 participants
one year later, the Deferred Vesting Plan qualifies as a
“Large” plan. (Id. ¶¶ 14-15.)
Brown, as the “Plan Administrator under 29 U.S.C.
§ 1002(16)(A)(i), ” and a named fiduciary pursuant
to section 402(a)(1) of ERISA, “is responsible for
day-to-day plan operations.” (Id. ¶ 21.)
Specifically, as Plan Administrator, Brown:
is vested with exclusive and complete responsibility and
discretionary authority to control the operation, management
and administration of the Plans, with all powers necessary to
enable it properly to carry out such responsibilities,
including the selection and compensation of the providers of
administrative services to the Plans and the selection,
monitoring, and removal of the investment options made
available to participants for the investment of their
contributions and provision of their retirement income.
(Id. ¶ 22.) For similar reasons, Brown is a
fiduciary to the Plans because it maintains discretionary
authority and/or control with respect to the Plans'
management, management and disposition of Plan assets, and
discretionary authority or responsibility in the Plans'
administration. (Id. ¶ 23.) Brown's Plans
are known as 403(b) retirement plans.
allege that Brown failed to fulfill its fiduciary duties
pursuant to ERISA. For example, according to Plaintiffs, on
or before December 31, 2014, the Legacy Plan “offered a
bewildering array of 175 investment options through Fidelity
Investments and offered an additional 24 investment options
through TIAA-CREF, which included numerous duplicative
investment choices (e.g., 9 target retirement date funds
offered by Fidelity Investments and 9 target retirement date
funds offered by TIAA CREF).” (Id. ¶
7(a).) As of December 31, 2015, the Legacy Plan offered 35
investment options through TIAA-CREF and 26 through Fidelity
Investments; those options continued to include duplicative
investment choices. (Id. ¶ 7(b).) On or before
December 31, 2014, similarly, the Deferred Vesting Plan
“offered a bewildering array of 177 investment options
through Fidelity Investments and offered an additional 26
investment options through TIAA-CREF.” (Id.
¶ 7(c).) As of that date, the Deferred Vesting Plan also
included many duplicative investment choices “and
dozens of highly specialized funds that lack diversification
and inappropriate for inclusion in a menu of investment
choices in a participant-directed individual account
plan.” (Id.) As of December 31, 2015, at least
35 investment options were offered through TIAA-CREF whereas
Fidelity Investments offered at least 26, which included
duplicative choices. (Id. ¶ 7(d).)
Specifically, both Plans offered the TIAA Traditional
Annuity, “a fixed annuity contract that returns a
contractually specified minimum interest
rate.” (Id. ¶ 29.) The Plans also
offered “variable annuities that invest in underlying
securities for a given investment style, ” including
the “CREF Stock Account, CREF Money Market Account,
CREF Inflation-Linked Bond Account, CREF Social Choice
Account, CREF Bond Market Account, CREF Global Equities
Account, CREF Growth Account, and CREF Equity Index
Account.” (Id. ¶ 31.) These
annuities' value fluctuated based on investment
performance and the accounts' expenses. (Id.)
Similarly offered was the TIAA Real Estate Account, a
TIAA-CREF maintained, insurance company separate account,
i.e., “an investment vehicle that aggregates assets
from more than one retirement plan for a given investment
strategy, but those assets are segregated from the insurance
company's general account assets.” (Id.
¶ 33.) What remains for the Plans' investment
options are various TIAA-CREF mutual funds, which
“charge varying amounts for investment management, but
also charge distribution, marketing, and other expenses,
depending on the type of investment and share class.”
(Id. ¶ 34.)
overcome a motion to dismiss under Rule 12(b)(6), a complaint
must possess sufficient facts “to state a claim for
relief that is plausible on its face.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “The
court must take all of the pleaded factual allegations in the
complaint as true, ” Foley v. Wells Fargo Bank,
N.A., 772 F.3d 63, 71 (1st Cir. 2014), and draw all
reasonable inferences in favor of the plaintiff. Riggs v.
Curran, 863 F.3d 6, 10 (1st Cir. 2017). “Barring
‘narrow exceptions,' courts tasked with this feat
usually consider only the complaint, documents attached to
it, and documents expressly incorporated into it.”
Foley, 772 F.3d at 71-72 (quoting Watterson v.
Page, 987 F.2d 1, 3 (1st Cir. 1993)). “[A] primary
purpose of a Rule 12(b)(6) motion is to weed out cases that .
. . based on the factual scenario on which the case rests,
the plaintiff could never win.” Id. at 72.
“[P]laintiffs are not required to submit evidence to
defeat a Rule 12(b)(6) motion, but need only sufficiently
allege in their complaint a plausible claim.”
at the motion-to-dismiss stage, “further record
development - and particularly input from those with
expertise in the arcane area of the law where ERISA's . .
. provisions intersect with its fiduciary duty requirements .
. . [is] essential to a reasoned elaboration of that which
constitutes a breach of fiduciary duty in this
context.” LaLonde v. Textron, Inc., 369 F.3d
1, 6 (1st Cir. 2004). “In factually complex ERISA cases
like the instant ones, dismissal is often
inappropriate.” Brotherston v. Putnam Invs.,
No. 15-13825-WGY, 2016 WL 1397427, at *1 (D. Mass. 2016);
see also Braden v. Wal-Mart Stores, Inc., 588 F.3d
585, 598 (8th Cir. 2009) (“No matter how clever or
diligent, ERISA plaintiffs generally lack the inside
information necessary to make out their claims in detail
unless and until discovery commences.”).
outset, because Plaintiffs expressly concede that Counts III
and IV do not survive Brown's Motion for lack of
standing, the Court dismisses those Counts. (See
Pls.' Opp'n to Mot. to Dismiss (“Pls.'
Opp'n”) 1 n.2 (“Plaintiffs do not oppose
dismissal of Counts III and IV . . . as Plaintiffs were not
borrowers under this loan program.”)). The Court's
discussion is therefore limited to Counts I and II. As to