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Bell v. Pension Committee of ATH Holding Co., LLC

United States District Court, S.D. Indiana, Indianapolis Division

March 23, 2017

MARY BELL, JANICE GRIDER, CINDY PROKISH, JOHN HOFFMAN, and PAMELA LEINONEN, individually and as representatives of a class of similarly situated persons of the Anthem 401(k) Plan (formerly the WellPoint 401(k) Retirement Savings Plan), Plaintiffs,
v.
PENSION COMMITTEE OF ATH HOLDING COMPANY, LLC, ATH HOLDING COMPANY, LLC, BOARD OF DIRECTORS OF ATH HOLDING COMPANY, LLC, JOHN DOES 1-40, Defendants.

          ENTRY ON MOTION TO DISMISS

          TANYA WALTON PRATT, JUDGE.

         Before the Court is a Motion to Dismiss filed by Defendants ATH Holding Company, LLC (“ATH”), ATH's Board of Directors (“Board”), and ATH's Pension Committee (“Pension Committee”) (collectively, “Defendants”), pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendants are fiduciaries of the Anthem 401(k) Plan[1] (“Plan”). On March 16, 2016, Plaintiffs Mary Bell, Janice Grider, Cindy Prokish, John Hoffman, and Pamela Leinonen, individually and as representatives of a class of similarly situated persons of the Plan (collectively, “Plaintiffs”), filed an Amended Complaint against the Defendants under the Employee Retirement Income Security Act (“ERISA”), alleging breach of fiduciary duty for unreasonable investment management fees, breach of fiduciary duty for unreasonable administrative fees, breach of fiduciary duty for failure to evaluate and monitor the Plan's investments, failure to monitor fiduciaries, and refusal to supply requested information. (Filing No. 23.) Defendants now seek to dismiss Plaintiffs' Amended Complaint as meritless, untimely, and inadequately pled. (Filing No. 37.) For the following reasons, the Court grants in part and denies in part Defendants' Motion to Dismiss.

         I. BACKGROUND

         The following facts are undisputed. The Plan is a defined contribution plan within the meaning of ERISA. See 29 U.S.C. § 1002(34). The Plan is sponsored by ATH and, as of December 31, 2014, is one of the largest 401(k) plans in the United States. It provides retirement income for employees of ATH and any direct or indirect subsidiary of the company that has been offered the Plan. The retirement benefits are limited to the value of an employee's account, which depends upon employee and employer contributions, as well as investment options' fees and expenses. Plaintiffs are current or former participants of the Plan.

         The Pension Committee serves as the Plan's administrator and is responsible for selecting, monitoring, and removing Plan investment options available to participants. As of December 31, 2014, Defendants offered twenty-six investment options, including: eleven Vanguard mutual funds[2], twelve Vanguard target date funds, two non-Vanguard mutual funds[3], and an Anthem, Inc. common stock fund. (Filing No. 23 at 8-9.) In connection with the administration of the Plan, the fiduciaries hired the Vanguard Group, Inc. (“Vanguard”) to serve as the record keeper to the Plan. Vanguard's duty is to keep track of each individual participant's account, contributions, distributions, gains and losses, as well as handling communications with participants. Vanguard's recordkeeping fees are paid from the Plan's assets.

         On July 22, 2013, to lower expense ratios, the Plan restructured the investments offered to participants and replaced the higher-cost share classes with their lower-cost versions. (Filing No. 23 at 13-14.) For instance, prior to restructuring, the Plan's two non-Vanguard mutual fund options-the Artisan Mid Cap Value Fund and the Touchstone Sands Capital Select Growth Fund-amounted to 120 bps[4] (1.2%), and 103 bps (1.03%), respectively. After the Plan's restructuring, the price of the two non-Vanguard mutual fund options decreased to 95 bps (.95%) and 79 bps (.79%), respectively. The Plan also changed the handling of fees. Previously, participants were charged approximately eighty to ninety-four dollars annually to compensate Vanguard's recordkeeping fees. As of September 30, 2013, the recordkeeping fees billed at a flat rate of forty-two dollars per participant per year for anyone with an account balance over $1, 000.00. Participants with an account balance under $1, 000.00 did not pay a recordkeeping fee.

         On October 5 and October 27, 2015, approximately two years after Defendants restructured the Plan, Plaintiffs sent letters requesting Plan information from the Pension Committee. The Pension Committee, however, refused to accept Plaintiffs' letters and the letters were returned to Plaintiffs' counsel. Thereafter, on March 16, 2016, Plaintiffs filed a five count Amended Complaint alleging, from December 29, 2009 through July 22, 2013, Defendants breached their fiduciary duties under ERISA. Under Count I of the Amended Complaint, Plaintiffs assert that Defendants breached their fiduciary duty by causing the Plan to pay unreasonable investment management expenses in violation of 29 U.S.C. § 1104(a)(1)(A), (B). Count II states that Defendants breached their fiduciary duty by causing the Plan to pay unreasonable administrative expenses. Count III alleges that Defendants breached their fiduciary duty by providing a money market investment, while failing to prudently consider a stable value fund. Count IV asserts that Defendants failed to properly monitor and remove fiduciaries. Lastly, Count V states that Defendants failed to supply Plan information upon request in violation of 29 U.S.C. §1132(c)(1). (Filing No. 23.)

         Defendants now move to dismiss Plaintiffs' Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), asserting that Plaintiffs' claims are meritless, untimely, and inadequately pled. (Filing No. 37.)

         II. LEGAL ANALYSIS

         Federal Rule of Civil Procedure 12(b)(6) authorizes a defendant to move to dismiss a complaint that fails to “state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). When deciding a motion to dismiss under Rule 12(b)(6), the court construes the complaint in the light most favorable to the plaintiff, accepts all factual allegations as true, and draws all reasonable inferences in favor of the plaintiff. Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008). However, courts “are not obliged to accept as true legal conclusions or unsupported conclusions of fact.” Hickey v. O'Bannon, 287 F.3d 656, 658 (7th Cir. 2002).

         While a complaint need not include detailed factual allegations, a plaintiff has the obligation to provide the factual grounds supporting his entitlement to relief; and neither bare legal conclusions nor a formulaic recitation of the elements of a cause of action will suffice in meeting this obligation. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Stated differently, the complaint must include “enough facts to state a claim to relief that is plausible on its face.” Hecker v. Deere & Co., 556 F.3d 575, 580 (7th Cir. 2009) (citation and quotation marks omitted). To be facially plausible, the complaint must allow “the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556).

         III. ERISA FIDUCIARY STANDARDS

         ERISA imposes general standards of loyalty and prudence that require fiduciaries to act solely in the interest of plan participants and to exercise their duties with the “care, skill, prudence, and diligence” of an objectively prudent person. 29 U.S.C. § 1104(a)(1). Section 1104 specifically states:

a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and-[]for the exclusive purpose of: (i) providing benefits to participants and their beneficiaries; and (ii) defraying reasonable expenses of administering the plan;…with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.

29 U.S.C. § 1104(a)(1)(A), (B). Additionally, § 1105(a) provides that one fiduciary may be liable for breaches of fiduciary duty committed by another fiduciary under specified circumstances.

         Although ERISA normally imposes a fiduciary duty, the statute provides a safe harbor and modifies that rule for plans that provide for individual accounts and allows a participant or beneficiary “to exercise control over the assets in his account.” 29 U.S.C. § 1104(c)(1). In order for the safe harbor to apply, the participant must: 1) have the right to exercise independent control over the assets; 2) be able to choose from an array of investment options; and 3) be given or have the opportunity to obtain “sufficient information to make informed decisions with regard to investment alternatives available under the plan.” Hecker v. Deere & Co., 556 F.3d 575, 587 (7th Cir. 2009) (quoting 29 C.F.R. § 2550.404c-1(b)(2)(i)(B)).

         IV. DISCUSSION

         Defendants move to dismiss Plaintiffs' Amended Complaint, contending that Plaintiffs failed to state a claim upon which relief can be granted. Defendants also assert that Plaintiffs' ...


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