United States District Court, S.D. Indiana, Indianapolis Division
MARY BELL, JANICE GRIDER, CINDY PROKISH individually and as representatives of a class of similarly situated persons of the Anthem 401k Plan formerly the WellPoint 401k Retirement Savings Plan, JOHN HOFFMAN, and PAMELA LEINONEN, Plaintiffs,
PENSION COMMITTEE OF ATH HOLDING COMPANY, LLC, ATH HOLDING COMPANY, LLC, and BOARD OF DIRECTORS OF ATH HOLDING COMPANY, LLC, Defendants. VANGUARD GROUP, INC., Interested Party.
ENTRY ON PENDING MOTIONS
WALTON PRATT, JUDGE
matter is before the Court on a Motion for Class
Certification filed by Plaintiffs Mary Bell
(“Bell”), Janice Grider (“Grider”),
Cindy Prokish (“Prokish”), John Hoffman
(“Hoffman”), and Pamela Leinonen
“Plaintiffs”). (Filing No. 117.) Defendants are
fiduciaries of the Anthem 401(k) Plan (“the
Plan”). Plaintiffs allege that Defendants Pension
Committee of ATH Holding Company, LLC (“the Pension
Committee”), ATH Holding Company, LLC
(“ATH”), and Board of Directors of ATH Holding
Company, LLC, (“the Board”) (collectively,
“Defendants”) breached their fiduciary duties by
causing Plaintiffs' retirement plan to pay excessive
investment and management fees to Vanguard Group, Inc.
(“Vanguard”), and also invested in an imprudent
money market fund, resulting in tens of millions of dollars
of Plan losses. Plaintiffs seek to represent two classes for
the alleged breaches of fiduciary duty: 1) the Administrative
and Investment Management Fee Class and 2) the Money Market
before the Court is Defendants' Motion for Leave to File
a Supplemental Brief in Support of Their Opposition to
Plaintiffs' Motion for Class Certification, (Filing No.
189) and Plaintiffs' Motion for Leave to Respond to
Defendants' Proposed Supplemental Brief, (Filing No.
201). These two motions are granted. For the reasons set
forth below, Plaintiffs Motion to Certify the Investment and
Management Class is denied, and
Plaintiffs' Motion to Certify the Money Market Class is
Plan is a defined contribution plan within the meaning of the
Employee Retirement Income Security Act of 1974
(“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, with over $5.1 billion in total assets. 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 and former
participants of the Plan. The Pension Committee is appointed
by the Board, and serves as the Plan's administrator
which entails responsibility for the control, management, and
administration of the Plan's investment options.
select and determine the available investment options offered
in the Plan. (Filing No. 87 at 7.) These decisions are made
at the Plan level, therefore the available options and the
associated expenses are the same for all Plan participants.
The Plan offers three tiers of investment options: 1) Tier 1,
the Target Date Funds; (2) Tier 2, the Core Funds; and Tier
3, the Vanguard Brokerage Option. (Filing No. 123 at 10.) The
Plan's investment options vary based on risk and return
profiles. Vanguard is the Plan's recordkeeper, and the
Plan pays Vanguard investment management fees which are
deducted from participants' accounts on a pro rata basis,
based on each fund's “expense ratio”-a
percentage of a fund's assets charged for “expenses
that reduce the rate of return of the investment
option.” (Filing No. 38-3 at 6.) Until 2013, Defendants
compensated Vanguard for its administrative services
(primarily recordkeeping) through revenue sharing payments
from the Plan's mutual funds, paid through a portion of
the Plan's mutual funds expense ratios. (Filing No. 87 at
30.) Effective July 22, 2013, Defendants charged a flat
annual recordkeeping fee of $42.00 to each participant's
account with a balance over $1, 000.00. (Filing No. 38-4 at
March 23, 2017, this Court denied in part and granted in part
Defendants' Motion to Dismiss. (Filing No. 80 at 2.) The
Court dismissed Plaintiffs' claim regarding the Vanguard
Prime Money Market Fund (the “Money Market Fund”)
without prejudice. Plaintiffs then filed the operative Second
Amended Complaint, which provides additional facts supporting
the Money Market Fund claim. (See Filing No. 87 at 82-85.)
Plaintiffs summarize their allegations against Defendants,
contained in the Second Amended Complaint as the following:
1) Defendants provided investment options charging
unreasonable management fees compared to available superior
institutional investment products; 2) Defendants failed to
monitor and control the excessive administrative expenses
paid to Vanguard; 3) Defendants provided the Money Market
Fund as the Plan's sole capital preservation option even
though it did not provide any meaningful retirement benefits;
and 4) Defendants failed to prudently and regularly monitor
the Money Market Fund. (Filing No. 118 at 4-5.) Plaintiffs
seek certification of the following classes:
Administrative Fee and Investment Management Fee
Class All participants and beneficiaries of the
Anthem 401(k) Plan (formerly the WellPoint 401(k) Retirement
Savings Plan) from December 29, 2009 through the date of
judgment, excluding the Defendants.
Money Market Fund Class All participants and
beneficiaries of the Anthem 401(k) Plan (formerly the
WellPoint 401(k) Retirement Savings Plan) who, from December
29, 2009 through the date of judgment, excluding the
Defendants, invested in the Vanguard Money Market Fund.
Id. at 5.
certify a plaintiff class under Federal Rule of Civil
Procedure 23, the Plaintiffs must first satisfy all four
elements of Rule 23(a) by demonstrating that: (1) the class
is too numerous to join all members; (2) there are questions
of law or fact common to the class; (3) the claims or
defenses of representative parties are typical of those of
the class members; and (4) the representative parties will
fairly and adequately represent the class. As the Seventh
Circuit has noted, plaintiffs must satisfy the trial court,
“after a rigorous analysis, ” that the
prerequisites of Rule 23(a) have been satisfied. Davis v.
Hutchins, 321 F.3d 641, 649 (7th Cir. 2003) (quoting
General Tel. Co. of S.W. v. Falcon, 457 U.S. 147,
160-61 (1982)). If these requirements are met, plaintiffs
must also satisfy at least one subsection of Rule 23(b).
Rule 23(b)(1) provides for a non-opt-out class action where
individual actions could ‘establish incompatible
standards of conduct for the party opposing the class' or
‘as a practical matter, would be dispositive of the
interests of the other members of the class' or 
‘would be dispositive of the interests of the other
members not parties to the individual adjudications.'
Spano v. Boeing Co., 294 F.R.D. 114, 119 (S.D. Ill.
2013) (quoting Fed.R.Civ.P. 23(b)(1)). Rule 23(b)(3) applies
if the court finds “that the questions of law or fact
common to class members predominate over any questions
affecting only individual members, and that a class action is
superior to other available methods for fairly and
efficiently adjudicating the controversy.” Fed R. Civ.
parties seeking class certification bear the burden of proof
in establishing each of the requirements under Rule 23.
Susman v. Lincoln Am. Corp., 561 F.2d 86, 90 (7th
Cir. 1977). The failure to satisfy any one of these elements
precludes certification. Retired Chi. Police Ass'n v.
City of Chi., 7 F.3d 584, 596 (7th Cir. 1993). In
deciding whether to certify a class, the court is not
required to accept the allegations in the complaint as true.
The court should make any factual and legal inquiries needed
to ensure that the requirements for class certification are
satisfied, even if the underlying considerations overlap with
the merits of the case. Szabo v. Bridgeport
Machines, Inc., 249 F.3d 672, 676 (7th Cir.
2001); In re Bromine Antitrust Litigation, 203
F.R.D. 403, 407 (S.D. Ind. 2001). In evaluating class
certification, the court must take into consideration the
substantive elements of plaintiff's cause of action,
inquire into the proof necessary for the various elements,
and envision the form that trial on the issues would take.
Cima v. WellPoint Health Networks, Inc., 250 F.R.D.
374, 377 (S.D. Ill. 2008).
this analysis, the court bears in mind that a principal
purpose of class certification is to save the resources of
both the courts and the parties by permitting an issue
potentially affecting every class member to be litigated in
an economical manner. See Falcon, 457 U.S. at 155.
In doing so, Rule 23 gives the district courts “broad
discretion to determine whether certification of a
class-action lawsuit is appropriate.” Arreola v.
Godinez, 546 F.3d 788, 794 (7th Cir. 2008) (internal
quotation omitted). That said, “similarities of claims
and situations must be demonstrated rather than
assumed.” Szabo, 249 F.3d at 677. “The
propriety of class treatment thus will turn on the
circumstances of each case.” Spano v. The Boeing
Co., 633 F.3d 574, 582 (7th Cir. 2011).
referenced earlier, Plaintiffs seek to certify an
Administrative Fee and Investment Management Fee Class (the
“Fee Class”) and a Money Market Fund Class
(“Money Market Fund Class”). The Court will
discuss the proposed classes in turn.
Class is defined as: “All participants and
beneficiaries of the Anthem 401(k) Plan (formerly the
WellPoint 401(k) Retirement Savings Plan) from December 29,
2009 through the date of judgment, excluding the
Defendants.” (Filing No. 118 at 5.) Defendants contend
that Plaintiffs cannot satisfy all of the requirements of
Rule 23(a). Specifically, relying on the Seventh
Circuit's Spano decision, Defendants argue that
Plaintiffs cannot show the third and fourth requirements:
typicality and adequacy. (Filing No. 123 at 18.) Plaintiffs
respond that “the class is properly defined to include
all Plan participants, because all participants contributed
to the fees.” (Filing No. 136 at 2).
23(a)(1) provides that the class must be so “numerous
that joinder of all the members is impracticable.”
Fed.R.Civ.P. 23(a)(1). “Generally, where the membership
of the proposed class is at least 40, joinder is
impracticable and the numerosity requirement is met.”
Gentry v. Floyd Cty.,313 F.R.D. 72, 77 (S.D. Ind.
2016), on reconsideration in part, No. 4:14-CV-00054-RLY-TAB,
2016 WL 4088748 (S.D. Ind. July 25, 2016) (citation omitted).
Plaintiffs represent that the Fee Class includes all