CAJOECO, LLC v. BENEFIT PLANS ADMINISTRATION SERVICES, INC., 2:17-cv-07551

Background

Norman and Carmen Mais (and Cajoeco LLC) operated pension/profit-sharing plans (the Jest Plan and later the Cajoeco Plan); Jeffrey Schreiber (an enrolled actuary employed by CAI Benefits/BPAS) and those firms provided plan administration, actuarial, and recordkeeping services.
From 2004–2014 Norman Mais used plan funds allocated to his account to invest in a restaurant venture (Bensi); defendants prepared plan documents, Form 5500s, valuations, and established segregated accounts to reflect those investments.
Plaintiffs sued defendants for breach of ERISA fiduciary duties, alleging defendants were functional fiduciaries who provided investment advice and exercised control over plan assets; defendants moved for summary judgment arguing they were not fiduciaries and, alternatively, that 29 U.S.C. § 1104(c) shields losses from participant-directed investments.
The record showed Mais, as trustee/administrator, directed and made the Bensi investments and that defendants performed routine ministerial/administrative tasks and limited advice about how to route/record the investments.
The Court concluded defendants did not exercise discretionary authority nor meet the DOL five‑factor test for investment‑advice fiduciaries, granted summary judgment for defendants, and dismissed defendants’ counterclaim for mootness/failure to state a claim.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether defendants were ERISA "functional fiduciaries" under 29 U.S.C. § 1002(21)(A)	Defendants acted as de facto plan administrators and regularly provided investment advice and valuation/control over plan assets (thus assumed fiduciary duties).	Defendants were third‑party administrators performing ministerial tasks (reports, filings, valuations); they had no discretionary authority or control and did not render individualized investment advice on a regular basis.	Court: Not fiduciaries. Services were ministerial; plaintiffs failed to show discretionary authority or that all five DOL factors for investment‑advice fiduciary status were met.
Whether defendants rendered investment advice sufficient to create fiduciary status (DOL five‑factor test)	Defendants regularly advised on investing rollovers, segregating accounts, and handling Bensi investments and were relied upon as primary source of information.	Any communications were advice about rights/options or administrative steps; Mais sourced the investment opportunity and made decisions himself so defendants’ input was not the primary basis for investment decisions.	Court: Plaintiffs did not satisfy the five factors; defendants were not investment‑advice fiduciaries.
Applicability of ERISA § 404(c) (participant‑directed investment defense)	Plaintiffs argued fiduciary breach not excused.	Defendants argued § 404(c) would bar fiduciary liability if participant exercised control.	Court: Did not reach § 404(c) because defendants were not fiduciaries; grant of summary judgment established.
Sufficiency of defendants’ counterclaim alleging plaintiffs (plan fiduciaries) negligently selected Bensi investments	N/A (counterclaim)	Counterclaim alleges plaintiffs were fiduciaries and negligently selected investments.	Court: Counterclaim dismissed for mootness and failure to state a claim (parties offered no argument/support).

Key Cases Cited

Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (summary judgment and genuine‑issue standard)
Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (movant’s and nonmovant’s burdens on summary judgment)
Painters of Philadelphia Dist. Council No. 21 Welfare Fund v. Price Waterhouse, 879 F.2d 1146 (3d Cir. 1989) (DOL interpretive guidance on when advisors/consultants are fiduciaries; deference to DOL)
Confer v. Custom Engineering Co., 952 F.2d 34 (3d Cir. 1991) (TPA performing day‑to‑day administrative duties not necessarily a fiduciary)
Board of Trustees v. Wettlin Associates, Inc., 237 F.3d 270 (3d Cir. 2001) (TPA can be fiduciary where contract delegates significant discretion)
Santomenno ex rel. John Hancock Trust v. John Hancock Life Ins. Co., 768 F.3d 284 (3d Cir. 2014) (all five DOL factors required to find investment‑advice fiduciary)
Thomas, Head & Greisen Emps. Trust v. Buster, 24 F.3d 1114 (9th Cir. 1994) (DOL five‑factor framework for investment‑advice fiduciary status)
Reich v. McManus, 883 F. Supp. 1144 (N.D. Ill. 1995) (example where advisors were found fiduciaries given exclusive reliance and control)