108 F.4th 297
5th Cir.2024Background
- Plaintiffs (employees of TRDI) sued Plan Benefit Services, Inc. and affiliates ("FBG") for mismanagement of retirement and health benefit trusts (CERT & CPT) under ERISA, alleging excessive and self-dealing fees depleted employee benefits.
- FBG served as master sponsor and recordkeeper, controlling the deduction of fees from employer and employee plan contributions across hundreds of employer plans.
- Plaintiffs moved to certify a broad ERISA class for all persons in plans run through the CERT and CPT trusts within a defined time period.
- The district court certified two classes under Rule 23(b)(1) and (b)(3); certification was challenged by FBG on grounds of standing and propriety of class treatment given varying plans and fees.
- The Fifth Circuit reviewed both the question of plaintiffs’ Article III standing to represent absent class members and whether class certification under Rules 23(b)(1) or (b)(3) was proper, applying both standing and class certification approaches from national precedent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III Standing for Absent Class Members | Standing is established if named plaintiffs have the required injury; class aggregability is an issue for Rule 23, not standing. | Plaintiffs lack standing to represent individuals in different plans, with different fees, lacking direct injury. | Plaintiffs have standing under both "class certification" and "standing" approaches. |
| Statutory Standing under ERISA | Plaintiffs need only show individual statutory standing at initial stage; broader questions for Rule 23. | (Not challenged on appeal—deemed waived.) | Plaintiffs’ statutory standing accepted as district court found. |
| Certification under Rule 23(b)(1) (Mandatory) | Claims are sufficiently similar; differences in plans do not prevent joint adjudication; judgment would bind absent parties. | Significant differences among plans/fees; damages claims predominate, making mandatory class improper. | Rule 23(b)(1) certification reversed; damages dominate, opt-out right required. |
| Certification under Rule 23(b)(3) (Opt-Out) | Predominance and superiority satisfied: common issues about FBG’s fiduciary duties and fee practices apply to all. | Mini-trials on individual fee calculations/plan differences overwhelm common issues. | Rule 23(b)(3) certification affirmed; common issues predominate, formulaic damages possible. |
Key Cases Cited
- Sosna v. Iowa, 419 U.S. 393 (class standing requires named plaintiff to be a class member; certification then shifts to Rule 23 adequacy)
- Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147 (distinction between standing and Rule 23 analysis in discrimination cases)
- Blum v. Yaretsky, 457 U.S. 991 (standing limited to individuals subject to the same injury; no standing to challenge dissimilar conduct)
- Lewis v. Casey, 518 U.S. 343 (actual-injury standing requirement in the class context)
- Gratz v. Bollinger, 539 U.S. 244 ("same set of concerns" test for standing in broad education class)
- Langbecker v. Elec. Data Sys. Corp., 476 F.3d 299 (opt-out right crucial where monetary damages dominate ERISA class claims)
- Comcast Corp. v. Behrend, 569 U.S. 27 (damage calculations by model do not bar class certification if liability is common)
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (predominance requirement is more demanding than commonality)