Chavez v. Plan Benefit Services, 77 F.4th 370

Background

FBG administered two multi-employer conduits: the Contractors Plan Trust (CPT) for health/welfare and the Contractors and Employee Retirement Trust (CERT) for retirement, under Master Trust Agreements that allowed FBG to set and deduct fees and direct trustees.
Plaintiffs (employees of TRDI) allege FBG deducted excessive fees (including indirect/self-payments), depleting individual accounts and trusts and providing little or no retirement funding, in violation of ERISA fiduciary duties.
Plaintiffs sued under ERISA seeking disgorgement, restitution to the trusts, and injunctive relief; the district court certified two nationwide classes of CPT and CERT participants and beneficiaries under Rules 23(b)(1)(B) and (b)(3).
This Court previously vacated and remanded for a more rigorous Rule 23 analysis; on remand the district court recertified large classes (hundreds of thousands of participants) and FBG appealed, challenging constitutional/statutory standing and the Rule 23(b)(1)(B) and (b)(3) certifications.
The Fifth Circuit affirmed: Plaintiffs have Article III standing to represent the class under multiple analytical approaches, and the district court did not abuse its discretion in certifying the class under either Rule 23(b)(1)(B) or Rule 23(b)(3).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Standing to represent class members from plans plaintiffs did not personally participate in	Plaintiffs: their injuries (mismanagement/self-dealing that depleted trusts and accounts) are concrete, traceable to FBG, and redressable; once named plaintiffs show individual standing, class-representation issues belong in Rule 23 inquiry.	FBG: named plaintiffs lack Article III standing to litigate harms they did not personally suffer (different plans, employers, fees); class aggregation cannot create standing in gross.	The court held plaintiffs have Article III standing under both the "class certification" and more stringent "standing" approaches.
Whether Rule 23(b)(1)(B) certification was proper	Plaintiffs: common issues (FBG’s fiduciary role, trust mismanagement, disgorgement) will have dispositive/preclusive effects on absent members; injunctive relief and trust-wide disgorgement affect whole class.	FBG: class involves widely varying plans and fees; certification would inappropriately bind absent members and rest on mere stare decisis/precedent concerns.	The court held district did not abuse discretion certifying under 23(b)(1)(B); it considered preclusive effect alongside other factors (uniform fee structures, equitable relief, disgorgement).
Whether Rule 23(b)(3) predominance is met given plan differences and individualized damages	Plaintiffs: central common legal issues (FBG’s fiduciary status and breach) predominate; damages can be computed by formula/statistical methods; superiority satisfied.	FBG: individualized functional-fiduciary inquiries and fee reasonableness will predominate, producing mini-trials (citing Teets).	The court held predominance satisfied: common questions (fiduciary duty, breach, causation) dominate and damages methods can address individual amounts; no abuse of discretion.
Due process concerns about litigating liability/statutory damages using statistical/formulaic proof	Plaintiffs: a common arithmetic/formulaic method can fairly determine class-wide liability and individual damages without violating due process.	FBG: statistical proof deprives FBG of ability to defend against each individualized fee as excessive.	The court rejected a due process violation: Supreme Court and circuit precedent permit classwide models that match the liability theory; individualized damage differences do not bar certification.

Key Cases Cited

Chavez v. Plan Benefit Servs., Inc., 957 F.3d 542 (5th Cir. 2020) (earlier panel vacated and remanded for more rigorous Rule 23 analysis)
Angell v. Geico Advantage Ins. Co., 67 F.4th 727 (5th Cir. 2023) (analyzed both "standing" and "class certification" approaches to disjuncture issue)
Fallick v. Nationwide Mut. Ins. Co., 162 F.3d 410 (6th Cir. 1998) (class-certification approach: named-plaintiff standing may end the Article III inquiry before Rule 23 analysis)
Sosna v. Iowa, 419 U.S. 393 (1975) (Article III standing precedes and then shifts focus to Rule 23 adequacy/commonality)
General Tel. Co. v. Falcon, 457 U.S. 147 (1982) (Rule 23 commonality analysis distinguishes appropriate class scope)
Blum v. Yaretsky, 457 U.S. 991 (1982) (standing approach: plaintiff cannot litigate materially different kinds of injuries)
Lewis v. Casey, 518 U.S. 343 (1996) (remedies must be limited to inadequacy that caused the named plaintiff’s injury)
Gratz v. Bollinger, 539 U.S. 244 (2003) (allows broader class when injuries implicate similar concerns)
TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021) (named plaintiffs must demonstrate Article III standing for each claim and form of relief)
Spokeo, Inc. v. Robins, 578 U.S. 330 (2016) (injury must be concrete and particularized)
Comcast Corp. v. Behrend, 569 U.S. 27 (2013) (a damages model must measure damages attributable to the class’s theory of liability)
Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999) (caution about mandatory (b)(1)(B) classes and opt-in consequences)