Danielle Santomenno v. John Hancock Life Insurance Co
677 F.3d 178
| 3rd Cir. | 2012Background
- Participants in 401(k) plans allege John Hancock charged excessive fees on annuity contracts in funded funds under ERISA and ICA; district court dismissed ICA counts as derivative claims lacking ownership and ERISA counts for lack of pre-suit demand and trustee joinder.
- Dealings involved continuous ownership of John Hancock funds by Santomenno, K. Poley, and B. Poley at different times; ownership terminated before filing key complaints.
- Count VIII (ICA §36(b)) and IX (ICA §47(b)) were dismissed because participants allegedly lacked ongoing ownership or proper statutory basis, respectively.
- District Court held ERISA claims were derivative and required demand on trustees and joinder; dismissed Counts I–VII.
- Court notes ERISA provides broad remedies and does not require pre-suit demand or trustee joinder for suit by participants under §502(a)(2) and (a)(3).
- This appeal affirms ICA counts, vacates ERISA dismissal, and remands for proceedings on ERISA claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| ICA §36(b) standing requires continuous ownership | Santomenno contends no continuous-ownership requirement applies | John Hancock argues continuous ownership is required | Continuous ownership required; standing fails when ownership ends before filing or during suit |
| Existence of private right under ICA §47(b) to enforce §26(f) standards | §47(b) permits private action to enforce ICA standards via rescission | §47(b) does not create private rights; §36(b) governs private action | §47(b) does not create a private right; claim properly dismissed |
| Pre-suit demand and trustee joinder under ERISA §502(a)(2)/(a)(3) | ERISA §502(a) actions require no pre-suit demand or trustee joinder | District Court required demand/joinder under trust-based common law | ERISA allows §502(a)(2)/(a)(3) actions without pre-suit demand or trustee joinder; dismissal improper |
| Relation of Diduck v. Kaszycki to 502(a)(2)/(a)(3) claims | Diduck controls ERISA claims | Diduck does not apply to 502(a)(2)/(a)(3) claims | Diduck does not govern here; ERISA standing is broad and not demand-based |
| Remedy alignment for ERISA claims in light of remedial purpose | Remedies should be allowed to advance participants' protections | Restrictive standing/common-law limits apply | ERISA claims should be remanded for appropriate proceedings; ICA affirmed |
Key Cases Cited
- Daily Income Fund, Inc. v. Fox, 464 U.S. 523 (U.S. 1984) (derivative nature and ownership interests in recovery via company)
- Lewis v. Chiles, 719 F.2d 1044 (9th Cir. 1983) (continuous ownership concept in derivative actions)
- Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11 (U.S. 1979) (private rights action analysis; private remedies context)
- Rockwell International Corp. v. United States, 549 U.S. 457 (U.S. 2007) (jurisdictional amendments; amended pleadings)
- Sandoval v. Alexander, 532 U.S. 275 (U.S. 2001) (private rights creation must be by Congress)
- Olmsted v. Pruco Life Insurance Co. of New Jersey, 283 F.3d 429 (2d Cir. 2002) (KS 26(f) rights not rights-creating; investors focus)
- Kaufman v. Dreyfus Fund, Inc., 434 F.2d 727 (3d Cir. 1970) (standing tied to proprietary interest of shareholder)
- Diduck v. Kaszycki & Sons Contractors, Inc., 874 F.2d 912 (2d Cir. 1989) (did not apply to ERISA §502(a) claims; precedent differs)