898 F.3d 820
8th Cir.2018Background
- Plaintiff John Meiners sued Wells Fargo and related defendants under ERISA for breach of fiduciary duty, challenging the Plan’s inclusion and use of Wells Fargo proprietary target date funds (Wells Fargo TDFs).
- The Plan offered over two dozen options, including twelve Wells Fargo TDFs; Meiners alleged these funds charged higher fees and underperformed comparable Vanguard and Fidelity funds.
- Claims: (I) breach of loyalty and prudence by the Benefit Committee, (II) co-fiduciary breach by HR Committee members, and (III) knowing participation by Wells Fargo—each alleging defendants retained and defaulted participants into affiliated, costly, underperforming funds to generate fees/seed funds.
- District court dismissed for failure to state a claim under Fed. R. Civ. P. 12(b)(6); Meiners appealed. The Eighth Circuit reviewed de novo.
- The court required a meaningful benchmark or factual predicate showing the Wells Fargo TDFs were an imprudent choice before inferring improper motives; mere existence of a cheaper or better‑performing alternative was insufficient.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Wells Fargo TDFs were an imprudent plan option | Meiners: TDFs were more expensive and underperformed Vanguard/Fidelity comparators, so retention was imprudent | Wells Fargo: Complaint lacks plausible factual allegations and a meaningful benchmark to show imprudence | Held: Dismissed—complaint fails to plead a plausible imprudent choice; single better‑performing fund is not a meaningful benchmark |
| Whether defendants acted from improper motives (seeding/fee generation) | Meiners: retention and defaulting into affiliated funds shows self‑interest and seeding | Wells Fargo: No plausible factual predicate tying retention to unlawful motives; lawful explanations equally plausible | Held: Dismissed—no plausible inference of unlawful motive without showing imprudence |
| Sufficiency of pleading to permit discovery | Meiners: allegations viewed as a whole support inference of fiduciary breach and justify discovery | Wells Fargo: Plaintiff must allege facts concrete enough to warrant costly discovery; bald allegations insufficient | Held: Dismissed—plaintiff failed to meet the pleading threshold to proceed to discovery |
| Use of materials outside the complaint in dismissal analysis | Meiners: district court improperly relied on outside materials regarding comparators | Wells Fargo: courts may consider materials embraced by the pleadings | Held: Court may consider such materials where necessarily embraced; dismissal still proper on pleadings ground |
Key Cases Cited
- Braden v. Wal‑Mart Stores, Inc., 588 F.3d 585 (8th Cir.) (ERISA fiduciary duty pleading requires meaningful benchmark; totality of allegations matters)
- Iqbal v. Ashcroft, 556 U.S. 662 (pleading must state a plausible claim; legal conclusions insufficient)
- Twombly v. Bell Atlantic Corp., 550 U.S. 544 (plausibility standard for complaints; labels and conclusions inadequate)
- Tussey v. ABB, Inc., 850 F.3d 951 (8th Cir.) (existence of a better‑performing fund does not by itself show imprudence)
- Pension Benefit Guar. Corp. v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705 (2d Cir.) (ERISA plaintiffs face informational asymmetry; must plead factual predicate to permit inference of breach)
- Hecker v. Deere & Co., 556 F.3d 575 (7th Cir.) (reasonableness of fees assessed by total fee, not internal allocations)