250 F. Supp. 3d 460
N.D. Cal.2017Background
- Plaintiffs are current and former participants in the Fujitsu Group Defined Contribution and 401(k) Plan (a >$1 billion “mega-plan”) who allege imprudent fiduciary conduct by Fujitsu (plan sponsor/administrator) and Shepherd Kaplan (named investment fiduciary/plan designer).
- Plaintiffs claim the Plan paid unusually high fees (recordkeeping and fund share-class fees), used expensive custom target-date funds with poor underlying investments, and paid Fujitsu substantial payments for overseeing the Plan.
- Plaintiffs allege Fujitsu failed to obtain lower‑cost share classes, failed to investigate alternatives, and failed to monitor or remove imprudent investments and Shepherd Kaplan appointees.
- Plaintiffs filed a class action and amended their complaint; defendants moved to dismiss for failure to state a claim and for limitations/standing defects. The magistrate judge considered only the FAC and denied judicial notice of extra‑record materials.
- The court denied both motions to dismiss, holding the FAC plausibly alleges ERISA fiduciary breaches and monitoring failures and that limitations/standing arguments raise factual issues more appropriate for later stages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Statute of limitations | Claims fall within six‑year accrual; plaintiffs only investigated documents after late‑2015 | Three‑year limitations applies because plaintiffs had actual knowledge via public filings (Form 5500s) | Court declines to resolve factual knowledge issue at Rule 12; allows claims under six‑year tolling to proceed |
| Standing for unchosen funds | Named plaintiffs have standing; class‑certification approach resolves representative standing later | Lack of standing to challenge funds plaintiffs did not select | Court applies class‑certification approach (Melendres): named plaintiffs' standing suffices for now; class issues reserved for certification |
| Sufficiency of fiduciary breach pleadings (Fujitsu) | Plaintiffs allege imprudent process, excessive fees, failure to monitor/remove imprudent investments and service providers | Defendants: allegations insufficient as matter of law; actions were prudent | Court finds factual allegations (high fees, poor design, failure to consider alternatives/monitoring) plausible under ERISA; denies dismissal |
| Shepherd Kaplan liability duration and merits | Plaintiffs allege ongoing harm from Shepherd Kaplan’s design/management of custom target‑date funds | Shepherd Kaplan: liability should end when terminated July 31, 2015; disputes start date of engagement | Court rejects truncating liability at this stage given FAC alleges continuing harm; denies dismissal |
Key Cases Cited
- Navarro v. Block, 250 F.3d 729 (9th Cir.) (standard for Rule 12(b)(6) review)
- Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336 (9th Cir.) (construing allegations in light most favorable to non‑movant)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for complaints)
- Ashcroft v. Iqbal, 556 U.S. 662 (application of Twombly plausibility principles)
- Tibble v. Edison Int’l, 135 S. Ct. 1823 (2015) (continuing duty to monitor and trust‑law prudence principles under ERISA)
- Pegram v. Herdrich, 530 U.S. 211 (ERISA incorporates duties of loyalty and prudence)
- Melendres v. Arpaio, 784 F.3d 1254 (9th Cir.) (class‑certification approach to standing)
- Ziegler v. Connecticut Gen. Life Ins. Co., 916 F.2d 548 (9th Cir.) (actual‑knowledge inquiry is factual)
- Johnson v. Couturier, 572 F.3d 1067 (9th Cir.) (ERISA fiduciary duties and prohibition on self‑dealing)