Maria Karla Terraza v. Safeway Inc., 4:16-cv-03994

Background

Plaintiff Maria Karla Terraza sued Safeway’s 401(k) plan fiduciaries and Aon Hewitt (Aon), alleging breaches of ERISA fiduciary duties in selecting, retaining, and monitoring certain Plan investment options.
The Second Amended Complaint (filed March 31, 2017) first named Aon; Aon moved for summary judgment arguing timeliness, lack of imprudence/process, lack of causation, and that Terraza failed to proceed properly in a representative capacity.
The Court applied ERISA’s fiduciary prudence standard (duty of care and continuing monitoring), emphasizing that prudence is a fact-intensive, conduct-focused inquiry and that monitoring claims can be timely under Tibble.
The Court held Aon is entitled to summary judgment for alleged conduct before March 31, 2011 (including Aon’s role in selecting the Wells Fargo fund in Jan. 2011 and claims regarding JP Morgan SmartRetirement PassiveBlend TDFs), because those claims do not relate back under Rule 15(c).
The Court denied summary judgment as to Aon’s monitoring and retention of several other funds (Interest Income Fund, SSgA S&P 500 Index Fund, Wells Fargo Strategic Large Cap Growth Fund apart from Jan. 2011 selection, RS Partners Fund, Chesapeake Core Growth Fund) finding triable issues of fact on prudence and monitoring.
The Court found Terraza raised triable issues on causation (expert testimony and proposed alternative investments) and rejected Aon’s contention that Terraza cannot seek relief on behalf of the Plan absent class certification.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Timeliness / Relation back (pre-3/31/2011 conduct)	Terraza: Aon was co‑fiduciary and on notice; late naming resulted from discovery; claims relate back.	Aon: ERISA six‑year statute of repose bars claims before 3/31/2011; Rule 15(c) relation‑back not satisfied.	Court: No relation back; summary judgment for Aon as to conduct before 3/31/2011 (including Jan. 2011 Wells Fargo and JP Morgan TDF allegations).
Prudence of Aon’s process (selection/monitoring)	Terraza: Aon failed to conduct a prudent monitoring process and consistently advised retaining underperforming/high‑fee funds.	Aon: No evidence of an imprudent process; decisions were reasonable.	Court: Fact issues exist for multiple funds (Interest Income, SSgA S&P 500, Wells Fargo monitoring, RS Partners, Chesapeake) — summary judgment denied on those.
Causation / Losses to the Plan	Terraza: Expert shows imprudent monitoring and identifies reasonable alternative funds that would have reduced losses.	Aon: Terraza cannot link fiduciary breaches to plan losses; urges stricter "objective imprudence" standard.	Court: Terraza provided sufficient evidence to create a triable issue on causation; rejects adopting an objective‑imprudence rule from Dudenhoeffer.
Representative capacity / relief to Plan	Terraza: Seeks relief on behalf of the Plan under 29 U.S.C. § 1132(a)(2); requests losses be returned to the Plan.	Aon: Terraza must move for class certification or take other steps to protect absent participants before pursuing plan‑wide relief.	Court: Denied Aon’s challenge; plaintiff may pursue plan relief without prior Rule 23 certification and court can ensure protections (citing Stanton).

Key Cases Cited

Fresno Motors, LLC v. Mercedes Benz USA, LLC, 771 F.3d 1119 (9th Cir. 2014) (summary judgment standard and material fact inquiry)
Anderson v. Liberty Lobby, 477 U.S. 242 (U.S. 1976) (genuine dispute and summary judgment principles)
Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (party opposing summary judgment must produce evidence of genuine issue)
Donovan v. Mazzola, 716 F.2d 1226 (9th Cir. 1983) (prudence inquiry focuses on fiduciary’s investigative methods)
In re Unisys Sav. Plan Litig., 74 F.3d 420 (3d Cir. 1996) (prudence inquiry assesses conduct not results)
Tibble v. Edison Int’l, 135 S. Ct. 1823 (U.S. 2015) (duty to monitor investments and continuing duty can give rise to timely claims)
Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. 409 (U.S. 2014) (standards for inside‑information claims and discussion of prudence standard)
Wright v. Oregon Metallurgical Corp., 360 F.3d 1090 (9th Cir. 2004) (plaintiff must prove causal link between breach and plan losses)
Friend v. Sanwa Bank California, 35 F.3d 466 (9th Cir. 1994) (ERISA trustee liability limited to losses resulting from breach)