Stargel v. Suntrust Banks, Inc.
968 F. Supp. 2d 1215
N.D. Ga.2013Background
- Plaintiffs (Stargel and Pruitt) sued SunTrust and plan fiduciaries under ERISA §§ 502(a)(2) & (a)(3) alleging fiduciary breaches and prohibited transactions for offering and retaining eight proprietary "STI Classic" 401(k) funds (class period April 10, 2004–Dec. 31, 2012). No class certified.
- Stargel left SunTrust in 2007, received a final distribution, and signed a broad Confidential Settlement Agreement and Release in June 2010 that expressly released ERISA claims while preserving rights to vested benefits.
- Pruitt remained a participant through October 2010 and invested in several STI Classic funds; the complaint alleges the funds had poor performance, high fees, and conflicted affiliations.
- Defendants moved for partial summary judgment as to Stargel based on the Release and moved to dismiss Pruitt’s claims under Rule 12(b)(6) on statute-of-limitations and standing grounds. Court accepted certain tolling concessions (336 days) and an operative date tied to a related prior filing.
- The court granted summary judgment for defendants on Stargel’s claims (Release bars suit) and dismissed all of Pruitt’s claims as time-barred, lacking standing, or derivative of dismissed claims; judgment entered for defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Stargel’s Release bars her ERISA fiduciary and prohibited-transaction claims | Stargel: Release carves out "vested benefits" only; she preserved the right to pursue plan/derivative claims and did not release ERISA fiduciary claims | Defendants: Release unambiguously waived all ERISA and plan claims except vested benefits; also bars instituting or joining class/other proceedings | Court: Release unambiguous; Stargel waived these ERISA claims and cannot join or pursue them — summary judgment for defendants |
| Whether Pruitt’s breach-of-prudence claim (failure to remove funds) survives ERISA’s 6-year limitations as a continuing breach | Pruitt: Fiduciaries had ongoing monitoring duties; each failure to remove during class period is a discrete breach within 6 years | Defendants: The challenged conduct is the original selection (pre-2004) and mere continuation/failure to remove is not a new breach triggering a new 6-year period | Court: Adopting Ninth/Fourth Circuit reasoning, claim challenges initial selection and is time-barred under the 6-year repose; Count I dismissed |
| Whether Pruitt’s claims are barred by ERISA’s 3-year actual-knowledge limitation | Pruitt: Documents do not establish she actually knew the facts; dismissal inappropriate | Defendants: Plan/SPD/prospectus disclosures (2005–2006) gave actual knowledge more than three years before filing | Court: Defendants failed to establish actual knowledge on the face of the complaint; the three-year bar not resolved for all funds but 6-year ruling dispositive for many claims |
| Standing for claim challenging offering of STI Classic International Equity Index Fund (2005) | Pruitt: Claim asserts that offering this fund was imprudent and a prohibited transaction | Defendants: Pruitt never invested in that specific fund and thus lacks injury/standing | Court: Pruitt lacked standing for any fund she never owned; claim dismissed |
| Whether § 1106 prohibited-transaction claims are revived by participant investments during class period | Plaintiffs: Each participant investment constituted a new prohibited transaction | Defendants: § 1106 requires a fiduciary-caused commercial transaction; mere continued offering or participant purchases do not create new prohibited transactions | Held: Only the initial selection/offering could constitute the § 1106 transaction; continued offering/purchases are not separate transactions — most § 1106 claims barred by repose |
| Viability of derivative/co-fiduciary claims (Counts III–V) | Pruitt: Derivative claims stand independent of primary counts | Defendants: Those counts are derivative and fall with the primary fiduciary/prohibited-transaction claims | Court: Derivative claims depend on an underlying breach; dismissal of primary claims mandates dismissal of derivative claims |
Key Cases Cited
- Howell v. Motorola, Inc., 633 F.3d 552 (7th Cir. 2011) (release preserved right to recover vested account balance but waived challenges to plan management)
- Tibble v. Edison Int’l, 729 F.3d 1110 (9th Cir. 2013) (statute-of-repose begins at initial selection; mere continuation does not restart limitations)
- David v. Alphin, 704 F.3d 327 (4th Cir. 2013) (continuing failure to remove investments was a challenge to initial selection and time-barred)
- Morrissey v. Curran, 567 F.2d 546 (2d Cir. 1977) (fiduciary has post-ERISA duty to remediate pre-ERISA imprudent investments)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must state a plausible claim, not mere conclusions)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (complaint must plead facts raising entitlement above speculative level)
- Wright v. Oregon Metallurgical Corp., 360 F.3d 1090 (9th Cir. 2004) (for § 1106, an affirmative commercial act, not mere failure to sell/act, constitutes a transaction)
- Lockheed Corp. v. Spink, 517 U.S. 882 (1996) (discusses scope of § 1106 transactions)