MEMORANDUM OPINION
This'matter is brought by Plaintiffs on behalf of themselves and a putative class of similarly situated former and current employees of Defendant Colonial Parking, Inc. (“Colonial”) against Colonial and Defendant FCE Benefit Administrators, Inc. (“FCE”) for alleged violations of the Employee Retirement Income Security Act of 1974 (“ERISA”). The purported violations stem primarily from FCE’s alleged charging of excessive administrative fees.
Presently before the Court are FCE’s [5] Motion to Dismiss and Motion to Strike, [6] Motion to Take Judicial Notice, and Colonial’s [12] Motion to Dismiss. Upon consideration of the pleadings,
I. BACKGROUND
The Court accepts as true the well-pleaded factual allegations of the Complaint, as it must on a motion to dismiss for failure to state a claim. The Court presents only those factual allegations that are relevant to its disposition of the pending motions.
Plaintiffs are Colonial employees who worked as parking lot attendants, earning approximately $2,000 per month in gross wages. Compl. ¶¶ 8, 34. Because Colonial contracts with federal agencies, it must comply with the McNamara-O’Hara Service Contract Act, which requires Colonial to “to pay a set amount per employee per hour for fringe benefits.” Id. ¶ 3. Colonial complies with this requirement by funding a benefits plan known as the “The Forge Company (Colonial Parking) Death, Dismissal, Wage/Unemployment Benefit ‘Reserve’ Employee Account” (the “Plan”). Id. ¶ 4. Colonial has retained FCE to administer the Plan, which operates as follows: Colonial contributes money to the ... Plan, FCE allocates the contribution to each [employee participant’s] [separate account], and then it withdraws money for payments of insurance premiums and fees to FCE and others. Amounts not used for those purposes are held in trust for the employee participants where they are credited with a share of the ... Plan’s investment earnings.” Id. ¶ 5. All agree that the Plan is subject to ERISA.
Prior to October 2006, FCE administered, the Plan for a nominal fee of $4.50 per employee participant. Id. ¶ 24. However, beginning in October 2006, two events occurred that allegedly resulted in a dramatic increase in the fees charged by FCE. First, the medical and other insurance premiums that Colonial had previously paid directly for its employees were instead funneled through the Plan, which increased the amount of contributions to the Plan. Id. ¶25. At the same time, FCE’s fee went from a fixed amount per participant, to one based on a percentage of the monthly contributions to the Plan. Id. Consequently, the amount of fees charged per participant by FCE increased by as much as twenty-fold. Id. ¶26 (the “fees charged to Plaintiff Akalu went from
The Complaint also makes reference to a lawsuit filed in the United States District Court for the District of Maryland, Perez v. Chimes District of Columbia, No. 1:15— cv-3315 (D, Md. Oct. 30, 2015), wherein the Secretary of Labor has brought claims against FCE for allegedly charging excessive fees to administer an unrelated benefits plan, and for paying kickbacks to the employer sponsor of that plan. Id. ¶ 9, 39. Plaintiffs relay that it was allegedly FCE’s business practice “to provide financial incentives to employers so that they would conspire in FCE’s extraction of unreasonable fees from the employees.” The Department of Labor is actively investigating FCE in this regard. Id. ¶¶ 41-42.
II. LEGAL STANDARD
Defendants move to dismiss the Complaint for “failure to state a claim upon which relief can be granted” pursuant to Federal Rule of Civil Procedure 12(b)(6). “[A] complaint [does not] suffice if it tenders ‘naked assertion[s]’- devoid of ‘further factual enhancement.’” Ashcroft v. Iqbal,
III. DISCUSSION
Plaintiffs bring claims for Defendants’ alleged failure to comply with several statutory obligations imposed by ERISA. The Court addresses each of these in turn, and finds that'Plaintiffs have pleaded sufficient factual matter to state a viable claim under each statutory violation pleaded in the Complaint.
A.' Breach of Fiduciary Duty—§ 1104
ERISA imposes duties of loyalty and prudence on fiduciaries, 29 U.S.C.
Plaintiffs allege that Defendants breached their fiduciary duties by, inter alia, charging Plaintiffs and other Plan participants excessive fees for FCE’s administrative services. Defendants challenge these allegations primarily on the basis that they owed no fiduciary duty with respect to the amount of fees charged, and that, even if they did, Plaintiffs have failed to adequately allege that the fees charged were excessive.' For the reasons described below, the Court finds these arguments unavailing, and concludes that Plaintiffs have stated a plausible claim for relief for Defendants’ alleged violations of the duties of loyalty and prudence imposed on fiduciaries by ERISA. ■
1. FCE’s Fiduciary Status
FCE asserts that it was not a fiduciary with respect to the fees that it charged because those fees were set by. a contract that was negotiated at arm’s-length by FCE and Colonial. FCE Mem. at 14. A number of courts outside of the District of Columbia Circuit (“D.C. Circuit”) have held that service providers such as FCE are not fiduciaries with respect to fee amounts that are set by contractual arrangements negotiated at arm’s-length. See Santomenno ex rel. John Hancock Trust v. John Hancock Life Ins. Co. (U.S.A),
By the same token, a number of courts outside of the D.C. Circuit have held that if a service provider does retain discretion over the fees that it charges, the service provider can be held liable as a fiduciary with respect to those fees. F.H. Krear & Co. v. Nineteen Named Trustees,
FCE contends that the change in fee structure from a nominal amount per Plan participant, to one based on a percentage of contributions to the Plan, was expressly permitted by the contract negotiated between FCE and Colonial. FCE Mem. at 14. Contrary to FCE’s view of this matter, however, the change in fee structure is not alleged to have been one negotiated and performed at arm’s length between FCE and Colonial, but rather one undertaken for the mutual benefit of FCE and Colonial, at the expense of Colonial’s employees. Compl. ¶ 29. Plaintiffs allege that the percentage-based fee structure permitted FCE to charge substantially higher fees, while allowing Colonial to shed the administrative burdens of managing its employees’ health insurance coverage, id. ¶¶25, 29; that Colonial and FCE never disclosed the change in fee structure to Colonial’s employees, because such disclosure would have allegedly led the employees to choose less expensive insurance coverage, which would have lowered the contributions to the Plan, and by extension, the amount of fees charged by FCE, id. ¶¶ 27-28, 38; and that FCE’s “business practice was to provide financial incentives to employers so that they would conspire in FCE’s extraction of unreasonable fees from the employees,” id. ¶ 41. Consequently, under the particular factual allegations of this case, the Court finds that Plaintiffs have plausibly alleged that FCE exercised discretion over its compensation, meaning Plaintiffs have plausibly alleged that FCE acted as a fiduciary with respect to its compensation. See Santomenno v. Transamerica Life Ins. Co., No. CV 12-02782 DDP MANX,
2. Colonial’s Fiduciary Status
Colonial contends that it was not a fiduciary with respect to the amount of fees charged by FCE because the determination of those fees was a “settlor” function. Col. Mem. at 7. The Supreme Court of the United States has instructed that when plan sponsors such as Colonial “adopt, modify, or terminate ... plans ... they do not act as fiduciaries, but are analogous to the settlors of a trust.” Lockheed Corp. v. Spink,
First, “[ujnder ERISA, fiduciaries who have appointed other fiduciaries have a continuing duty to monitor the actions of the appointed fiduciaries.” Cannon v. MBNA Corp., No. CIVA 05-429 GMS,
Second, Plaintiffs have plausibly alleged that FCE exerted de facto control over the amount of fees charged by FCE. Namely, Plaintiffs allege that Colonial benefitted from the change in fee structure because it was able to shift its administrative burden to FCE, Compl. ¶ 29, and that it facilitated this fee structure by not disclosing the structure to its employees, id. ¶¶27, 38. Accordingly, because Plaintiffs have plausibly alleged that Colonial exercised discretion over the amount of fees charged by FCE, they have plausibly alleged that Colonial had a fiduciary duty with respect to those fees.
3. Plaintiffs Have Plausibly Alleged that Defendants Breached Their Fiduciary Duties
Both Colonial and FCE contend that even if they had a fiduciary duty with respect to FCE’s fees, Plaintiffs have failed to plausibly allege that those fees were so excessive as to constitute a breach of fiduciary duty. Col. Mem. at 9-10; FCE Mem. at 16. Both Defendants cite Young v.
The Court, however, finds that the Complaint sufficiently alleges that FCE’s fees were excessive relative to the services performed by FCE. In particular, Plaintiffs allege that FCE’s fee rate went from a nominal, fixed amount per- Plan participant, to one based on a percentage of the contributions made to the Plan for a given participant, which Plaintiffs claim was not industry-standard because “when insurance premiums rise, the administrator [receives additional fees] even though the level of work stays the same.” Compl. ¶ 25. This change resulted in a substantial increase in fees for FCEs. Id. ¶ 31 (alleging that FCE’s fees increased by “4000-5000 percent” in one month). By contrast, despite the increase in administrative fees, Plaintiffs contend that FCE’s services were habitually deficient. Plaintiffs allege, inter alia, that FCE failed to consistently provide account statements to Plan participants, id'. ¶33;' to administer any sort of claims process, id. ¶ 38; and that FCE made distributions from an account that is not formally associated with the Plan, id. ¶35. Accordingly, given the allegations that FCE’s fees were unusually high, while its services were unusually poor, the Court concludes that Plaintiffs have plausibly alleged that FCE’s fees were so excessive that they constitute a breach of fiduciary duty by FCE and Colonial. As a result, Plaintiffs have stated a plausible claim for relief for violations of ERISA’s duties of'loyalty and prudence, as codified in sections 1104(a)(1)(A) and (B). Although Plaintiffs plead additional factual allegations to support their claim that Defendants breached their fiduciary duties under ERISA, given that Plaintiffs have already stated a plausible claim based on the factual allegations just recounted,’ the Court need not address whether such 'other factual allegations would independently suffice to state a claim for' relief under sections 1104(a)(1)(A) and (B). See Col. Reply at 2 (noting certain factual predicatés for breach of fiduciary liability that Colonial contested).
B. Co-Fiduciary Liability—§ 1105
ERISA imposes liability on one fiduciary for the acts of another in certain cases. The relevant statutory, language provides that:
a fiduciary with respect to a plan shall be liable for a breach of fiduciary responsibility of another fiduciary with respect to the same plan in the following circumstances:
(1) if he participates knowingly in, or knowingly undertakes to conceal, an act or omission of such other fiduciary, knowing such act or omission is a breach;
(2) if, by his failure to comply with section 1104(a)(1) of this title in the administration of his specific responsibilities which give rise to his status as-a fiduciary, he has enabled such other fiduciary to commit a breach; or
(3) if he has knowledge of a breach by such other fiduciary, unless he makes reasonable efforts under the. circumstances to remedy the breach.
C, Statute of Limitations—§ 1113
ERISA’s statute of limitations provides that:
No action may be commenced under this subchapter with respect to a fiduciary’s breach of -any responsibility, duty, or obligation under this part, or with respect to a violation of this part, after the earlier of—
(1) six years after (A) the date of the last action which constituted a part of the breach or violation, or (B) in the case of an omission the latest date on which the fiduciary could have cured the breach or violation, or
(2) three years after the earliest date on which the plaintiff had actual knowledge of the breach or violation;
except that in the case of fraud or concealment, such action may be commenced not later than six years after the date of discovery of such breach or violation.
29 U.S.C. § 1113. Colonial contends that Plaintiffs’ claims are time-barred' because Colonial hired FCE more than six years ago, and the increase in fees alleged in the Complaint likewise occurred more than six years ago. Col. Mem. at 18-19.
Defendants may raise a statute of limitations defense in a motion to dismiss “when the facts that give ris.e to the defense are clear from the face -of the complaint.” Smith-Haynie v. District of Columbia,
Two considerations preclude the Court from deciding the statute of limitations issues raised by Colonial at this procedural juncture. First, although the Complaint alleges that the fee increase occurred in 2006, it also alleges that Colonial and FCE sought to conceal the fee structure from Colonial’s employees so they would continue to opt for more expensive health coverage, thereby increasing the contributions to the Plan, and the amount of fees received by FCE. Compl. ¶ 27-28. Consequently, it is not evident from the face of the Complaint that the “date of the last action which constituted a part of the breach or violation” occurred more than six years before the Complaint was filed. Moreover, in Tibbie v. Edison., the Supreme Court instructed that where a breach of fiduciary duty is based on a
D. Prohibited Transactions—§ 1106
“ERISA supplements [its] general fiduciary obligations ... by prohibiting certain categories of transactions believed to pose a high risk of fiduciary self-dealing.” Kindle v. Dejana, No. 14CV6784SJFARL,
E. Insufficient Claims Procedure— § 1133
Plaintiffs allege that although the “claim process mandated by ERISA is supposed to provide a means for employees to challenge the amount of their benefits, ... Colonial and FCE provide[d] no claims process.” Compl. ¶ 38. The claims process referred to by Plaintiffs is specified by statute and associated regulations. In particular, ERISA requires that
In accordance with regulations of the Secretary, every employee benefit plan shall—
(1) provide adequate notice in writing to any participant or beneficiary whose claim for benefits under theplan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant, and
(2) afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.
29 U.S.C. § 1133; see generally Lee v. Hartford Life & Acc. Ins. Co.,
Plaintiffs bring their section 1133 claim only against Colonial, which challenges that claim primarily on the basis that no denial of benefits has been alleged in the Complaint. Col. Mem. at 18.
F. Reporting and Disclosure Obligations
ERISA imposes certain disclosure and reporting obligations on plan “administrators.” See generally 29 U.S.C. §§ 1021-1024. Plaintiffs allege that Colonial and FCE failed to satisfy those obligations because they did not submit annual reports to the federal government, and did not provide Plan participants with summary plan descriptions. See id. § 1021 (requiring the “administrator of each employee benefit plan” to furnish a summary plan description to plan participants, and to file an annual report with the Department of Labor). “Congress has provided for three classes of persons who may be sued as the plan administrator .... ” Moran v. Aetna Life Ins. Co.,
(i) the person specifically so designated by the terms of the instrument under which the plan is operated;
(ii) if an administrator is not so designated, the plan sponsor; or
(in) in the ease of a plan for which an administrator is not designated and a plan sponsor cannot be identified, such other person as the Secretary may by regulation prescribe.
FCE contends that it is not liable under sections 1021-1024 because it was not designated as the plan administrator. FCE Mem. at 18 (“FCE was never (nor is it alleged to have ever been) the plan administrator”). In particular, FCE asserts that the trust agreement for the Plan named Colonial, and not FCE, as the plan administrator. FCE Mem., Ex. IB ¶¶ 1.11, 2.1. The trust agreement, in pertinent part, provides that “Employer shall serve as Plan Administrator until such time as Employer appoints another Plan Administrator.” Id. ¶2,1. Colonial, for its part, contends that it delegated to FCE “the duty to ‘prepare, sign, and file any and all’ reports to governmental authorities, and disclosures to employees, required by applicable law.” Col; Mem. at 16 (citing Ex. 1 ¶ 4.3(b)). Colonial also asserts that certain forms filed with the Department of Labor show that the Plan has submitted the requisite annual reports. Id. Plaintiffs concede that only the plan administrator is subject to ERISA’s reporting and disclosure obligations, but contend that there is a factual dispute as to which Defendant was appointed to that role, FCE Opp’n Mem. at 15; Col. Opp’n Mem. at 16. The waters are further muddied as the forms referenced by Colonial seemingly list both Colonial and FCE as plan administrator, Col. Opp’n Mem., Ex. A, and because Defendants disagree as to what documents constitute the entirety of the trust agreement, Col. Reply at 3 n.3. .
The Court may take notice of the trust agreement and' the publicly availably forms and other information cited by the parties, and accordingly, for purposes of the pending motions, grants FCE’s motion to take judicial notice of those materials. See Al-Aulaqi v. Panetta,
Pursuant to -Federal Rule of Civil Proeédure 12(f), FOE has moved to strike references in the Complaint to the Chimes litigation. FCE Mem. at 21-22. “Under Rule 12(f), a party may move the district court to strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter. However, ■ courts recognize that striking portions of pleadings is a drastic remedy and, accordingly, motions to strike are generally disfavored.” NCB Mgmt. Servs., Inc. v. F.D.I.C.,
Contrary to FCE’s view of the matter, the Court finds that Plaintiffs’ references to the Chimes litigation are appropriate under the circumstances. Most notably, Plaintiffs cite the Chimes litigation in order to buttress the pertinent allegation that FCE’s business practice was to “provide financial incentives to employers so that they would conspire in FCE’s extraction of unreasonable fees from the employees.” Compl. II41; see Rodriguez v. City of N.Y., No. CV1600214ENVST,
IV. CONCLUSION
For. all of the foregoing reasons, the Court DENIES FCE’s [5] Motion to Dismiss and Motion to Strike; GRANTS FCE’s [6] Motion to Take Judicial Notice; GRANTS IN PART AND DENIES IN PART Colonial’s [12] Motion to Dismiss; and DENIES FCE’s [26] Motion to Strike Plaintiffs’ Notice of Supplemental Authority. Plaintiffs’ section 1133 claim against Colonial is DISMISSED WITHOUT PREJUDICE. Plaintiffs’ other claims against Defendants may proceed.
An appropriate Order accompanies this Memorandum Opinion.
Notes
. The Court’s consideration has focused on the following documents:
• FCE’s Mem. of P. & A. in Supp. of Mot. to Dismiss and Mot. to Strike, ECF No. 5-1
("FCE Mem.”).
• Colonial’s Mem. in Supp. of Mot. to Dismiss, ECF No. 12-1 ("Col. Mem.”).
• Pis.' Mem. in Opp'n to Def. Colonial Parking’s Mot. to Dismiss, ECF No. 15 ("Col. Opp'n Mem.”),
• Pis.’ Mem, in Opp'n to Def. FCE Benefit Administrators, Inc.'s Mots, to Strike and to Dismiss, ECF No. 16 ("FCE Opp’n Mem.”).
• FCE’s Reply to Pis.’ Opp’n to FCE’s Mem. of P. & A. in Supp. of Mot. to Dismiss and Mot. to Strike, ECF No. 17 ("FCE Reply”).
• Colonial's Reply in Supp. of Mot. to Dismiss, ECF No. 18 ("Col. Reply”).
. After Defendants' motions were fully briefed, Plaintiffs filed a Notice of Supplemental Authority, ECF No. 25, informing the Court of two decisions in an unrelated action against FCE in the United States District Court for the District of Maryland. FCE subsequently moved to strike the Notice of Supplemental Authority. See ECF No. 26. As the Court finds that the authorities relayed by Plaintiffs in the notice were pertinent and helpful to the resolution of the pending motions, FCE's motion to strike the notice is DENIED.
. Although Colonial asks the Court to treat the co-fiduciary claim against Colonial as conceded, Colonial itself admits that Plaintiffs have opposed Colonial's challenge, albeit briefly. Col. Reply at 2 (citing Col. Opp’n Mem. at 16)., As a result, the Court reaches the merits.
. Although Colonial contends that Plaintiffs have not opposed this challenge, Col. Reply at 2, Plaintiffs have in fact contested the issue in their opposition brief, Col. Opp’n Mem at 8 (asserting that Colonial violated sections 1106(a)(1)(C) and (D) in connection with FCE's administrative fees).
. Colonial also challenges this claim on the basis that the trust agreement allocated responsibility over claims management to FCE, Col. Mem. at 17-18, but for the reasons more fully discussed in the following section, the Court declines to rule on this basis given the factual dispute over what documents constitute the entirety of the trust agreement.