Matthew J. Dayak, Jeffrey S. Jacobs and Thomas Dore, individually and on behalf of all others similarly situated v. Reyes Holdings, LLC, the Board of Directors of Reyes Holdings, LLC, and Reyes Holdings, LLC Employee Benefits Committee

Summary

The United States District Court for the Northern District of Illinois denied Defendants’ Rule 12(b)(6) motion to dismiss a putative ERISA class action concerning alleged excessive recordkeeping fees and underperforming target-date funds in the Reyes Holdings 401(k) Thrift Plan. The court held that Plaintiffs plausibly alleged breaches of the fiduciary duty of prudence and the duty to monitor fiduciaries.

Holdings

1. A complaint plausibly alleges an ERISA breach-of-prudence claim based on excessive recordkeeping fees when it alleges facts indicating that the plan paid materially higher fees than reasonably comparable plans, even if the plaintiffs' initial fee calculations may be imperfect because of limited publicly available information.
2. An allegation that plan fiduciaries failed to conduct a request for proposal can support an ERISA imprudence claim when combined with allegations that the plan paid excessive recordkeeping fees and possessed substantial bargaining power, even though ERISA does not categorically require fiduciaries to solicit quotes or competitive bids at regular intervals.
3. The complaint plausibly alleged a breach of the duty of prudence based on the selection and retention of underperforming target-date funds.
4. Because the complaint plausibly stated the underlying duty-of-prudence claim, the defendants' argument that the duty-to-monitor claim failed merely because it was derivative of Count I did not warrant dismissal of Count II.

Questions Presented

1. Whether the complaint plausibly alleged that the Committee breached ERISA's duty of prudence through excessive recordkeeping and administrative fees.
2. Whether the complaint plausibly alleged that the Committee breached the duty of prudence by selecting and retaining underperforming target-date funds.
3. Whether the complaint plausibly alleged that Reyes and the Board breached their fiduciary duty to monitor the Committee.
4. Whether the alleged miscalculations, comparator-plan allegations, failure to conduct a request for proposal, and target-date-fund allegations required dismissal under Rule 12(b)(6).

Disposition

other