Jaclyn Santomenno; Karen Poley; Barbara Poley, individually and on behalf of Employee Retirement Income Security Act of 1974, etc.; as an investor in the Lommis Sayles Investment Grade Bond Ret. Opt. and the First American Mid Cap Growth Opportunities Inv. Opt., etc.; as an investor of Vanguard Target Ret., Plaintiffs-Appellees,
Transamerica Life Insurance Company; Transamerica Investment Management, LLC; Transamerica Asset Management, Inc., Defendants-Appellants.
and Submitted November 17, 2017 Pasadena, California
from the United States District Court for the Central
District of California D.C. No. 2:12-cv-02782-DDP-MAN Dean D.
Pregerson, District Judge, Presiding
D. Boyle (argued), Shannon Barrett, and Anton Metlitsky,
O'Melveny & Myers LLP, Washington, D.C.; Catalina J.
Vergara and Christopher B. Craig, O'Melveny & Myers
LLP, Los Angeles, California; for Defendants-Appellants.
C. Lakind (argued) and Stephen Skillman, Szaferman Lakind
Blumstein & Blader P.C., Lawrenceville, New Jersey; Lynn
Lincoln Sarko, Derek W. Loeser, Michael D. Woerner, and
Gretchen S. Obrist, Keller Rohrback LLP, Seattle, Washington;
S. Mattson and Daniel R. Thies, Sidley Austin LLP, Chicago,
Illinois; Lisa Tate, Vice President, Litigation &
Associate General Counsel, American Council of Life Insurers,
Washington, D.C.; Janet M. Jacobson, American Benefits
Council, Washington, D.C.; Kate Comerford Todd and Janet
Galeria, U.S. Chamber Litigation Center, Washington, D.C.;
for Amici Curiae American Council of Life Insurers, American
Benefits Council, and Chamber of Commerce of the United
States of America.
Ellen Signorille and William Alvarado Rivera, AARP Foundation
Litigation, Washington, D.C., for Amici Curiae AARP and AARP
Before: Jacqueline H. Nguyen and Andrew D. Hurwitz, Circuit
Judges, and Richard Seeborg, [*] District Judge.
Retirement Income Security Act
panel (1) reversed the district court's order denying
defendants' motion to dismiss an ERISA case alleging
breach of fiduciary duties in connection with a retirement
plan, and (2) vacated the district court's subsequent
class certification orders.
district court held that a plan service provider breached its
fiduciary duties to plan beneficiaries first when negotiating
with an employer about providing services to the plan and
later when withdrawing predetermined fees from plan funds.
employer that forms an ERISA plan is a statutory fiduciary,
and a plan service provider becomes a functional fiduciary
under certain circumstances.
other circuits, the panel held that a plan administrator is
not an ERISA fiduciary when negotiating its compensation with
a prospective customer. As to alleged breaches after the
defendant became a plan service provider, the panel held that
the defendant was not a fiduciary with respect to its receipt
of revenue sharing payments from investment managers because
the payments were fully disclosed before the provider
agreements were signed and did not come from plan assets.
Agreeing with other circuits, the panel held that defendant
also was not a fiduciary with respect to its withdrawal of
preset fees from plan funds. The panel concluded that when a
service provider's definitively calculable and
nondiscretionary compensation is clearly set forth in a
contract with the fiduciary-employer, collection of fees out
of plan funds in strict adherence to that contractual term is
not a breach of the provider's fiduciary duty.
panel remanded with instructions to the district court to
dismiss the complaint.
HURWITZ, Circuit Judge
Employee Retirement Income Security Act of 1974
("ERISA"), Pub. L. 93-406, 88 Stat. 829 (codified
at 29 U.S.C. § 1001 et seq.), imposes fiduciary
duties on various parties in connection with retirement
plans. This case turns on when and under what circumstances
those duties attach. The district court found that a provider
breached its fiduciary duties to plan beneficiaries first
when negotiating with an employer about providing services to
the plan and later when withdrawing predetermined fees from
plan funds. The court accordingly denied defendants'
motion to dismiss and certified three plaintiff classes. We
disagree and reverse.
TLIC's Relationship with 401(k) Plans
plaintiffs are members of employer-supported,
defined-contribution 401(k) plans governed by ERISA. 29
U.S.C. § 1002(34). Because the daily administration of
the plans often requires particularized expertise, employers