Larson v. Allina Health Sys., Case No. 17-cv-03835 (SRN/SER)

• Decision Date: 01 October 2018
• Docket Number: Case No. 17-cv-03835 (SRN/SER)
• Citation: 350 F.Supp.3d 780
• Parties: Judy LARSON, Janelle Mausolf, and Karen Reese, Individually and on Behalf of Themselves and All Others Similarly Situated, Plaintiffs, v. ALLINA HEALTH SYSTEM; the Allina Health System Board of Directors; the Allina Health System Retirement Committee; the Allina Health System Chief Administrative Officer; the Allina Health System Chief Human Resources Officer; Clay Ahrens; John I. Allen; Jennifer Alstad; Gary Bhojwani; Barbara Butts-Williams; John R. Church; Laura Gillund; Joseph Goswitz; Greg Heinemann; David Kuplic; Hugh T. Nierengarten; Sahra Noor; Brian Rosenberg; Debbra L. Schoneman; Thomas S. Schreier, Jr.; Abir Sen; Sally J. Smith ; Darrell Tukua; Penny Wheeler ; Duncan Gallagher ; Christine Webster Moore; Kristyn Mullin; Steve Wallner; John T. Knight ; and John Does 1–20, Defendants.
• Court: U.S. District Court — District of Minnesota

350 F.Supp.3d 780

Judy LARSON, Janelle Mausolf, and Karen Reese, Individually and on Behalf of Themselves and All Others Similarly Situated, Plaintiffs,

v.ALLINA HEALTH SYSTEM; the Allina Health System Board of Directors; the Allina Health System Retirement Committee; the Allina Health System Chief Administrative Officer; the Allina Health System Chief Human Resources Officer; Clay Ahrens; John I. Allen; Jennifer Alstad; Gary Bhojwani; Barbara Butts-Williams; John R. Church; Laura Gillund; Joseph Goswitz; Greg Heinemann; David Kuplic; Hugh T. Nierengarten; Sahra Noor; Brian Rosenberg; Debbra L. Schoneman; Thomas S. Schreier, Jr.; Abir Sen; Sally J. Smith ; Darrell Tukua; Penny Wheeler ; Duncan Gallagher ; Christine Webster Moore; Kristyn Mullin; Steve Wallner; John T. Knight ; and John Does 1–20, Defendants.

Case No. 17-cv-03835 (SRN/SER)

United States District Court, D. Minnesota.

Signed October 1, 2018

Edward W. Cioklo, Mark K. Gyandoh, and Julie Siebert-Johnson, Kessler, Topaz, Meltzer & Check, LLP, 280 King of Prussia Road, Radnor, Pennsylvania, 19807, Carl F. Engstrom, Kai H. Richter, and Brock K. Specht, Nichols Kaster PLLP, 80 South Eighth Street, Suite 4600, Minneapolis, Minnesota, 55402, and Robert A. Izzard, Jr., Martin Patrick Kindall, and Douglas Patrick Needham, Izard, Kindall & Raabe, LLP, 29 South Main Street, Suite 305, West Hartford, Connecticut, 06107, for Plaintiff Judy Larson, Janelle Mausolf, and Karen Reese, individually and on behalf of themselves and all others similarly situated.

Nicholas J. Bullard, Andrew J. Holly, and Stephen P. Lucke, Dorsey & Whitney LLP, 50 South Sixth Street, Suite 1500, Minneapolis, Minnesota, 55402, and Paul J. Ondrasik, Jr., Eric G. Serron, and Osvaldo Vazquez, Steptoe & Johnson LLP, 1330 Connecticut Avenue, Northwest, Washington, District of Columbia, 20036, for Defendants Allina Health System, Allina Health System Board of Directors, Allina Health System Retirement Committee, Allina Health System Chief Administrative Officer, Allina Health System Chief Human Resources Officer, Clay Ahrens, John I. Allen, Jennifer Alstad, Gary Bhojwani, Barbara Butts-Williams, John R. Church, Laura Gillund, Joseph Goswitz, Greg Heinemann, David Kuplic, High T. Nierengarten, Sasha Noor, Brian Rosenberg, Debbra L. Schoneman, Thomas S. Schreier, Jr., Abir Sen, Sally J. Smith, Darrell Tukua, Penny Wheeler, Duncan Gallagher, Christine Webster Moore, Kristyn Mullin, Steve Wallner, John T. Knight, and John Does 1–20.

MEMORANDUM OPINION AND ORDER

SUSAN RICHARD NELSON, United States District Judge

I. INTRODUCTION

This matter comes before the Court on Allina Health System, Allina Health System Board of Directors, Allina Health System Retirement Committee, Allina Health System Chief Administrative Officer, Allina Health System Chief Human Resources Officer, Clay Ahrens, John I. Allen, Jennifer Alstad, Gary Bhojwani, Barbara Butts-Williams, John R. Church, Laura Gillund, Joseph Goswitz, Greg Heinemann, David Kuplic, Hugh T. Nierengarten, Sahra Noor, Brian Rosenberg, Debbra L. Schoneman, Thomas S. Schreier, Jr., Abir Sen, Sally J. Smith, Darrell Tukua, Penny Wheeler, Duncan Gallagher, Christine Webster Moore, Kristyn Mullin, Steve Wallner, John T. Knight, and John Does 1–20's (collectively "Defendants' ") Motion to Dismiss the Complaint ("Motion to Dismiss") [Doc. No. 28] for lack of subject-matter jurisdiction and for failure to state a claim. For the reasons stated below, the Court will partially grant and partially deny the motion.

II. BACKGROUND

A. Factual History

Defendant Allina Health System ("Allina") is a health care system that provides medical care throughout Minnesota and western Wisconsin. (Compl. ¶ 21.) Qualifying Allina employees were covered by the Allina retirement plan. Allina previously offered a 403(b) Plan to its employees. (Id. ¶ 84.) However, in October 2010, new participant entry into the 403(b) Plan was frozen, and by January 1, 2011, all employee salary deferrals, employer matching contributions, and discretionary employer contributions were frozen. (Id. ¶ 84.) In conjunction with freezing the 403(b) Plan, effective January 1, 2012, all eligible Allina employees became participants in the 401(k) Plan. (Id. ) Since that time, all deferral elections and employer contributions have been received within the 401(k) Plan. (Id. ¶ 88.)

Both the 403(b) and 401(k) Plans are "defined contribution plans" or "individual account" plans within the meaning of ERISA § 3(34), 29 U.S.C. § 1002(34). (Id. ¶ 4.) Therefore, each Plan contains individual accounts for every participant and for benefits based solely upon the amount contributed to those accounts. (Id. ¶ 83.) The retirement benefits each Plan provides are based solely on the amounts allocated to an individual's account. (Id. )

Allina is the named fiduciary of the Plan. (Id. ¶ 22.) Allina acted through the Board of Directors ("Director Defendants"), the Chief Administrative Officer ("CAO Defendants"), the Chief Human Resources Officer ("HR Defendants"), the Plan Administrators ("Plan Administrator Defendants"), and Retirement Committee ("Retirement Committee Defendants"), to perform Plan-related fiduciary functions in the course and scope of their employment. (Id. ¶ 23.) Director Defendants are in charge of selecting Retirement Committee Defendants. (Id. ¶ 27.) Retirement Committee Defendants are tasked with selecting the Plan's core investment options. (Id. ¶ 48.) Plan Administrator Defendants are responsible for determining benefits eligibility and construing Plan documents. (Id. ¶ 58.)

The Plan currently offers three groups of investment options. First, the ProManage program automatically allocates enrolled participant's contributions to eleven set investment options. (Id. ¶ 100.). ProManage, LLC, headquartered in Chicago, Illinois, is the firm appointed by Allina to provide investment management services "with respect to assets held in the individual Plan accounts of Participants who do not elect to opt out of the ProManage Service." (Id. ¶ 94.). Second, the core options program allows enrolled participants to pick where they would like to invest their contributions from a list of thirteen investment options. (Id. ¶ 126.). Lastly, the mutual fund window allows enrolled participants to choose where to invest their contributions from a list of approximately three hundred mutual funds. (Id. ¶¶ 12, 130.)

Fidelity Management Trust Company ("Fidelity") is the custodian of the 403(b) Plan and trustee of the 401(k) Plan. (Id. ¶ 90.) Fidelity also provides recordkeeping, and management services to the Plans. (Id. ) Under both of the Plans' terms, Plan administration and reasonable expenses are to be paid from the Plan assets. (Id. ¶ 157.)

B. Procedural History

Plaintiffs are three former employees and participants of the Plan who seek to represent a class of all participants in and beneficiaries of the Plan from the 403(b) Plan's inception in 2011 through to the 401(k) Plan today. (Id. ¶¶ 16, 17, 18.) Plaintiffs' action is brought on behalf of themselves and all persons, except Defendants and their immediate family members, who were participants in or beneficiaries of the 403(b) Plan and/or the 401(k) Plan, at any time between August 18, 2011 and the present. (Id. ¶ 76.)

Defendants move to dismiss Plaintiffs' Complaint under Federal Rule of Civil Procedure 12(b)(1) arguing that the Court lacks subject-matter jurisdiction and under Federal Rule of Civil Procedure 12(b)(6) arguing that Plaintiffs' Complaint fails to state a claim upon which relief can be granted.

III. DISCUSSION

A. Standard of Review

Federal Rule of Civil Procedure 8 requires that a complaint present "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 9. To meet this standard and survive a motion to dismiss under Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Although a complaint is not required to contain detailed factual allegations, "[a] pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’ " Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955 ). The plausibility standard requires a plaintiff to show at the pleading stage that success on the merits is more than a "sheer possibility." Braden v. Wal–Mart Stores, Inc. , 588 F.3d 585, 593 (8th Cir. 2009) (citation omitted). It is not, however, a "probability requirement." Id. (citation omitted). Thus, "a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of the facts alleged is improbable, and ‘that a recovery is very remote and unlikely.’ " Twombly, 550 U.S. at 556, 127 S.Ct. 1955 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) ).

"A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955 ). Several principles guide courts in determining whether a complaint meets this standard. First, the court must take the plaintiff's factual allegations as true and grant all reasonable inferences in favor of the plaintiff. Crooks v. Lynch, 557 F.3d 846, 848 (8th Cir. 2009). This tenet does not apply, however, to legal conclusions or "formulaic recitation of the elements of a cause of action;" such allegations may properly be set aside. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955 ). In addition, some factual allegations may be so indeterminate that they require "further factual...