McCaffree Fin. Corp. v. ADP, Inc.
| Decision Date | 31 March 2022 |
| Docket Number | Civil Action 20-5492 (ES) (JRA) |
| Parties | MCCAFFREE FINANACIAL CORP., Plaintiff, v. ADP, INC., et al., Defendants. |
| Court | U.S. District Court — District of New Jersey |
Not For Publication
Plaintiff McCaffree Financial Corp. brings claims of breach of fiduciary duty under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001, et seq., against Defendants ADP, Inc.; ADP TotalSource Group, Inc.; and the Administrative Committee of the ADP TotalSource Retirement Savings Plan. (D.E. No. 1 (“Compl.”)). Defendants move to dismiss the Complaint, arguing (among other things) that Plaintiff does not have constitutional or statutory standing to sue. (D.E. No. 20-1 ( ) at 11-15). Plaintiff responds that it has constitutional standing because it might be sued as a co-fiduciary for Defendants' breach of fiduciary duties, and that it has statutory standing as a fiduciary. (D.E. No. 39 (“Opp. Br.”) at 12). Having considered the parties' submissions, the Court decides this matter without oral argument. See Fed R. Civ. P. 78(b); L. Civ. R. 78.1(b). For the following reasons, Defendants' motion is GRANTED.
As alleged in the Complaint, Plaintiff is a participating employer in a multiple-employer 401(k) defined contribution plan (the “Plan”), [1] which is governed under ERISA. (Compl. ¶ 3). A multiple-employer plan is an ERISA plan that is, among other things, “sponsored by more than one employer.” Lee T. Polk, ERISA Practice and Litigation § 2:6 (2021) (hereinafter, “Polk”). The Plan here is vast. According to the Complaint, it is sponsored by over 5, 000 participating employers, it has over 114, 000 participating employees, and it has accumulated assets worth over $4.4 billion. (Compl. ¶¶ 3-4 & 78(a)).
The Plan “irrevocably” designates the “Company”-that is, Defendant ADP TotalSource Group, Inc.-as the agent of each adopting employer “with respect to [the employer's] relations with the Trustee and Plan Administrator for the purpose of this Plan.” (Plan §§ 2.10 & 12.3). The Trustee of the Plan is Voya National Trust Company. (Compl. ¶ 27). And the Plan Administrator is the “Committee, ” members of which are appointed by ADP TotalSource Group. (Plan §§ 8.1 & 8.8). The Committee, as Plan Administrator, is responsible for administering the Plan. (Id. § 8.1). The Committee is also the Plan's named fiduciary. (Id. § 2.9A). ADP TotalSource Group may, “in its sole discretion, ” designate another person or entity as Plan Administrator. (Id. § 8.8). If ADP TotalSource Group abolishes the Committee, then ADP TotalSource Group would become the Plan's named fiduciary and the Plan Administrator. (Id. § 8.8).
New employers may join the Plan without the consent or agreement of other participating employers and may negotiate amendments to the Plan that would apply only to them. (Id. §§ 12.1 & 12.6). However, amendments to the Plan are effective only upon the consent of ADP TotalSource Group and the Trustee “where such consent is necessary in accordance with the terms of this Plan.” (Id. § 12.6). An adopting employer may discontinue or revoke its participation in the Plan. (Id. § 12.7). There appears to be no limitation on an adopting employer's ability to do so.
Plaintiff alleges that Defendants are fiduciaries under ERISA and therefore owe fiduciary duties to the Plan. (Compl. ¶ 5). Defendants, Plaintiff alleges, “maintain the Plan[] and are responsible for selecting, monitoring, and retaining the service provider(s) that provide investment, recordkeeping, and other administrative services.” (Id.). And according to Plaintiff, Defendants breached their fiduciary duties to the Plan by subjecting the Plan to excessive total plan costs and excessive recordkeeping/administrative costs, by failing to oversee the Plan recordkeeper and engaging a recordkeeper with a conflict of interest, and by permitting objectively imprudent investment options. (Id. ¶¶ 29-69).
Defendants move to dismiss the Complaint, arguing that Plaintiff does not have constitutional or statutory standing to sue, among other things. (Mov. Br. at 11-15).
Under Rule 12(b)(1), a court may dismiss a claim at the pleading stage if the court does not have jurisdiction. “A motion to dismiss for want of standing is also properly brought pursuant to Rule 12(b)(1), because standing is a jurisdictional matter.” Ballentine v. United States, 486 F.3d 806, 810 (3d Cir. 2007). “Two types of challenges can be made under Rule 12(b)(1)-‘either a facial or a factual attack.'” In re Horizon Healthcare Servs. Inc. Data Breach Litig., 846 F.3d 625, 632 (3d Cir. 2017) (quoting Davis v. Wells Fargo, 824 F.3d 333, 346 (3d Cir. 2016)). Defendants a raise a facial attack to Plaintiff's constitutional standing; therefore, the Court accepts Plaintiff's factual allegations as true. See In re Schering Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235, 243 (3d Cir. 2012).
While motions to dismiss for lack of standing are generally assessed under Rule 12(b)(1), motions to dismiss for lack of statutory standing under ERISA are assessed under the Rule 12(b)(6) framework because such challenges are not jurisdictional. N. Jersey Brain & Spine Ctr. v. Aetna, Inc., 801 F.3d 369, 371 n.3 (3d Cir. 2015). In assessing whether a complaint states a cause of action sufficient to survive dismissal under Rule 12(b)(6), the Court accepts “all well-pleaded allegations as true and draw[s] all reasonable inferences in favor of the plaintiff.” City of Cambridge Ret. Sys. v. Altisource Asset Mgmt. Corp., 908 F.3d 872, 878 (3d Cir. 2018). “[T]hreadbare recitals of the elements of a cause of action, legal conclusions, and conclusory statements” are all disregarded. Id. at 878-79 (quoting James v. City of Wilkes-Barre, 700 F.3d 675, 681 (3d Cir. 2012)). The complaint must “contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face, ” and a claim is facially plausible when the plaintiff “pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Zuber v. Boscov's, 871 F.3d 255, 258 (3d Cir. 2017) ().
Constitutional standing is derived from Article III's “case or controversy” requirement. Pub. Interest Research Grp. of New Jersey, Inc. v. Magnesium Elektron, Inc., 123 F.3d 111, 117 (3d Cir. 1997). Constitutional standing consists of three elements. Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992)). That is, “[t]he plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Id. The first element-injury in fact-is the “‘foremost' of standing's three elements.” Thorne v. Pep Boys Manny Moe & Jack Inc., 980 F.3d 879, 885 (3d Cir. 2020) (quoting Spokeo, 578 U.S. at 338). It requires “the party invoking federal jurisdiction” to “establish three sub-elements: first, the invasion of a legally protected interest; second, that the injury is both ‘concrete and particularized'; and third, that the injury is ‘actual or imminent, not conjectural or hypothetical.'” Id. (quoting Spokeo, 578 U.S. at 339).
Defendants argue that the Complaint fails to allege injury in fact, and points out “[t]here is no ERISA exception to Article III.” (Mov. Br. at 15 n.24 (quoting Thole v. U.S. Bank N.A, 140 S.Ct. 1615, 1622 (2020))). Plaintiff responds that it has suffered an injury in fact because, as a co-fiduciary, it is at risk of being sued under ERISA for Defendants' unlawful conduct. (Opp. Br. at 15-17 (outlining co-fiduciary liability under 29 U.S.C. § 1105)).
Plaintiff is correct that a co-fiduciary may be sued under ERISA under certain circumstances. See § 1105. And some courts, albeit in other contexts, have held that the risk of liability is sufficient to confer Article III standing. See Choirock Contents Factory Co. v. Saucier, 801 Fed.Appx. 754, 762 (Fed. Cir. 2020). However, as will be discussed below, the term “fiduciary” bears a legal meaning. See Glaziers & Glassworkers Union Loc. No. 252 Annuity Fund v. Newbridge Sec., Inc., 93 F.3d 1171, 1179 (3d Cir. 1996); Santomenno ex rel. John Hancock Tr. v. John Hancock Life Ins. Co. (U.S.A), 768 F.3d 284, 291 (3d Cir. 2014). And Plaintiff's allegations concerning its status as a fiduciary are conclusory and non-specific. Moreover, Plaintiff does not offer in its opposition brief, much less plead in its Complaint, any facts suggesting that it could actually be held liable as a co-fiduciary. Plaintiff does not allege, for example, how a future plaintiff could reasonably plead that Plaintiff was a co-fiduciary “with respect to” the unlawful conduct allegedly committed by Defendants. See Renfro v. Unisys Corp., 671 F.3d 314, 324 (3d Cir. 2011) ( claim against an alleged co-fiduciary because the co-fiduciary did not have a fiduciary duty “with respect to” the particular activity). However, whether Plaintiff adequately alleged it is a fiduciary significantly overlaps with its statutory standing. Accordingly, the Court will more fully address statutory standing below.[2]
Under ERISA, a “participant, beneficiary or fiduciary” may bring a civil action for appropriate relief against a plan fiduciary for breach of fiduciary duty. See 29 U.S.C. §§ 1104, 1105, 1109 & 1132(a)(2). As noted, Plaintiff claims its right to sue as a fiduciary of the Plan. (Compl. ¶¶ 1, 10, 78(c)...
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