Williams v. Centerra Grp.
| Decision Date | 16 September 2021 |
| Docket Number | 1:20-cv-04220-SAL |
| Parties | Shawn Williams, David Green, Jamie Coomes, Malcum Kenner, and Andrew Barrett, individually and as representatives of a class of participants and beneficiaries on behalf of the Centerra Group, LLC 401k Plan aka the Constellis 401k Plan, Plaintiffs, v. CENTERRA GROUP, LLC; THE BENEFIT PLAN COMMITTEE OF THE CENTERRA GROUP, LLC; THE INVESTMENT COMMITTEE OF THE CENTERRA GROUP, LLC; AON HEWITT INVESTMENT CONSULTING, INC. NKA AON INVESTMENTS USA, INC.; PAUL P. DONAHUE; DEBORAH F. RICCI; MARCIA ALDRICH; AND JOHN DOES 1- 10; Defendants. |
| Court | U.S. District Court — District of South Carolina |
This matter is before the Court on three motions to dismiss Plaintiffs' complaint. [ECF Nos. 46, 48, 49]. Plaintiffs are five current employees of Centerra Group, LLC (“Centerra”) who are participants in the Centerra 401(k) Plan (“the Plan”). Plaintiffs individually and as representatives of a class of participants and beneficiaries of the Plan, bring this action on behalf of the Plan against Centerra, the Benefit Plan Committee of Centerra, the Investment Committee of Centerra Aon Hewitt Investment Consulting, Inc. (now known as Aon Investments USA, Inc.), Paul P. Donahue, Deborah F. Ricci Marcia Aldrich, and John Does 1-10.[1] In their complaint Plaintiffs bring a variety of claims under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001 et seq., arising out of alleged improper investment decisions that resulted in losses to participants' retirement savings and excessive administrative fees. Plaintiffs allege the Benefit Plan Committee, the Investment Committee, Paul P. Donahue, Deborah F. Ricci, Marcia Aldrich, and John Does 1-10 acted as agents of Centerra. Accordingly, the Court hereinafter refers to these individuals and entities, along with Centerra itself, as “the Centerra Defendants.”
Aon Hewitt Investment Consulting Inc. (“AHIC”) moved to dismiss the complaint as it pertains to AHIC. [ECF No. 46]. The Centerra Defendants-excluding Deborah F. Ricci-also moved to dismiss the complaint. [ECF No. 48]. Defendant Ricci filed her own motion to dismiss, but the motion adopts and incorporates by reference the arguments advanced by the Centerra Defendants without distinguishing her position from that of the Centerra Defendants. [ECF Nos. 49, 49-1]. Accordingly, unless stated otherwise, the Court treats Ricci as a Centerra Defendant for purposes of this Order. Plaintiffs responded to AHIC's motion, ECF No. 60, and responded to Ricci and the Centerra Defendants together in one filing, ECF No. 59. All Defendants replied to the responses, ECF Nos. 72-74. The motions are ripe for ruling.
The following is a summary of the factual background of this action as set forth in Plaintiffs' complaint, ECF No. 1. Plaintiffs are five current participants in the Plan, a defined contribution, individual account employee benefit plan sponsored by Centerra. See 29 U.S.C. § 1002(a)(1), (16). Plaintiffs seek to represent a class of all participants and beneficiaries in the Plan from December 4, 2014 through January 1, 2019. On December 4, 2014, the Plan had $273 million in assets and 4, 161 participants with account balances. On January 1, 2019, the Plan was merged into the Constellis 401(k) Plan (“the Constellis Plan”).
Prior to the Plan's merger in January 2019, Centerra was the named fiduciary with authority to manage the Plan. The Benefit Plan Committee of Centerra (“Benefits Committee”) was responsible for the administration of the Plan, and the Investment Committee of Centerra (“Investment Committee”) was responsible for the selection of investment options in the Plan. The named individual Defendants were members of the Benefits Committee during the relevant time period.
On January 1, 2016, Centerra and the Benefits Committee hired AHIC as the Plan's discretionary investment manager. AHIC had the authority to select and remove Plan investments. The Centerra Defendants had the authority to request that AHIC retain any investment for the Plan but agreed to allow AHIC to exclusively select its own proprietary funds for the Plan. Per this arrangement, the Plan's investment lineup was restructured.
In June 2016, AHIC replaced eleven actively managed equity, fixed income, and target date mutual funds with five collective trusts (“the Aon Trusts”) managed by Aon Trust Company (“ATC”), a banking affiliate of AHIC. The Plan invested over $150 million in the Aon Trusts. When the Plan merged with the Constellis Plan in January 2019, Constellis replaced the five Aon Trusts.
Plaintiffs allege the Defendants replaced well-performing funds with the Aon Trusts for their own financial gain rather than to benefit the Plan participants. According to the Plaintiffs, the Aon Trusts underperformed causing substantial losses compared to what the Plan would have earned had it remained invested in the actively managed funds which the Aon Trusts replaced. Further, Plaintiffs allege the Centerra Defendants caused the Plan to incur excessive recordkeeping fees because they failed to monitor and control the compensation of the Plan's recordkeeper: Voya Institutional Plan Services, LLC (“Voya”).
Plaintiffs assert four causes of action. In count one, Plaintiffs allege the Centerra Defendants and AHIC breached the fiduciary duties imposed by ERISA when the Plan invested in the Aon Trusts. In count two, Plaintiffs allege the Centerra Defendants breached the fiduciary duties imposed by ERISA when they caused the Plan to pay unreasonable recordkeeping fees. In count three, Plaintiffs allege the Centerra Defendants and AHIC engaged in transactions prohibited by ERISA. In count four, Plaintiffs allege the Centerra Defendants breached the fiduciary duty imposed by ERISA to monitor other Plan fiduciaries. The Centerra Defendants move to dismiss the entire complaint. AHIC moves to dismiss counts one and three: the only counts asserted against AHIC. All Defendants move pursuant to Federal Rule of Civil Procedure 12(b)(6), arguing that Plaintiffs fail to state a claim upon which relief can be granted.
Under Federal Rule of Civil Procedure 8(a)(2), a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). However, “Rule 8(a)(2) still requires a ‘showing,' rather than a blanket assertion, of entitlement to relief.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, n.3 (2007).
“A motion filed under Rule 12(b)(6) challenges the legal sufficiency of a complaint[.]” Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009). To survive a Rule 12(b)(6) motion to dismiss, the “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 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.
In reviewing the complaint, the court accepts all well-pleaded allegations as true and construes the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff. Venkatraman v. REI Sys., Inc., 417 F.3d 418, 420 (4th Cir. 2005); Ashcroft, 556 U.S. at 662 (). However, the court is not required to accept Plaintiff's legal conclusions as true. Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999) (“[F]or purposes of Rule 12(b)(6), we are not required to accept as true the legal conclusions set forth in a plaintiff's complaint.”).
Rule 8 applies to pleadings for all ERISA actions. Reetz v. Lowe's Companies, Inc., No. 518CV00075KDBDCK, 2019 WL 4233616, at *3 (W.D. N.C. Sept. 6, 2019). To state a viable claim under ERISA, the complaint must contain sufficient factual allegations as compared to mere legal conclusions. See Custer v. Sweeney, 89 F.3d 1156, 1163 (4th Cir. 1996) ().
AHIC submits thirty exhibits that it contends the Court may consider on its motion to dismiss, and the Centerra Defendants submit eight of their own. Generally, a court's evaluation of a motion to dismiss is limited to a review of the allegations of the complaint itself. Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 165 (4th Cir. 2016); Fed.R.Civ.P. 12(d). However, a court may consider documents that are explicitly incorporated into the complaint by reference and those attached to the complaint as exhibits. Goines, 822 F.3d at 165. A court may also consider a document submitted by the movant that was not attached to or expressly incorporated in a complaint, so long as the document was integral to the complaint and there is no dispute about the document's authenticity. Id. at 166.
Limited quotation from or reference to documents that may constitute relevant evidence in a case is not enough to incorporate those documents, wholesale, into the complaint. Id. (citing Sira v. Morton, 380 F.3d 57, 67 (2d. Cir. 2004)). Instead, for the document to be considered, the plaintiff's claims must turn on, or otherwise be based on, the contents of the document. Goines, 822 F.3d at 166. Short of that, a document is not integral to the complaint and should not be considered. Id.
Here only three of Defendants'...
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