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Clark v. Duke University

United States District Court, M.D. North Carolina

April 13, 2018

DAVID CLARK, et al., Plaintiffs,
DUKE UNIVERSITY, et al., Defendants.


          Catherine C. Eagles, District Judge.

         In this ERISA action, the plaintiffs contend that the defendants breached their fiduciary duties to the plan by failing to investigate and include low-cost recordkeeping services and funds with reasonable fees and by including imprudent investment funds. They seek certification of a class made up of current and former participants of the plan. Because the plaintiffs have established Article III standing and meet the class certification standards set forth in Rule 23(a) and Rule 23(b)(1), the Court will grant the motion for class certification.


         The Employee Retirement Income Security Act imposes fiduciary duties “on those responsible for the administration of employee benefit plans and the investment and disposal of plan assets.” Tatum v. RJR Pension Inv. Comm., 761 F.3d 346, 355 (4th Cir. 2014). A fiduciary who breaches ERISA-imposed duties is personally liable for any losses to the plan resulting from the breach. 29 U.S.C. § 1109(a). ERISA authorizes any plan participant to bring an action on behalf of the plan for a breach of fiduciary duty, including the right to seek associated monetary and injunctive relief. 29 U.S.C. §§ 1109(a), 1132(a)(2).

         The plaintiffs are participants and beneficiaries in the Duke Faculty and Staff Retirement Plan. Doc. 72 at ¶¶ 13-17; Docs. 70-2, -3, -4, -5, -6. The defendants are Duke University, the Duke Investment Advisory Committee, and individuals members of the advisory committee.

         The plaintiffs assert that the defendants breached their fiduciary duties to the Plan by failing to monitor and control the Plan's recordkeeping services, allowing the Plan to engage in related prohibited transactions with its record keepers, failing to prudently monitor the Plan fund options resulting in the inclusion of funds with overly high expenses and fees and of two allegedly imprudent funds, and violating the Plan's Investment Policy Statement by including and retaining the CREF Stock Account fund in the Plan. See Doc. 72 at ¶¶ 229-63. The plaintiffs allege that the defendants' breach resulted in higher Plan recordkeeping costs and the inclusion of lower performing, higher fee funds as compared to available alternative investments, all of which reduced the value of Plan's investments. Id. The plaintiffs seek equitable and injunctive relief, including that the defendants:

■ “make good to the Plan all losses to the Plan resulting from each breach of fiduciary duty, ”
■ “[r]eform the plan to offer only prudent investments, ”
■ “obtain bids for recordkeeping and . . . pay only reasonable recordkeeping expenses, ” and
■ “[r]emove the fiduciaries who have breached their fiduciary duties and enjoin them from future ERISA violations.”

Doc. 72 at ¶ 263.

         The plaintiffs now move to certify the following class of plaintiffs under Federal Rule of Civil Procedure 23:

All participants and beneficiaries of the Duke Faculty and Staff Retirement Plan from August 10, 2010 through the date of judgment, excluding Defendants.

Doc. 69 at 1. They ask the Court to appoint them as class representatives and to appoint Schlichter, Bogard & Denton, LLP as class counsel under Federal Rule of Civil Procedure 23(g). Id.


         “The class action is an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.” Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013).[1] To show that a case falls within the exception, the plaintiff “must affirmatively demonstrate his compliance” with Federal Rule of Civil Procedure 23. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011); see also Thorn v. Jefferson-Pilot Life Ins. Co., 445 F.3d 311, 318 (4th Cir. 2006) (“[D]istrict courts must conduct a rigorous analysis to ensure compliance with Rule 23.”).

         As threshold matters, the putative class representatives must show that they are members of the proposed class, see Fed. R. Civ. P. 23(a) (“One or more members of a class may sue or be sued as representative parties on behalf of all members”), and must establish that the members of the proposed class are “readily identifiable” or “ascertainab[le].” EQT Prod. Co. v. Adair, 764 F.3d 347, 358 (4th Cir. 2014). The plaintiff must then establish that the case satisfies all four requirements of Rule 23(a) and fits into at least one of the three subsections of Rule 23(b). Comcast, 569 U.S. at 33-34. As in all litigation, the plaintiffs must have constitutional standing. Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 n.6 (2016).

         Here, the issues in dispute are whether the named plaintiffs have Article III standing; whether the claims of the named plaintiffs are common and typical; whether the named plaintiffs will adequately protect the interests of the class; and whether the class can be certified under Rule 23(b)(1). Doc. 74 at 14-15, 19, 22, 26-27, 29.

         I. Undisputed Issues

         The plaintiffs' proposed class includes at least 40, 000 individuals. Doc. 70-1 at 2; Doc. 35-10 at 3; Doc. 51 ¶ 12. This “is so numerous that joinder of all members is impracticable.” Fed.R.Civ.P. 23(a)(1); see Cent. Wesleyan Coll. v. W.R. Grace & Co., 6 F.3d 177, 183 (4th Cir. 1993) (noting district court's finding “that some 480 potential class members would easily satisfy the numerosity requirement”).

         The proposed class members can be easily identified in participant account records possessed by the defendants or the Plan's recordkeepers. See, e.g., Doc. 70-1; Doc. 35-10 (providing example of detailed recordkeeping). The class members are ascertainable.

         There is no dispute that Schlichter, Bogard & Denton, LLP has extensive experience in ERISA class action lawsuits, has invested time in investigating and identifying potential claims in the action, and will commit resources to representing the class. See Fed. R. Civ. P. 23(g)(1), (2); Doc. 70-7. The Court finds that Schlichter, Bogard & Denton, LLP will fairly and adequately represent the interests of the class. Fed.R.Civ.P. 23(g)(2), (4).

         II. Constitutional Standing

         In order to have standing to sue under Article III of the United States Constitution, a plaintiff must establish three elements: (1) that the plaintiff has sustained an injury in fact that is concrete and particularized; (2) that the injury is traceable to the defendants' actions; and (3) that a favorable judicial decision is likely to redress the injury. Spokeo, 136 S.Ct. at 1547; Friends of the Earth, Inc. v. Gaston Copper Recycling Corp., 629 F.3d 387, 396 (4th Cir. 2011). “[N]amed plaintiffs who represent a class must allege and show that they personally have been injured, not that injury has been suffered by other, unidentified members of the class to which they belong and which they purport to represent.” Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 40 n. 20 (1976); accord Doe v. Obama, 631 F.3d 157, 160 (4th Cir. 2011). There must be a named plaintiff with ...

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