United States District Court, M.D. North Carolina
MEMORANDUM OPINION AND ORDER
Catherine C. Eagles, District Judge.
ERISA action, the plaintiffs have sued the defendants
alleging that they breached their fiduciary duties to the
BB&T 401(k) Savings Plan and engaged in prohibited
transactions in connection with fees and investment options.
The defendants have moved for partial summary judgment. The
motion will be granted in part and denied in part.
1982, BB&T Corporation established the BB&T
Corporation 401(k) Savings Plan. Doc. 315-1 at 8. Eligible
BB&T employees can contribute some of their compensation
to personal retirement accounts invested through the Plan.
Doc. 315-1 at 28-37. The Plan is a Defined Contribution Plan
under ERISA. Doc. 315-7 at 5.
Plan offers participants a number of investment options
including stock mutual funds, bond funds, and a guaranteed
interest option called the Bank Investment Contract. See,
e.g., Doc. 315-6 at 12-14 (2009 options); Doc. 315-7 at
13-15 (2012 options); Doc. 315 at ¶¶ 33-34. It also
gives participants the option to use a self-directed
brokerage account with TD Ameritrade. Doc. 315-7 at 15; Doc.
315 at ¶ 21. Participants decide how to allocate their
contributions among the Plan's investment options and may
move their investments to other options at any time. Doc.
315-2 at 11-12.
Plan's governing document establishes a Compensation
Committee, members of which are Plan fiduciaries. Doc. 315-1;
Doc. 315-2 at 19-21. The Compensation Committee is
responsible for “adopt[ing] an investment policy
statement” for the Plan and “determin[ing] from
time to time the investment funds to be made available to
participants.” Doc. 315-2 at 20. The Compensation
Committee engages a consultant to assist it in evaluating the
types of investments options to offer Plan participants.
See Doc. 315 at ¶ 13; Doc. 315-4.
and its affiliates, including Sterling Capital Management,
offer mutual funds and other proprietary investment options
to the Plan, as well as to other retirement plans, pension
funds, and customers. Until 2007, the Plan offered only
investment options from BB&T or its affiliates. Doc.
328-35 at 36 (consultants 2007 investment review).
Non-proprietary funds were added to the Plan beginning in
2007, see Doc. 315 at ¶ 18, but many
proprietary mutual funds remain as Plan options. See,
e.g., Doc. 315 at ¶ 34; Doc. 315-7 at 13-15 (2012
options). These funds-proprietary and otherwise- generally
charge the Plan fees for their services. See, e.g.,
Doc. 328-8 at 11 (May 2012 report showing fees paid from the
Plan to proprietary and non-proprietary funds).
judgment is appropriate if “there is no genuine issue
as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed.R.Civ.P. 56(a). A
genuine issue exists only when “the evidence is such
that a reasonable jury could return a verdict for the
nonmoving party.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). “Only disputes
over facts that might affect the outcome of the suit under
the governing law will properly preclude the entry of summary
judgment. Factual disputes that are irrelevant or unnecessary
will not be counted.” Id.
moving party has the initial burden of demonstrating the
absence of any material issue of fact. Ruffin v. Shaw
Indus., Inc., 149 F.3d 294, 300-01 (4th Cir. 1998) (per
curiam) (citing Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986) and Liberty Lobby, 477 U.S. at
248-49). Once the moving party meets its initial
burden, the non-moving party must come forward with
evidentiary material demonstrating the existence of a genuine
issue of material fact requiring a trial. Id.
Court will construe the evidence and all reasonable
inferences in favor of the plaintiff, the non-moving party.
United States v. Diebold, Inc., 369 U.S. 654, 655
(1962) (per curiam). The Court has reviewed the evidence
referenced in the parties' briefs, but it has not scoured
the record to locate support for factual assertions in the
briefs that are not accompanied by a citation to evidence.
See Ritchie v. Glidden Co., 242 F.3d 713, 723 (7th
Cir. 2001); see also Cray Commc'ns, Inc. v. Novatel
Comp. Sys., Inc., 33 F.3d 390, 396 (4th Cir. 1994)
(noting that the district court is “well within its
discretion in refusing to ferret out the facts that counsel
had not bothered to excavate”).
Statute of limitations
requires that a plaintiff bring suit within the earlier of
six years of the breach or violation or three years after a
plaintiff has actual knowledge of the breach or violation. 29
U.S.C. § 1113(1), (2) (West, Westlaw through P.L.
115-185). This lawsuit was filed on September 4, 2015. Doc.
defendants move for partial summary judgment as to all claims
based on acts or omissions occurring more than six years
before suit was filed, Doc. 322 at 10, and as to all claims
relating to investment expenses incurred and performance
issues arising more than three years before suit was filed.
Id. at 10-11.
Acts or omissions before September 3, 2009
103 provides “that in the case of fraud or concealment,
such action may be commenced not later than six years after
the date of discovery of such breach or
violation.” 29 U.S.C. § 1113. The Supreme Court
also has stated that courts should read the fraudulent
concealment tolling doctrine into every federal statute of
limitation, Supermarket of Marlinton, Inc. v. Meadow Gold
Dairies, Inc., 71 F.3d 119, 122 (4th Cir. 1995) (citing
Holmberg v. Armbrecht, 327 U.S. 392, 397 (1946)),
and the Fourth Circuit has noted in an unpublished opinion
that ERISA's fraud or concealment provision
“encompasses at a minimum” the common law
fraudulent concealment doctrine. Browning v. Tiger's
Eye Benefits Consulting, 313 Fed.Appx. 656, 663 (4th
Cir. 2009). The plaintiffs have the burden of proof to
establish that the statute of limitation should be tolled by
fraudulent concealment. See, e.g., Supermarket
of Marlinton, 71 F.3d at 122.
the statute of limitations under the fraudulent concealment
doctrine to allow claims based on acts or omissions occurring
more than six years ago, the plaintiffs must show (1) that
defendants engaged in fraud or a course of conduct designed
to conceal evidence of their alleged wrongdoing and (2) that
the plaintiffs were not on actual or constructive notice of
that evidence, despite (3) their exercise of diligence.
See SD3 II LLC v. Black & Decker (U.S.) Inc.,
888 F.3d 98, 108 (4th Cir. 2018); Supermarket of
Marlinton, 71 F.3d at 122; see also Browning,
313 Fed.Appx. at 663 (noting that “when the defendant
acts to prevent or delay the plaintiff's discovery of the
breach, ” the statute of limitations is tolled
“until the plaintiff in the exercise of reasonable
diligence discovered or should have discovered the alleged
fraud or concealment”).
plaintiffs contend that the statute of limitations should be
tolled because the defendants had a duty to provide
information to Plan participants, the defendants did not
disclose this information, and the information contained
“facts that would have alerted [the] participants that
BB&T had breached its duties through self-dealing.”
Doc. 327 at 23-24. The plaintiffs have not identified
evidence in support of these contentions sufficient to create
a disputed question of material fact as to fraudulent
to a large extent the plaintiffs do not clearly articulate
the information the defendants allegedly failed to disclose,
and their evidentiary citations often direct the Court to
pages of information, to a declaration identifying documents
but not to the document itself, and to pages of previous
briefing. See supra pp. 3-4. Second, the plaintiffs
do not provide the Court with a clear analysis of how this
information relates to their claims or how the allegedly
secret information was necessary to put the plaintiffs on
notice of their claims.
even as to those pieces of information that the plaintiffs
have specifically identified and that the Court has been able
to link to a substantive claim, the plaintiffs have not
directed the Court to any statute, regulation or authority
that requires the defendants to disclose such information to
Plan participants or any evidence beyond a failure to
affirmatively disclose. Fraudulent concealment means more
than a mere failure to disclose disparate pieces of
information, even in the fiduciary context. Rather, it
requires fraud, SD3, 888 F.3d at 108, or, at the
very least, a course of conduct designed to conceal,
Supermarket of Marlinton, 71 F.3d at 123, and
“affirmatively directed at deflecting
litigation.” Pocahontas Supreme Coal Co., Inc. v.
Bethlehem Steel Corp., 828 F.2d 211, 219 (4th Cir.
1987). The plaintiffs have not pointed to any such evidence.
plaintiffs also contend that the defendants “made
purposeful misstatements in response to Plan participant
questions about fee income received by BB&T” that
fraudulently concealed their wrongdoing. Doc. 327 at 23-24.
However, the only allegedly “purposeful
misstatement” they identify was the Plan's 2007
Summary Plan Description that followed a general inquiry
about fees by some Plan participants in 2006. See
Doc. 327 at 12, 24 (citing TAD Decl. ¶ 32). The
plaintiffs maintain that the 2007 Summary Plan Description
did not identify fee income BB&T receives from
proprietary mutual funds in which the Plan invests. Doc. 327
at 12; see also Doc. 327 at 24 (citing for continued
misstatements to the TAD Decl. ¶¶ 10, 69, which
cite Doc. 328-8 and Doc. 328-79). This is insufficient to
establish fraudulent concealment, which cannot be based on
“failing to admit illegal conduct upon general inquiry,
” such as the 2006 fee inquiry. Supermarket of
Marlinton, 71 F.3d at 123; see also Pocahontas,
828 F.2d at 219 (requiring more than an unpursued inquiry).
this, the plaintiffs have not directed the Court's
attention to specific misstatements or explained how the
misstatements prevented the plaintiffs from being on notice
of their claims. In the absence of sufficient evidence of
fraudulent concealment, the six-year statute of repose is not
tolled. The defendants are entitled to summary judgment on
all claims based on acts or omissions occurring before
September 3, 2009.
Acts or omissions between September 4, 2009, and September 3,
defendants assert that ERISA's three-year statute of
limitation applies to bar Counts II, VI, and VII to the
extent those claims are based on the Plan's investment
expenses and performance issues before September 4, 2012.
Doc. 322 at 19-21. As to these claims, the defendants contend
that plan-wide communications establish that plaintiffs had
actual knowledge of the facts underlying their claims more
than three years before suit was filed.
defendants have the burden of proving facts showing that the
statute of limitation bars the plaintiffs' claims.
David, 704 F.3d at 339. The Court concludes that the
defendants have not met their burden to show that the
plaintiffs had actual knowledge more than three years before
the suit was filed and will deny summary judgment on the
defendants' three-year statute of limitation defense.
is unsettled as to what standard the Court should apply in
evaluating actual knowledge, Browning, 313 Fed.Appx.
at 660-61, 661 n. 1 (discussing potential circuit split), but
it does appear clear that actual knowledge of the facts
supporting one claim would not bar another claim based on
different facts. In view of the complicated facts underlying
the multiple claims at issue in this case and some lack of
clarity in the briefing as to the facts that the plaintiffs
contend constitute breaches and violations-and thus of which
the plaintiffs would need actual knowledge for the three-year
statute to apply-summary judgment is
of course, does not guarantee that the Court ultimately will
hold that the three-year statute of limitation is not
applicable. Rather, it gives the defendants a chance to prove
at trial that the limitation is applicable to each particular
Breach of fiduciary duty claims
is a comprehensive statute that imposes a number of detailed
duties and responsibilities on Plan fiduciaries, Mertens
v. Hewitt Assocs., 508 U.S. 248, 251-52, (1993),
including “the proper management, administration, and
investment of [plan] assets, the maintenance of proper
records, the disclosure of specified information, and the
avoidance of conflicts of interest.” Mass. Mut.
Life Ins. Co. v. Russell, 473 U.S. 134, 142-143 (1985);
see also 29 U.S.C. § 1104(a) (West, Westlaw
through P.L. 115-185). Among other things, Section 404(a)
specifically imposes fiduciary duties of prudence and loyalty
on fiduciaries. 29 U.S.C. § 1104(a)(1)(A) (duty of
loyalty), § 1104(a)(1)(B) (duty of prudence); see
also Cent. States, Se. & Sw. Areas Pension Fund v. Cent.
Transport, Inc., 472 U.S. 559, 570-71 (1985) (noting
that Section 404(a)(1) imposes “strict standards of
trustee conduct . . . most prominently, a standard of loyalty
and a standard of care”).
duty of loyalty requires an ERISA fiduciary to
“discharge his duties . . . solely in the interest of
the participants and beneficiaries.” 29 U.S.C. §
1104(a)(1)(A). “Fiduciaries must also scrupulously
adhere to a duty of loyalty, and make any decisions in a
fiduciary capacity with an eye single to the interests of the
participants and beneficiaries.” DiFelice v. U.S.
Airways, Inc., 497 F.3d 410, 418-19 (4th Cir. 2007).
duty of prudence requires ERISA fiduciaries to act
“with the care, skill, prudence, and diligence under
the circumstances then prevailing that a prudent man acting
in a like capacity and familiar with such matters would use
in the conduct of an enterprise of a like character and with
like aims.” 29 U.S.C. § 1104(a)(1)(B). This
includes “a continuing duty to monitor investments and
remove imprudent ones.” Tibble v. Edison
Intern., 135 S.Ct. 1823, 1828 (2015). “When
deciding whether a plan fiduciary has acted prudently, a
court must inquire whether the individual trustees, at the
time they engaged [or failed to engage] in the challenged
transactions, employed the appropriate methods to investigate
the merits of the investment and to structure the
investment.” DiFelice, 497 F.3d at 420.
409(a) makes fiduciaries liable for breach of these duties
and specifies that each fiduciary must personally “make
good to the plan any losses to the plan resulting from each
such breach” and “restore to the plan any profits
of such fiduciary [that] have been made through use of assets
of the plan by the fiduciary.” Mertens, 508
U.S. at 252; see also 29 U.S.C. § 1109(a)
(West, Westlaw through P.L. 115-185). While the ERISA statute
does not define “losses, ” courts have generally
applied the law of trusts to find that a loss occurs when
there is a difference between the current value of the Plan
as compared to what the Plan would have been worth had the
breach not occurred. See, e.g., Coyne &
Delany Co. v. Selman, 98 F.3d 1457, 1466 (4th Cir. 1996)
(finding that a defined benefit plan incurred a loss when it
imprudently paid out $160, 000 for services to a
non-participant because it had “less money available to
pay benefits”); Roth v. Sawyer-Cleator Lumber
Co., 61 F.3d 599, 603 (8th Cir. 1995) (explaining how
loss should be measured and citing to Donovan);
Donovan v. Bierwirth, 754 F.2d 1049, 1056 (2nd Cir.
1985) (explaining how loss should be measured in light of
the elements of a claim for breach of fiduciary duty under
ERISA are: (1) that the defendant was a fiduciary of the
ERISA plan; (2) that the defendant breached its fiduciary
responsibilities under the plan; and (3) that the plan
suffered a loss from the defendant's breach. See,
e.g., Tatum v. RJR Pension Inv. Comm., 761 F.3d
346, 361 (4th Cir. 2014) (discussing breach and loss
requirements); Blair v. Young Phillips Corp., 235
F.Supp.2d 465, 470 (M.D. N.C. 2002) (stating elements and
citing Griggs v. E.I. DuPont de Nemours & Co.,
237 F.3d 371, 379-80 (4th Cir. 2001)).
trial, the plaintiffs bear the burden of proof on these
elements. Tatum, 761 F.3d at 361-62. As to proof of
loss resulting from the breach, this is a low burden-the
plaintiff only need establish “that there was some sort
of loss to the Plan.” Plasterers' Local Union
No. 96 Pension Plan v. Pepper, 663 F.3d 210, 220 (4th
Cir. 2011); see also Tatum, 761 F.3d at 362-63
(plaintiff need only establish a prima facie loss). Once the
plaintiff meets this low burden, the burden shifts to the
defendants to disprove loss. Tatum, ...