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Davis v. Stadion Money Management, LLC

United States District Court, M.D. North Carolina

December 20, 2019

KIMBERLY DAVIS, individually and as The representative of a class of similarly situated persons, Plaintiff,



         This action is brought pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (“ERISA”). Before the Court are motions to dismiss Plaintiff's First Amended Class Action Complaint filed by Defendants Stadion Money Management, LLC (“Stadion”) and United of Omaha Life Insurance Company (“United”), (ECF Nos. 42; 47), as well as United's Motion to Transfer Venue to the District of Nebraska, (ECF No. 32). For the reasons stated below, United's Motion to Transfer will be granted. Accordingly, the Court declines to resolve Defendants' motions to dismiss, which shall be transferred as part of this action to the District of Nebraska.

         I. BACKGROUND

         A. ERISA Overview “Congress enacted ERISA to promote the ‘soundness and stability of [employee benefit plans]' in private industry.” Trs. of the Plumbers and Pipefitters Nat'l Pension Fund v. Pluming Servs., Inc., 791 F.3d 436, 440 (4th Cir. 2015) (quoting 29 U.S.C. § 1001(a)) (alteration in the original). Specifically, the law (1) establishes certain “minimum standards” of equitability and financial soundness for employee benefits plans and then (2) provides “appropriate remedies, sanctions, and ready access to the Federal courts” to cure any breaches of those standards. See id.; Aetna Health Inc. v. Davila, 542 U.S. 200, 208 (2004).

         In 2006, Congress enacted the Pension Protection Act (“PPA”) to “increase employee participation in § 401(k) retirement plans.” Bidwell v. Univ. Med. Ctr., Inc., 685 F.3d 613, 616 n.1 (6th Cir. 2012). Specifically, the PPA amended ERISA “to provide a safe harbor for plan fiduciaries investing participant assets in certain types of default investment alternatives in the absence of participant investment direction.” U.S. Dep't of Labor, Fact Sheet: Default Investment Alternatives Under Participant-Direct Individual Account Plans (Sept. 2006), available at That is, the PPA encourages employers to automatically invest the savings of employees who do not select a 401(k) plan on their own by limiting employers' legal exposure for these automatic enrollments.[1] Id.; Larson v. Allina Health Sys., 350 F.Supp.3d 780, 794 (D. Minn. 2018). In exchange for this safe harbor, so-called QDIA (qualified default investment alternative) plans must comply with Department of Labor regulations. See Bidwell, 685 F.3d at 616.

          B. The Parties

         Plaintiff, Kimberly Davis, lives in Greensboro, North Carolina where she worked for Festival Fun Parks, LLC d/b/a Palace Entertainment. (See ECF Nos. 36 ¶ 13; 28-1 at 2.) Palace Entertainment is a California-based company. (See ECF No. 28-3 at 2.) Davis was automatically enrolled by her employer in the “Palace Plan, ” Palace Entertainment's QDIA. (See ECF Nos. 36 ¶ 13 (explaining that Plaintiff participated in the Palace Plan); 28-1 at 2 (documenting that the Palace Plan was a QDIA).) The Palace Plan was managed by Stadion. (ECF No. 36 ¶ 13.) Stadion “canceled [Davis's] service” when she “received a distribution of . . . benefits” in March 2013. (Id.)

         Defendant, Stadion, “is a registered investment adviser based in Watkinsville, Georgia.” (Id. ¶ 14.) Stadion provides “managed account services to participants in ERISA-covered plans throughout the United States.”[2] (Id.) “Stadion invests each participant's funds into one of its risk-based portfolios” with younger participants generally placed into riskier plans focused on growth and older participants placed into more conservative plans focused on capital preservation. (ECF Nos. 44 at 6; 36 at ¶¶ 35-36.) In return for its investing services, Stadion receives a fee agreed to by the plan's sponsor. (ECF No. 44 at 7.)

         Defendant, United, is an insurance company based in Omaha, Nebraska. (ECF No. 36 ¶ 15.) United “issues group variable annuity contracts to employer-sponsored retirement plans and provides attendant administrative and investment services.”[3] (Id.)

         C. Stadion's Relationship with United and Alleged ERISA Violations

         According to Plaintiff, Stadion's managed account service has consistently “delivered underwhelming results.” (Id. ¶ 24.) Given this poor performance, Stadion could only expand by “establish[ing] new marketing relationships with insurance companies, ” like United, who could “pitch Stadion's managed account service” to the participants in the group variable annuities they managed. (See Id. ¶ 25.) In exchange for these managed account services, Stadion “receives a managed account fee” which it splits with United. (See Id. ¶ 26.)

         Plaintiff initiated this lawsuit on behalf of all “participants and beneficiaries whose accounts were enrolled in Stadion's managed account service within a retirement plan administered by United of Omaha for any period of time after January 25, 2013.” (Id. ¶ 74.) At its core, Plaintiff's Complaint alleges that Stadion “select[ed] investment options that generate[d] higher fees for [United]” and, in exchange, United kept referring Stadion to provide managed account services despite Stadion's lackluster track record. (See Id. ¶¶ 3-5.) In Count One, Plaintiff alleges Stadion violated its fiduciary duties of loyalty and prudence by investing in investment options affiliated with Defendants when “unaffiliated options . . . would have provided better performance at lower costs.” (See Id. ¶¶ 81-84.) In Count Two, Plaintiff alleges United wrongfully and knowingly profited from Stadion's ERISA violations. (Id. ¶¶ 85-87.) In Count Three, Plaintiff alleges Stadion engaged in prohibited transactions with a party in interest, United. (Id. ¶¶ 88-92.) Finally, in Count Four, Plaintiff alleges Stadion engaged in prohibited transactions with itself. (Id. ¶¶ 93-95.)


         Under 28 U.S.C. § 1404(a), “[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented.” 28 U.S.C. § 1404(a). Such requests for a transfer of venue are “committed to the sound discretion of the district court.” Jenkins v. Albuquerque ...

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