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Meiners v. Wells Fargo & Co.

United States District Court, D. Minnesota

May 25, 2017

John Meiners, Plaintiff,
Wells Fargo & Company, et al., Defendants.

          Goeffrey A. Graber, Esq. and Cohen Milstein Sellers & Toll PLLC, Greg G. Gutzler, Esq. and Elias Gutzler Spicer LLC, Robert K. Shelquist, Esq. and Lockridge Grindal Nauen PLLP, counsel for plaintiff.

          Stephen P. Lucke, Esq., Andrew J. Holly, Esq. and Dorsey & Whitney LLP, Russell Laurence Hirschhorn, Esq. and Proskauer Rose LLP, Eleven Times Square, counsel for defendants.


          David S. Doty, Judge.

         This matter is before the court upon the motion to dismiss by defendants Wells Fargo & Company, Human Resources Committee of the Wells Fargo Board of Directors, the Human Resources Committee members, Wells Fargo Employee Benefits Review Committee, and the Benefits Review Committee members.[1] Based on a review of the file, record, and proceedings herein, and for the following reasons, the court grants the motion.


         This ERISA dispute arises out of plaintiff John Meiners's participation in Wells Fargo's 401(k) retirement plan (Plan). The Plan is a defined-contribution plan in which employees may invest a certain percentage of their earnings on a pre-tax basis. Compl. ¶ 10. During the class period, the Plan offered 26 to 27 investment options. Id. ¶ 19. Twelve of the options are Wells Fargo Dow Jones Target Date Funds, which are proprietary funds managed by a Wells Fargo subsidiary.[2] Id. Meiners, on behalf of a putative class, alleges that these funds both underperformed comparable Vanguard funds and were more expensive than comparable Vanguard and Fidelity funds. Id. ¶¶ 27-32. Meiners claims that by continuing to keep these funds in the Plan, Wells Fargo breached its fiduciary duties. Id. ¶¶ 38-40. Further, Wells Fargo, in an effort to generate fees and seed the underperforming funds, allegedly breached its fiduciary duties by designating the Wells Fargo funds as the default for participants who enrolled in the Plan but did not select an investment option. Id. ¶¶ 33-36, 39-40.

         On November 22, 2016, Meiners filed this class action lawsuit under ERISA alleging (1) breach of the duties of loyalty and prudence under 29 U.S.C. § 1104 against the Benefit Committee; (2) breach of co-fiduciary duty under 29 U.S.C. § 1105 against the Human Resources Committee, Hardison, and Thornton; and (3) knowing participation in a breach of fiduciary duty under 29 U.S.C. § 1132(a)(3) against Wells Fargo & Company. Wells Fargo now moves to dismiss the complaint.


         I. Standard of Review

         In order to survive a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009) (citations and internal quotation marks omitted). “A claim has facial plausibility when the plaintiff [has pleaded] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp v. Twombly, 550 U.S. 544, 556 (2007)). Although a complaint need not contain detailed factual allegations, it must raise a right of relief above the speculative level. See Twombly, 550 U.S. at 555. “[L]abels and conclusions or a formulaic recitation of the elements of a cause of action” are not sufficient to state a claim. Iqbal, 556 U.S. at 678 (citations and internal quotation marks omitted).

         The court does not consider matters outside the pleadings under Rule 12(c). Fed.R.Civ.P. 12(d). The court may, however, consider matters of public record and materials that are “necessarily embraced by the pleadings.” Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999) (citation and internal quotation marks omitted). Here, because Meiners's complaint references returns data for the Wells Fargo and Vanguard funds, the court properly considers the Wells Fargo and Vanguard prospectuses.

         II. Motion to Dismiss

         A. Breach of Fiduciary Duty

         To plead a breach of fiduciary duty under ERISA, a plaintiff must allege that the defendant (1) was a fiduciary of the plan, (2) was acting in that capacity, and (3) breached a fiduciary duty. See 29 U.S.C. § 1109. The principal duties owed by fiduciaries are loyalty and prudence. Braden, 588 F.3d at 595. The duty of loyalty requires that the fiduciary discharge his duties “solely in the interests of the participants and beneficiaries....” 29 U.S.C. § 1104(a)(1). The duty of prudence requires that the fiduciary 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 ....” 29 U.S.C. § 1104(a)(1)(B). ERISA's “prudent person standard is an objective standard ... that focuses on the fiduciary's conduct preceding the challenged decision. Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915, 917-18 (8th Cir. 1994). “Because the content of the duty of prudence turns on the circumstances ... prevailing at the time the fiduciary acts ... the appropriate ...

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