In Davis, et al. v. Salesforce.com, Inc., et al., No. 21-15867, 2022 WL 1055557 (9th Cir. Apr. 8, 2022), Plaintiffs-Appellants alleged that Defendants breached their ERISA duty of prudence with respect to the management of the Salesforce 401(k) Plan by imprudently failing to select lower-cost share classes or collective investment trusts with substantially identical underlying assets. The Ninth Circuit reversed the district court’s dismissal of the lawsuit because it found that Plaintiffs adequately alleged a claim for breach of the duty of prudence under the pleading standard articulated in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009).
Here, “Plaintiffs identify two lower-cost JPMorgan share classes (R5 and R6) that they allege were available substitutes for nine JPMorgan SmartRetirement mutual funds offered by the plan during the class period.” While Defendants had plausible explanations for their investment choices, the court found that judicially noticed documents, which showed Institutional class shares held by the plan, were not sufficient at the pleading stage to make Plaintiffs’ plausible allegations inadequate. Plaintiffs made several allegations supporting its claim that Defendants unreasonably retained allegedly high-cost target date funds. Whether Defendants’ actions are reasonable cannot be resolved at the pleading stage. The court reversed the dismissal of Plaintiffs’ breach of fiduciary duty claim and their derivative duty-to-monitor claim.
*Please note that this blog is a summary of a reported legal decision and does not constitute legal advice. This blog has not been updated to note any subsequent change in status, including whether a decision is reconsidered or vacated. The case above was handled by other law firms, but if you have questions about how the developing law impacts your ERISA benefit claim, the attorneys at Roberts Disability Law, P.C. may be able to advise you so please contact us.
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