United States District Court, N.D. Iowa, Cedar Rapids Division
JEREMY KARG, MATTHEW R. LEMARCHE, and SHRILEY RHODES, on behalf of themselves and all others similarly situated, Plaintiffs,
TRANSAMERICA CORPORATION; TRUSTEES OF THE AEGON USA, INC. PROFIT SHARING TRUST; and DOES 1-40, Defendants.
WILLIAMS UNITED STATES DISTRICT JUDGE
matter is before the Court on defendants' Transamerica
Corporation (“Transamerica”) and Trustees of the
Aegon USA, Inc. Profit Sharing Trust's
“defendants”) Motion to Dismiss. (Doc. 23).
Plaintiffs timely filed a resistance (Doc. 29), and
defendants timely filed a reply (Doc. 32). For the following
reasons, defendants' motion is denied.
sponsors the Transamerica 401(k) Retirement Savings Plan
(“Plan”) as a means for employees and
participants to save for retirement. (Doc. 10, at 1, 6). Over
17, 000 current and former employees had over $1.9 billion
invested in the Plan as of December 31, 2017. (Id.,
at 7). Plaintiffs are current and former participants in the
Plan. (Id., at 4). Plaintiffs seek to certify a
class action against defendants on behalf of all participants
and beneficiaries of the Plan for the class period of
December 28, 2012, to the date of final judgement in this
action. (Id., at 34-35). Does 1-20 are officers and
directors of Plan sponsor Transamerica, who had the authority
and responsibility to appoint, monitor, and remove Plan
trustees. (Id., at 5). Plaintiffs allege that under
the Employee Retirement Income Security Act
(“ERISA”), Title 29, United States Code Section
1001, et. seq., Does 1-20 and Transamerica are
fiduciaries of the Plan and monitoring fiduciaries of Aegon
and Does 21-40. (Id., at 40-41). The Plan appoints
Aegon to manage the assets of the Plan. (Id., at 5).
Aegon is “responsible for selecting and monitoring the
investment options offered to Plan participants.” (Doc.
25, at 11 (citing Doc. 23-2, at 110, 112)). Does 21-40 are
individual trustees of Aegon who manages the assets of the
Plan. (Doc. 10, at 5). Plaintiffs allege that Does 21-40 and
Aegon are also fiduciaries of the Plan under ERISA.
(Id., at 5-6).
Amended Complaint for Damages (“complaint”)
asserts two counts under ERISA. First, plaintiffs allege that
defendants' retention of six poor-performing investment
portfolios (“challenged funds”) in the Plan
breached defendants' fiduciary duty of prudence.
(Id., at 37-40). Second, plaintiffs allege that
Transamerica and Does 1-20 breached their fiduciary duties to
monitor the performance of Aegon and Does 21-40.
(Id., at 40-42). Plaintiffs allege that these
breaches caused the Plan and its participants, including
plaintiffs, to suffer “hundreds of millions of dollars
of damages and lost-opportunity costs which continue to
accrue.” (Id., at 39-40). Plaintiffs seek
various declaratory relief, monetary damages to
“restore all losses to the Plan that resulted from the
breaches, ” and attorney's fees and costs.
(Id., at 42-43).
2015, certain Plan participants filed a class action suit in
the Northern District of Iowa against Transamerica and its
affiliates (“Dennard defendants”)
regarding the Plan and the challenged funds. Dennard v.
Transamerica Corp., No. 15-cv-30-EJM (N.D. Iowa)
(“Dennard”). The Second Amended Class
Action Complaint in Dennard (“Dennard
complaint”) alleged that the Dennard
defendants violated their ERISA fiduciary duty of loyalty by
causing the Plan to invest funds with unreasonably high
expenses and engaged in prohibited transactions by charging
the Plan management fees that benefited the Dennard
defendants. (Doc. 23-2 at 178-79). On May 19, 2016, United
States District Court Judge Edward J. McManus approved a
class action Settlement Agreement and Release between the
plaintiffs and defendants in Dennard. (Id.,
at 6-36). The settlement agreement required Transamerica to
implement specified structural changes to the Plan and
establish a settlement fund to distribute monetary damages to
the class members. (Id., at 17-25). The named
plaintiffs and putative class members in this case are all
members of the Dennard class of
plaintiffs. The settlement agreement included a
provision releasing Transamerica and its affiliates from
future claims “arising out of or related to the conduct
alleged in the plaintiffs' operative complaint, whether
or not included as counts in the complaint.” (Doc.
23-2, at 10-11).
Motion to Dismiss asserts four grounds for dismissal. (Doc.
23, at 1). First, defendants assert that the imprudent
conduct alleged in the instant suit is identical in all
relevant aspects to the conduct alleged in Dennard,
therefore plaintiffs' claims are barred by both the
Dennard settlement agreement release provision and
res judicata. (Id., at 1-2). Second,
defendants contend that plaintiffs' complaint does not
allege a plausible violation of defendants' fiduciary
duty of prudence. (Id., at 2). Third, defendants
argue that plaintiffs' imprudence claim is barred by
ERISA's three-year statute-of-limitations because
plaintiffs had “actual knowledge” of the
challenged funds' performance well outside of the
limitations period (which extends to December 28, 2015).
(Id.). Finally, defendants assert that
plaintiffs' Count II, alleging failure to monitor
fiduciaries, does not state a claim because the claim it
derives from, an alleged breach of fiduciary duty of
prudence, is not facially plausible. (Id.).
complaint must contain a “short and plain statement of
the claim showing that the pleader is entitled to
relief.” Fed.R.Civ.P. 8(a)(2). Rule 8 does not require
“detailed factual allegations.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007).
Nevertheless, it “demands more than an unadorned,
the-defendant-unlawfully-harmed- me accusation.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A
complaint that relies on “naked assertion[s]”
devoid of “further factual enhancement, ”
“labels and conclusions, ” or “a formulaic
recitation of the elements of a cause of action will not
do.” Twombly, 550 U.S. at 555, 557.
ruling on a defendant's motion to dismiss, a judge must
accept as true all of the factual allegations contained in
the complaint.” Erickson v. Pardus, 551 U.S.
89, 94 (2007). The Court must also “grant all
reasonable inferences from the pleadings in favor of the
nonmoving party.” United States v. Any & All
Radio Station Transmission Equip., 207 F.3d 458, 462
(8th Cir. 2000). “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.” Iqbal, 556 U.S. at 678. “A claim
has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Id. Plausibility is not equivalent
to probability, but it is something “more than a sheer
possibility that a defendant has acted unlawfully.”
Id. “The question . . . is not whether [a
plaintiff] might at some later stage be able to prove [his
claims]; the question is whether [a plaintiff] has adequately
asserted facts (as contrasted with naked legal conclusions)
to support his claims.” Whitney v. Guys, Inc.,
700 F.3d 1118, 1129 (8th Cir. 2012).
Release Provision and Res Judicata
parties agree that because Dennard was resolved by a
judgment entered on a court-approved settlement agreement the
scope of res judicata is coextensive with scope of the
release in the settlement agreement. (Docs. 25, at 25; 29, at
7 (citing In re Gen. Am. Life Ins. Co. Sales Practices
Litig., 357 F.3d 800, 803 (8th Cir. 2004))). Because the
scope of the release dictates the res judicata effect of the
judgment in Dennard, the Court will analyze the
scope of the release but will not separately address the
applicability of res judicata. Cf. Boddicker v. Esurance
Inc., 770 F.Supp.2d 1016, 1021 (D.S.D. 2011)
(“Courts generally decide issues on the narrowest
settlement agreement provides that it “shall be
governed by and construed in accordance with the laws of Iowa
without giving effect to any conflict of law provisions that
would cause the application of the laws of any jurisdiction
other than Iowa.” (Doc. 23-2, at 35). Iowa law
“enforces a settlement agreement much like any other
contract.” Walker v. Gribble, 689 N.W.2d 104,
109 (Iowa 2004) (citation omitted). Plaintiffs do not contest
defendants' assertion that the settlement agreement is a
valid and enforceable contract. ...