Duane Morris Class Action Review - 2023 - Report - Page 200
the interests of other participants,” the court found that certification under Rule
23(b)(1)(B) was warranted. Id. at *36.
The decision in Garthwait, et al. v. Eversource Energy Co., 2022 U.S. Dist. LEXIS
93641 (D. Conn. May 25, 2022), is another typical ruling on these issues. There, the
plaintiffs sought to certify a class of current and former participants in the defendants’
401(k) plan, alleging that the defendants breached their fiduciary duties and failed to
monitor other fiduciaries in connection with their management of the plan. Specifically,
the plaintiffs alleged that the defendants charged the plan excessive recordkeeping,
administrative, and management fees; should have offered less risky and expensive
passively managed funds instead of actively managed funds; and otherwise failed to
remove a number of underperforming and overpriced investment options from the plan.
In opposing certification, the defendants first challenged the plaintiffs’ standing, arguing
that they lacked standing to pursue prospective relief and to represent a class
challenging funds in which the plaintiffs had not personally invested. The court agreed
that Plaintiffs lacked constitutional standing to seek prospective injunctive relief
because, as former plan participants, the “defendants’ future management of the plan
[did] not pose a real or immediate threat to the plaintiffs,” nor would prospective
injunctive relief “redress any of the past injuries they allege.” Id. at *15. However, the
court disagreed that the plaintiffs lacked standing with respect to funds in which they
had not personally invested, explaining that it was sufficient that they had “collectively
alleged ownership in, and losses to, each of the challenged funds or suites of funds”
and, regardless, asserted harms all premised on the same conduct by the defendants
implicating the same set of concerns across all of the challenged funds. Id. at *16-22.
Finally, the court noted that the plaintiffs had standing for the additional reason that they
asserted claims “in a derivative capacity on behalf of the Plan” as a whole. Id. at *23-24.
Defendants also challenged class certification under Rule 23 on similar grounds,
asserting that the proposed class lacked commonality and typicality to the extent some
class members were invested in only some or even none of the challenged funds.
However, the court found both elements satisfied. Commonality existed because the
class members all shared claims about excessive recordkeeping and administration
fees, with respect to which the common questions did not depend on the specific funds
in which class members may have invested. Id. at *25-29. Similar to the approach taken
by other case law precedents, the court concluded that typicality also existed because
“the plaintiffs’ claims arise from the same course of events and depend on similar legal
theories of imprudent conduct impacting all class members in a similar manner,”
regardless of the particular funds in which class members may have invested. Id. at *2933. The court likewise rejected the defendants’ similar arguments that the plaintiffs were
inadequate class representatives, concluding in relevant part that the plaintiffs’
incentives were “sufficiently aligned” with those of absent class members despite the
fact that they did not all invest in the same sets of funds. Id. at *33-36.
Having concluded that the plaintiffs satisfied the requirements of Rule 23(a), the court
likewise held that class certification was warranted under both Rule 23(b)(1)(A) and
23(b)(1)(B) to avoid the risk of separate adjudications producing inconsistent results
across a class of thousands whose rights would be substantially affected. The court
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Duane Morris Class Action Review – 2023
