In Re YRC Worldwide, Inc. ERISA Litigation, Case No. 09-2593 (D. Kan. Apr. 6, 2001), involves claims by plaintiffs who alleged that company fiduciaries violated ERISA by continuing to offer the company’s stock fund as a 401(k) investment option following a steep decline in share value. Defendants answered, denied liability, and asserted affirmative defenses. According to defendants, plaintiffs opted to invest in the company’s stock fund and thus plaintiffs’ own investment choices caused any losses.
Plaintiffs subsequently moved for class certification. The Court granted plaintiffs’ motion for class certification. Examining the Rule 23(a) requirements, the Court noted that defendants challenged only typicality. First, defendants argued that as plaintiffs did not allege misrepresentation, the only issue before the Court related to the investment decisions made by each plan participant and such an individualized assessment negated typicality. Second, defendants contended that their Section 404(c) affirmative defense under ERISA required individualized analysis of causation with respect to each plan participant, thus also defeating typicality.
The Court found no merit in either argument, ruling that, even in cases of full disclosure, prudence did not depend on the individual investment choices of individual participants. Likewise, the Court rejected defendants’ Section 404(c) argument, finding that as this defense was not unique to the claims of certain class members.
As to the Rule 23(b)(1) requirements, defendants opposed certification based on the Larue v. Dewolff, Boberg & Associates, 552 U.S. 248 (2008), a decision which permitted an individual participant in a defined contribution plan to obtain a remedy for a breach of ERISA fiduciary duty. The Court, however, held that Larue did not foreclose class certification under Rule 23(b)(1) and further found that certification was appropriate. Having found both Rule 23(a) and Rule 23(b)(1) satisfied, the Court granted class certification.
This case demonstrates that although some courts, particularly those in the Seventh Circuit, have seemed to question the validity of large, plan-wide ERISA class actions relating to individual investments, other courts continue to find such claims suitable for class treatment.