United States District Court, E.D. Missouri, Eastern Division
CHARLENE F. MCDONALD, et al., Plaintiffs,
EDWARD D. JONES & CO., L.P., et al., Defendants.
MEMORANDUM AND ORDER
W. SIPPEL UNITED STATES DISTRICT JUDGE.
Charlene McDonald is a plan participant in Defendant Edward
D. Jones & Co. L.P.'s (Edward Jones) profit sharing
and 401(k) plan (the Plan). Her complaint asserts that
Defendants breached their fiduciary duty and engaged in
prohibited transactions related to the Plan in violation of
the Employee Retirement Income Security Act of 1974, 29
U.S.C. §§ 1001 et seq. (ERISA). McDonald filed this
action on her own behalf, on behalf of a class of other
persons similarly situated, and on behalf of the Plan.
Defendants have moved to dismiss McDonald's claims on a
variety of grounds. I will deny Defendants' motion in
part because McDonald's complaint states viable claims.
However, I will grant Defendant The Jones Financial
Companies, L.L.L.P.'s motion to dismiss because the
complaint fails to allege any facts which would establish
that entity is a plan fiduciary.
ruling on a motion to dismiss, I must accept as true all
factual allegations in the complaint and view them in light
most favorable to the Plaintiff. Fed.R.Civ.P. 12(b)(6);
Erickson v. Pardus, 551 U.S. 89, 94 (2007). The
purpose of a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6) is to test the legal sufficiency of the
complaint. An action fails to state a claim upon which relief
can be granted if it does not plead “enough facts to
state a claim to relief that is plausible on its face.”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007). To survive a motion to dismiss, a plaintiff's
factual allegations “must be enough to raise a right to
relief above the speculative level. Id. at 555.
Charlene McDonald is a plan participant in Defendant Edward
Jones profit sharing and 401(k) retirement plan. Edward Jones
is the Plan Administrator. Edward Jones is a subsidiary of
Defendant The Jones Financial Companies, L.L.L.P. (Jones
Financial). Defendant Edward Jones Investment and Education
Committee selects Plan investments and educates Plan
participants about the Plan. Committee members include
partners of Edward Jones as well as officers and/or employees
of Edward Jones.
selecting investments for a retirement plan, ERISA requires
plan fiduciaries to discharge their duties with respect to
the plan solely in the interest of the participants and
beneficiaries; act prudently; and defray reasonable plan
administration expenses. 29 U.S.C. § 1104(a)(1).
alleges in her complaint that Defendants breached their
fiduciary duties imposed by ERISA regarding the Plan's
investment options. Specifically, McDonald alleges that
Edward Jones receives asset fees and sales fees from
“Preferred Product Partners” for many mutual
funds it offers as investment options in its Plan. In
addition, McDonald alleges that Defendants breached their
duties because the Plan offers investment options which pay
higher management fees for some of the mutual funds than fees
charged by identical mutual funds available to the Plan.
McDonald's complaint specifically identifies several of
these funds including the American Funds Money Market Funds.
McDonald also asserts that Defendants breached their duties
by paying recordkeeping fees for the Plan which are excessive
compared to available alternatives.
Charlene McDonald, as a Plan participant brings this suit
under 29 U.S.C. § 1132(a)(2) to recover for the Plan the
remedies provided under 29 U.S.C. § 1109(a).
McDonald's class allegations seek to certify a class of
all participants of the Plan during the relevant time period
from August 19, 2010 to the date of the judgment.
have moved to dismiss McDonald's complaint on several
grounds. Defendants argue that the breach of fiduciary claims
should be dismissed because Defendants fulfilled their duties
by offering an array of investment options. McDonald's
complaint asserts that Defendants violated their fiduciary
obligations and affiliated themselves with funds which
benefited Defendants at the expense of the Plan participants.
Defendants' defense that they offered an array of
investment options does not insulate Defendants from
McDonald's claims. See Krueger v. Ameriprise
Financial, Inc., 2012 WL 5873825 (D. Minn. Nov. 20,
argue that the complaint fails to state a claim for a breach
of fiduciary duties and for a failure to defray plan
expenses. I find that the complaint, when read as a whole,
has provided sufficient facts to plausibly state these
claims. Defendants dispute the complaint's factual
allegations and argue that they acted within ERISA”s
standards. In deciding a motion to dismiss I must determine
whether the complaint states a claim for relief.
Defendants' arguments in support of their motion to
dismiss challenge the factual allegations of the complaint
and are premature at this stage of the litigation.
argue that McDonald does not have standing to challenge the
Defendants' duties regarding the Plan funds in which she
did not personally invest. However, in addition to bringing
claims on her own behalf, McDonald is seeking relief on
behalf of the Plan. In a suit brought pursuant to 29 U.S.C
§ 1132(a)(2), a plan participant may seek recovery for
the plan even where the participant did not personally invest
in every one of the funds that caused an injury to the plan.
Branden v. Wal-Mart Stores, Inc., 588 F.3d 585, 593
(8th Cir. 2009).
argue that McDonald's breach of fiduciary duty claims are
time barred. McDonald's complaint alleges that Defendants
breached their fiduciary duties by making imprudent
investments. Section 1113(2) of ERISA provides that a
limitations period to bring an action runs from three years
after the earliest date on which the plaintiff had actual
knowledge of a breach of the statute. In her complaint
McDonald alleges that she did not discover the
“substance of deliberations, if any, of Defendants
concerning the Plan's menu of investment options or
selection of service providers during the Class Period”
until shortly before commencing the action. Doc. # 2, Amend.
Compl. ¶ 15. For purposes of a motion to dismiss a
plaintiff's factual allegations are deemed true. It
appears from the face of the complaint that this action was
Defendants finally argue that Defendant Jones Financial,
Edward Jones parent, should be dismissed from this action
because it was not a plan fiduciary. See 29 U.S.C.
§ 1002(21)(A) (a person is a fiduciary with respect to a
plan to the extent he exercises any discretionary authority
or discretionary control respecting the management of the
plan or exercises any authority or control respecting the
management or disposition of its assets). McDonald's
complaint does not allege that Jones Financial was a plan
fiduciary nor does ...