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Wildman v. American Century Services, LLC

United States District Court, W.D. Missouri, Western Division

December 6, 2017

STEVE WILDMAN and JON BORCHERDING, Individually and as representatives of a class of similarly situated persons, and ON BEHALF OF THE AMERICAN CENTURY RETIREMENT PLAN, Plaintiffs,
v.
AMERICAN CENTURY SERVICES, LLC, et al., Defendants.

          ORDER GRANTING PLAINTIFFS' MOTION FOR CLASS CERTIFICATION

          GREG KAYS, CHIEF JUDGE.

         This putative class action involves claims for breach of fiduciary duty brought pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq. Plaintiffs Steve Wildman (“Wildman”) and Jon Borcherding (“Borcherding”) bring this suit on their own behalf and on the behalf of a proposed class claiming Defendants breached their fiduciary duties and engaged in prohibited transactions.

         Now before the Court are Plaintiffs' Motion for Class Certification (Doc. 62), Defendants' Motion to Strike Plaintiffs' Reply (Doc. 79), [1] Plaintiffs' Notices of Supplemental Authority (Docs. 88, 105, 109, 111, 115, 152) and Defendants' Responses to Plaintiffs' Notice of Supplemental Authority (Docs. 90, 107, 110, 112, 116). For the following reasons, Plaintiffs' motion for class certification is GRANTED. Defendants' motion to strike Plaintiffs' reply brief is DENIED.

         Factual Background

         Defendant American Century Companies, Inc. (“American Century”) makes the American Century Retirement Plan (the “Plan”) available to its eligible employees and the employees of its affiliates. The Plan is a defined contribution 401(k) plan[2] that allows participants to contribute a percentage of their pre-tax earnings and invest those contributions among different investment options.

         Plaintiffs Wildman and Borcherding are former American Century employees. Wildman has participated in the Plan from 2005 to the present day. Borcherding participated in the Plan from 1996 until 2012. Plaintiffs assert approximately 2, 000 to 2, 500 people participated in the Plan from June 30, 2010, to the present day.

         The American Century Retirement Plan Retirement Committee (the “Committee”) is responsible for selecting, retaining, and reviewing the investment options in the Plan and overseeing the Plan's investment and administrative expenses. Until 2016, the investment options were generally limited to American Century mutual funds, American Century collective investment trusts, and shares of American Century common stock. The Plan also offers a self-directed brokerage account that allows participants to invest in stocks, bonds, and mutual funds not affiliated with American Century.

         Plaintiffs filed this ERISA lawsuit on June 30, 2016. In their Amended Complaint, Plaintiffs assert five counts pursuant to 29 U.S.C. § 1132(a)(2) and (3) on behalf of the Plan. Count I asserts Defendants breached their duties of loyalty and prudence in violation of 29 U.S.C. § 1104(a)(1)(A)-(B). Count II alleges Defendants failed to monitor the Committee and Committee members. Counts III and IV allege Defendants engaged in prohibited transactions in violation of 29 U.S.C. § 1106(a)(1) and (b). Count V is a claim for other equitable relief based on ill-gotten proceeds recoverable under 29 U.S.C. § 1132(a)(3).

         Plaintiffs allege Defendants breached their fiduciary duties to the Plan, causing the Plan to suffer losses. Specifically, Plaintiffs believe Defendants selected and retained proprietary funds, despite their high cost and poor performance, in order to further the self-interest of American Century. Plaintiffs also allege Defendants acted disloyally by not capturing revenue-sharing payments and by failing to promptly convert certain funds' shares to a lower-cost share class. In addition, Plaintiffs contend Defendants caused the Plan to pay unreasonable record-keeping fees because they failed to negotiate the existing contract or put the service up for competitive bidding.

         Plaintiffs propose defining the class as,

All participants and beneficiaries of the American Century Retirement Plan at the time on or after June 30, 2010, excluding Defendants, employees with responsibility for the Plan's investment or administrative functions, and members of the American Century Services, LLC Board of Directors.

         Pls.' Mot at 8 (Doc. 65).

         On February 27, 2017, the Court granted in part, Defendants' Motion for Summary Judgment because Wildman and Borcherding's claims were partially barred by a release they signed when they were laid off from American Century. The Court found the release of claims was valid as to Borcherding's claims that arose on or before July 19, 2012, but not Wildman's.

         Standard

         Federal rule of Civil Procedure 23 governs class certification. A party seeking class certification must satisfy all of the requirements of Rule 23(a) and at least one of the requirements of Rule 23(b). Id. The requirements under Rule 23(a) are satisfied when “(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.” Fed.R.Civ.P. 23(a). These requirements are typically summarized as numerosity, commonality, typicality, and adequacy. In re Constar Int'l Inc. Sec. Litig., 585 F.3d 774, 780 (3d Cir. 2009).

         Plaintiffs pursue certification under Rule 23(b)(1).[3] Under this rule, a party seeking class certification must satisfy the court that “prosecuting separate actions by or against individual class members would create a risk of” either:

(A) inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class; or
(B) adjudications with respect to individual class members that, as a practical matter, would be dispositive of the interest of the other members not parties to the individual adjudications or would substantially impair or impede their ability to protect their interests.

         Fed. R. Civ. P. 23(b)(1).

         The Court has broad discretion to determine whether class certification is appropriate. Shapiro, 626 F.2d at 71. The court must engage in “a rigorous analysis” to ensure the requirements of Rule 23 are met. Wal-Mart Store, Inc. v. Dukes, 564 U.S. 338, 351 (2011). Plaintiffs bear the burden of demonstrating that the proposed class meets Rule 23 requirements. See Coleman v. Watt, 40 F.3d 255, 258 (8th Cir. 1994).

         In considering whether class certification is appropriate, the Court does not address the merits of the parties' claims and defenses, but does probe behind the pleadings and look to what the parties must prove. Gen. Tel. Co. v. Falcon, 457 U.S. 147, 160-61 (1982); Elizabeth M. v. Montenez, 458 F.3d 779, 786 (8th Cir. 2006). “In conducting this preliminary inquiry, however, the court must look only so far as to determine whether, given the factual setting of the case, if the plaintiff's general allegations are ...


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