Barrett v. Pioneer Natural Resources USA, Inc. et al

Filing 82

ORDER: (1) Defendants' Early Motion for Partial Summary Judgment 32 is GRANTED; (2) Claim 2 of the First Amended Complaint 57 is DISMISSED WITHOUT PREJUDICE for lack of subject matter jurisdiction; and (3) Defendants' Motion to Strike 55 is DENIED AS MOOT. This order is not meant to prejudge the merits of Plaintiff's recently filed Motion to Amend 79 . SO ORDERED by Judge William J. Martinez on 06/29/2018. (wjmlc1)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 17-cv-1579-WJM-NYW
WILLIAM M. BARRETT, individually and as the representative of a class consisting of
the participants and beneficiaries of the Pioneer Natural Resources USA, Inc. 401(K)
and Matching Plan,
Plaintiff,
v.
PIONEER NATURAL RESOURCES USA, INC.;
THE PIONEER NATURAL RESOURCES USA INC. 401(K) AND MATCHING PLAN
COMMITTEE;
THERESA A. FAIRBROOK;
TODD C. ABBOTT;
W. PAUL MCDONALD;
MARGARET M. MONTEMAYOR;
THOMAS J. MURPHY;
CHRISTOPHER M. PAULSEN;
KERRY D. SCOTT;
SUSAN A. SPRATLEN;
LARRY N. PAULSEN;
MARK KLEINMAN; and
RICHARD P. DEALY,
Defendants.

ORDER GRANTING DEFENDANTS’
EARLY MOTION FOR PARTIAL SUMMARY JUDGMENT

Plaintiff William M. Barrett (“Plaintiff”) sues various parties involved in the
management of a retirement plan in which he previously participated (collectively,
“Defendants”). Barrett argues that Defendants breached the fiduciary duties
established by the Employee Retirement Income Security Act of 1974 (“ERISA”),
29 U.S.C. §§ 1001 et seq.

Currently before the Court is Defendants’ Early Motion for Partial Summary
Judgment (“Motion”), arguing that (1) Plaintiff lacks Article III standing to assert one of
the fiduciary breaches alleged in his complaint; and (2) even if standing exists, the claim
fails on its merits. (ECF No. 32.) Also before the Court is Defendants’ Motion to Strike
(ECF No. 55), which relates to what Defendants characterize as a surreply filed by
Plaintiff in opposition to Defendants’ second summary judgment argument. For the
reasons explained below, the Court agrees with Defendants’ Article III standing
argument and grants partial summary judgment on that basis. Defendants’ Motion to
Strike is therefore moot.
The Court recognizes that Plaintiff recently filed a motion to add an additional
plaintiff whose presence, Plaintiff argues, would cure the standing defect described
below. (See ECF No. 79.) That motion is not yet ripe and this order is not meant to
prejudge the merits of Plaintiff’s most recent motion.
I. BACKGROUND
A.

Allegations from the Complaint 1
The Court accepts the following facts as true for present purposes.
Plaintiff participated in the Pioneer Natural Resources USA, Inc. 401(k) and

Matching Plan (“Plan”) from 2011 until September 2017. (ECF No. 57 ¶ 1.) The Plan
was a defined contribution plan (as opposed to a defined benefit plan), meaning that
each Plan participant’s benefits turned on the participant’s contributions, the employer’s
matching contributions (if any), and investment performance. (Id. ¶¶ 2–3.)
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These allegations come from Plaintiff’s First Amended Complaint (ECF No. 57), which
was filed after close of briefing on Defendants’ Motion. The differences between the First
Amended Complaint and the original Complaint do not affect the Court’s analysis of Defendants’
Motion, so the Court will treat the Motion as if directed at the First Amended Complaint.

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Administrative and management fees, such as recordkeeping fees, can weigh
down investment performance. (Id. ¶¶ 4, 7.) With over $665 million in assets, the Plan
was large enough to possess the bargaining power needed to negotiate low
administrative and management fees, and to negotiate for participation in mutual funds
at lower expense ratios. (Id. ¶ 6.) The Plan, however, did not take advantage of this
bargaining power. It instead continued to pay management fees to its designated
recordkeeper (Vanguard Group Inc.) that were allegedly well above the industry
average. (Id. ¶¶ 29–56.)
In addition, the Plan imprudently gave its participants the choice between two
“short-term reserve” funds, the “Retirement Trust” and the “Money Market Fund.” (Id.
¶ 64.) The Retirement Trust “averaged returns of 2% per year over five years” while the
Money Market Fund “averaged returns of 0.12% per year” over the same time period.
(Id. ¶¶ 62–63.) Offering both funds “provided no benefit to the Plan participants, but
instead potentially confused and misled the Plan participants.” (Id. ¶ 66.) Defendants
“recognized this issue as early as March 2013, but did not remove the [Money Market
Fund] as an investment option” until 2016. (Id. ¶¶ 66, 71.) “As a result, many Plan
participants who were eligible to invest in the [Retirement Trust] instead invested in the
[Money Market Fund], which cost them an annual investment return of almost 2%.” (Id.
¶ 67.)
Based on these allegations, Plaintiff asserts four claims for relief. Claim 1
asserts breaches of the duties of loyalty and prudence based on the unreasonably high
recordkeeping fees. (Id. ¶¶ 93–101.) Claim 2 asserts breaches of the same duties for
maintaining the Money Market Fund as a Plan option for three years after it became

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clear that it was an imprudent investment choice. (Id. ¶¶ 102–12.) Claim 3 is closely
related to Claim 1 and asserts a violation of ERISA regulations regarding disclosure of
administrative fees. (Id. ¶¶ 113–19.) Claim 4 accuses Defendant Pioneer Natural
Resources USA, Inc. of failure to monitor the fiduciaries responsible for administering
the Plan. (Id. ¶¶ 120–27.)
Plaintiff seeks to assert these claims on a class-action basis. (Id. ¶¶ 87–92.) He
proposes two separate classes:
(1) Administrative Fee Class and Investment
Management Fee Class
All participants and beneficiaries of the Pioneer Natural
Resources USA, Inc. 401(K) and Matching Plan from July 1,
2011 through the date of judgment, excluding the
Defendants.
(2) Money Market Fund Class
All participants and beneficiaries of the Pioneer Natural
Resources USA, Inc. 401(K) and Matching Plan who, from
July 1, 2011 through the date of judgment, excluding the
Defendants, invested in the Vanguard Money Market Fund.
(Id. ¶ 89 (boldface in original).)
B.

Undisputed Facts
Defendants’ Motion has established certain facts as undisputed for summary

judgment purposes, but only one of those facts is relevant to the Court’s disposition:
Plaintiff himself never invested in the Money Market Fund. (ECF No. 32 at 8, ¶ 1.)2
II. LEGAL STANDARD
Article III of the U.S. Constitution restricts federal courts to deciding “cases” and
2

All ECF page citations refer to the page number in the ECF header, which does not
always match the document’s internal pagination, particularly in documents with separately
paginated prefatory material such as a table of contents.

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“controversies.” See U.S. Const. art. III, § 2, cl. 1. These words have been interpreted
to restrict federal courts from giving “advisory opinions,” Flast v. Cohen, 392 U.S. 83, 96
(1968), meaning that a federal court may not resolve questions in the abstract, but
instead may only resolve “disputes arising out of specific facts when the resolution of
the dispute will have practical consequences to the conduct of the parties,” Columbian
Fin. Corp. v. BancInsure, Inc., 650 F.3d 1372, 1376 (10th Cir. 2011).
To safeguard this restriction, the Supreme Court has articulated a three-element
test for “Article III standing”:
First, the plaintiff must have suffered an “injury in fact”—an
invasion of a legally protected interest which is (a) concrete
and particularized, and (b) “actual or imminent, not
‘conjectural’ or ‘hypothetical.’” Second, there must be a
causal connection between the injury and the conduct
complained of . . . . Third, it must be “likely,” as opposed to
merely “speculative,” that the injury will be “redressed by a
favorable decision.”
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992) (citations omitted; certain
alterations incorporated). Importantly for this case, “the plaintiff bears the burden of
proof” to establish that these elements exist. Id. at 561; see also United States v.
Bustillos, 31 F.3d 931, 933 (10th Cir. 1994) (“The party seeking to invoke the jurisdiction
of a federal court must demonstrate that the case is within the court’s jurisdiction. The
facts supporting jurisdiction must be affirmatively alleged, and if challenged, the burden
is on the party claiming that the court has subject matter jurisdiction.”).
III. ANALYSIS
Defendants argue that Plaintiff has no standing to assert Claim 2, concerning the
Money Market Fund, because he never invested in that fund and cannot invest in it in
the future because the Plan no longer offers it. (ECF No. 32 at 10.) The parties cite
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competing threads of case law on this question. The parties have cited no on-point
authority from the Tenth Circuit.
On Defendants’ side are a number of cases stating that a plaintiff in an action
such as this must demonstrate that he or she has been injured by each alleged fiduciary
breach. See Kendall v. Employees Ret. Plan of Avon Prod., 561 F.3d 112, 119–20 (2d
Cir. 2009), abrogated in part on other grounds by Lexmark Int’l, Inc. v. Static Control
Components, Inc., 134 S. Ct. 1377 (2014); Loren v. Blue Cross & Blue Shield of Mich.,
505 F.3d 598, 608–09 (6th Cir. 2007); In re Meridian Funds Grp. Sec. & Emp. Ret.
Income Sec. Act (ERISA) Litig., 917 F. Supp. 2d 231, 235 (S.D.N.Y. 2013); David v.
Alphin, 817 F. Supp. 2d 764, 767 n.2 (W.D.N.C. 2011), aff’d, 704 F.3d 327 (4th Cir.
2013); Bendaoud v. Hodgson, 578 F. Supp. 2d 257, 264–67 (D. Mass. 2008).
On Plaintiff’s side are a number of cases apparently reaching the contrary
conclusion. See Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 592–93 (8th Cir. 2009);
Leber v. Citigroup 401(k) Plan Inv. Comm., 323 F.R.D. 145, 155–59 (S.D.N.Y. 2017);
Cryer v. Franklin Templeton Res., Inc., 2017 WL 4023149, at *4 (N.D. Cal. July 26,
2017); Urakhchin v. Allianz Asset Mgmt. of Am., L.P., 2016 WL 4507117, at *4 (C.D.
Cal. Aug. 5, 2016); Krueger v. Ameriprise Fin., Inc., 304 F.R.D. 559, 567 (D. Minn.
2014); Glass Dimensions, Inc. v. State St. Bank & Tr. Co., 285 F.R.D. 169, 175 (D.
Mass. 2012); Walsh v. Marsh & McLennan Cos., Inc., 2006 WL 734899, at *1 (D. Md.
Feb. 27, 2006). These cases generally find great significance in the fact that any
recovery a plaintiff wins must be paid to the plan in question, not to the plaintiff. See
Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 140 (1985). Thus, they reason that a
plaintiff who has suffered some plan-related injury may sue on the plan’s behalf for that

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injury as well as other plan-related injuries that other plan participants suffered. Some
cases also invoke notions of third-party standing once a plaintiff has established his or
her own injury.
The most thoroughly-reasoned of Plaintiff’s cases are less helpful to him then he
represents. In Braden, the plaintiff alleged an injury based on excessive fees, similar to
the injury alleged in this case. 588 F.3d at 590. The district court held that the plaintiff
lacked standing to pursue claims for breaches before the date the plaintiff contributed to
his retirement plan. Id. The Eighth Circuit reversed, holding that the plaintiff alleged the
same injury supposedly suffered by all members of the putative class and so “[h]is own
recovery will stand or fall with that of the Plan.” Id. at 592–93. The temporal aspect of
his claim was not a matter of Article III standing, but simply of whether ERISA permits
the sort of lawsuit the plaintiff brought. Id. Braden is thus distinguishable because
Plaintiff does not assert the same injury supposedly suffered by those who invested in
the Money Market Fund. No recovery on the Plan’s behalf related to the Money Market
Fund will ever inure to Plaintiff.
Glass Dimensions is also distinguishable. There, the plan in question offered
260 investment choices, of which the plaintiff had only invested in three. 285 F.R.D. at
174–75. However, the plaintiff alleged a practice of fiduciary mismanagement that
affected all 260 investment choices, and so the district court ruled that the plaintiff had
standing to sue for classwide relief as to all 260 choices. Id. Krueger is similar because
the plaintiffs there alleged fiduciary mismanagement affecting all of the available
investment options collectively. 304 F.R.D. at 564, 566–67. Walsh falls into the same
category, 2006 WL 734899, at *1, as does Leber, 323 F.R.D. at 156–57. These cases

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support Plaintiff’s standing to bring his Claims 1 and 3, regarding excessive fees, but
not Claim 2. Claim 2 does not allege that all investment choices or some sensibly
grouped subset were offered imprudently. It alleges only that the Money Market Fund
was an imprudent offering alongside the Retirement Trust.
Plaintiff apparently recognizes this distinction because he argues in his response
brief that he really only asserts one claim of “overall Plan mismanagement,” of which
“retention of the [Money Market Fund] was [one] part.” (ECF No. 39 at 7.) But there is
no cause of action for “overall Plan mismanagement.” A plaintiff must prove that
specific acts or omissions were a breach of an ERISA fiduciary’s statutory duties. See
29 U.S.C. § 1109(a) (“Any person who is a fiduciary with respect to a plan who
breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by
this subchapter shall be personally liable to make good to such plan any losses to the
plan resulting from each such breach . . . .”); id. § 1132(a)(3) (“A civil action may be
brought * * * by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice
which violates any provision of this subchapter or the terms of the plan, or (B) to obtain
other appropriate equitable relief (i) to redress such violations or (ii) to enforce any
provisions of this subchapter or the terms of the plan . . . .”).
To the extent Plaintiff asserts (or his cited cases stand for) the proposition that
any breach of an ERISA-imposed duty gives injured plan participants standing to sue for
that breach and any others they can think of, regardless of whether the other breaches
injured the participants, the Court disagrees. “Injury in fact” is part of the “irreducible
constitutional minimum” of Article III standing. Lujan, 504 U.S. at 560 (internal quotation
marks omitted). And although plaintiffs are sometimes granted standing to assert the

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rights of parties not before the court, these cases inevitably involve a single practice by
the defendant that injures both the plaintiff and a third party, although in different ways.
See generally 13A Charles Alan Wright et al., Federal Practice & Procedure § 3531.9.2
(3d ed., Apr. 2018 update).
Here, Plaintiff does not allege a single practice as to the Money Market Fund that
injured both him and Money Market Fund investors. Plaintiff’s own recognition of this
deficiency is best demonstrated by his request for a separate class definition specific to
those investors. (ECF No. 57 ¶ 89.) 3 The Court accordingly finds that Plaintiff has
failed to carry his burden to demonstrate Article III standing, and so Claim 2 must be
dismissed without prejudice for lack of subject matter jurisdiction.
IV. CONCLUSION
For the reasons set forth above, the Court ORDERS as follows:
1.

Defendants’ Early Motion for Partial Summary Judgment (ECF No. 32) is
GRANTED;

2.

Claim 2 of the First Amended Complaint (ECF No. 57) is DISMISSED WITHOUT
PREJUDICE for lack of subject matter jurisdiction; and

3.

Defendants’ Motion to Strike (ECF No. 55) is DENIED AS MOOT.

3

In his Motion for Class Certification, filed after the Motion at issue here, Plaintiff has
reframed this as a request for a class comprising all participants in the Plan and then a subclass
comprising those who invested in the Money Market Fund. (ECF No. 61 at 2.) This request
nonetheless emphasizes the difference between his claims.

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Dated this 29th day of June, 2018.
BY THE COURT:

______________________
William J. Martinez
United States District Judge

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