ABRAHA et al v. COLONIAL PARKING, INC. et al
MEMORANDUM OPINION. Signed by Judge Colleen Kollar-Kotelly on 3/20/2017. (lcckk1)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
Berthe Benyam Abraha, et al.,
Civil Action No. 16-680 (CKK)
Colonial Parking, Inc., et al.,
(March 20, 2017)
This matter is brought by Plaintiffs on behalf of themselves and a putative class of similarly
situated former and current employees of Defendant Colonial Parking, Inc. (“Colonial”) against
Colonial and Defendant FCE Benefit Administrators, Inc. (“FCE”) for alleged violations of the
Employee Retirement Income Security Act of 1974 (“ERISA”). The purported violations stem
primarily from FCE’s alleged charging of excessive administrative fees.
Presently before the Court are FCE’s  Motion to Dismiss and Motion to Strike, 
Motion to Take Judicial Notice, and Colonial’s  Motion to Dismiss. Upon consideration of the
pleadings, 1 the relevant legal authorities, and the record for purposes of the pending motions, the
Court DENIES FCE’s  Motion to Dismiss and Motion to Strike, GRANTS FCE’s  Motion
The Court’s consideration has focused on the following documents:
FCE’s Mem. of P. & A. in Supp. of Mot. to Dismiss and Mot. to Strike, ECF No. 5-1 (“FCE
Colonial’s Mem. in Supp. of Mot. to Dismiss, ECF No. 12-1 (“Col. Mem.”).
Pls.’ Mem. in Opp’n to Def. Colonial Parking’s Mot. to Dismiss, ECF No. 15 (“Col. Opp’n
Pls.’ Mem. in Opp’n to Def. FCE Benefit Administrators, Inc.’s Mots. to Strike and to
Dismiss, ECF No. 16 (“FCE Opp’n Mem.”).
FCE’s Reply to Pls.’ Opp’n to FCE’s Mem. of P. & A. in Supp. of Mot. to Dismiss and
Mot. to Strike, ECF No. 17 (“FCE Reply”).
Colonial’s Reply in Supp. of Mot. to Dismiss, ECF No. 18 (“Col. Reply”).
to Take Judicial Notice, and GRANTS IN PART AND DENIES IN PART Colonial’s 
Motion to Dismiss. 2 Plaintiffs’ section 1133 claim against Colonial is DISMISSED WITHOUT
PREJUDICE. Plaintiffs’ other claims against Defendants may proceed.
The Court accepts as true the well-pleaded factual allegations of the Complaint, as it must
on a motion to dismiss for failure to state a claim. The Court presents only those factual allegations
that are relevant to its disposition of the pending motions.
Plaintiffs are Colonial employees who worked as parking lot attendants, earning
approximately $2,000 per month in gross wages. Compl. ¶¶ 8, 34. Because Colonial contracts with
federal agencies, it must comply with the McNamara-O’Hara Service Contract Act, which requires
Colonial to “to pay a set amount per employee per hour for fringe benefits.” Id. ¶ 3. Colonial
complies with this requirement by funding a benefits plan known as the “The Forge Company
(Colonial Parking) Death, Dismissal, Wage/Unemployment Benefit ‘Reserve’ Employee
Account” (the “Plan”). Id. ¶ 4. Colonial has retained FCE to administer the Plan, which operates
as follows: Colonial contributes money to the . . . Plan, FCE allocates the contribution to each
[employee participant’s] [separate account], and then it withdraws money for payments of
insurance premiums and fees to FCE and others. Amounts not used for those purposes are held in
trust for the employee participants where they are credited with a share of the . . . Plan’s investment
earnings.” Id. ¶ 5. All agree that the Plan is subject to ERISA.
After Defendants’ motions were fully briefed, Plaintiffs filed a Notice of Supplemental Authority,
ECF No. 25, informing the Court of two decisions in an unrelated action against FCE in the United
States District Court for the District of Maryland. FCE subsequently moved to strike the Notice of
Supplemental Authority. See ECF No. 26. As the Court finds that the authorities relayed by
Plaintiffs in the notice were pertinent and helpful to the resolution of the pending motions, FCE’s
motion to strike the notice is DENIED.
Prior to October 2006, FCE administered the Plan for a nominal fee of $4.50 per employee
participant. Id. ¶ 24. However, beginning in October 2006, two events occurred that allegedly
resulted in a dramatic increase in the fees charged by FCE. First, the medical and other insurance
premiums that Colonial had previously paid directly for its employees were instead funneled
through the Plan, which increased the amount of contributions to the Plan. Id. ¶ 25. At the same
time, FCE’s fee went from a fixed amount per participant, to one based on a percentage of the
monthly contributions to the Plan. Id. Consequently, the amount of fees charged per participant by
FCE increased by as much as twenty-fold. Id. ¶ 26 (the “fees charged to Plaintiff Akalu went from
$4.50 per month for the first nine months of 2006 to $108.91 in October 2006 and ha[ve] stayed
at that level”). The change in fee structure allegedly inured to the mutual benefit of Colonial and
FCE, as it allowed Colonial to shift administrative costs to the Plan, and allowed FCE to reap
substantially larger administrative fees. Id. ¶ 29. According to the Complaint, Colonial and FCE
never disclosed the change in fee structure to Colonial’s employees; never explained that medical
and insurance contributions to the Plan were effectively subject to a surcharge equal to the
percentage-based fee charged by FCE; and deliberately failed to comply with ERISA’s reporting
and claims administration obligations in order to conceal the Plan’s operations from its
participants. Id. ¶¶ 27, 37–38. Plaintiffs allege a raft of other purported ERISA violations as well,
including unexplained changes to Plaintiffs’ account balances, apparent comingling of Plan assets,
and improprieties with the Plan trustee. Id. ¶¶ 32 –35.
The Complaint also makes reference to a lawsuit filed in the United States District Court
for the District of Maryland, Perez v. Chimes District of Columbia, No. 1:15-cv-3315 (D. Md. Oct.
30, 2015), wherein the Secretary of Labor has brought claims against FCE for allegedly charging
excessive fees to administer an unrelated benefits plan, and for paying kickbacks to the employer
sponsor of that plan. Id. ¶ 9, 39. Plaintiffs relay that it was allegedly FCE’s business practice “to
provide financial incentives to employers so that they would conspire in FCE’s extraction of
unreasonable fees from the employees.” The Department of Labor is actively investigating FCE
in this regard. Id. ¶¶ 41–42.
II. LEGAL STANDARD
Defendants move to dismiss the Complaint for “failure to state a claim upon which relief
can be granted” pursuant to Federal Rule of Civil Procedure 12(b)(6). “[A] complaint [does not]
suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)). Rather,
a complaint must contain sufficient factual allegations that, if accepted as true, “state a claim to
relief that is plausible on its face.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when
the plaintiff pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. In deciding a Rule 12(b)(6)
motion, a court may consider “the facts alleged in the complaint, documents attached as exhibits
or incorporated by reference in the complaint,” or “documents upon which the plaintiff’s complaint
necessarily relies even if the document is produced not by the plaintiff in the complaint but by the
defendant in a motion to dismiss.” Ward v. District of Columbia Dep’t of Youth Rehab. Servs., 768
F. Supp. 2d 117, 119 (D.D.C. 2011) (internal quotation marks omitted). The court may also
consider documents in the public record of which the court may take judicial notice. Abhe &
Svoboda, Inc. v. Chao, 508 F.3d 1052, 1059 (D.C. Cir. 2007).
Plaintiffs bring claims for Defendants’ alleged failure to comply with several statutory
obligations imposed by ERISA. The Court addresses each of these in turn, and finds that Plaintiffs
have pleaded sufficient factual matter to state a viable claim under each statutory violation pleaded
in the Complaint.
A. Breach of Fiduciary Duty - § 1104
ERISA imposes duties of loyalty and prudence on fiduciaries. 29 U.S.C. §§ 1104(a)(1)(A),
(B). To state a claim for breach of fiduciary duty, Plaintiffs must plausibly allege that: “(1) the
defendants are plan fiduciaries; (2) that the defendants breached their fiduciary duties; and (3) that
the breach caused harm to the plaintiff[s].” Brosted v. Unum Life Ins. Co. of Am., 421 F.3d 459,
465 (7th Cir. 2005). A party can become a “plan fiduciary” in one of several ways. First, a party
can be expressly designated as a fiduciary in the plan instrument (a so-called “named fiduciary”).
Second, a party can be expressly delegated authority by a named fiduciary pursuant to a delegation
provision in the plan instrument. See generally Beddall v. State St. Bank & Trust Co., 137 F.3d 12,
18 (1st Cir. 1998); Hunt v. Hawthorne Assocs., Inc., 119 F.3d 888, 892 (11th Cir. 1997). Third, a
party can be a fiduciary by exercising de facto control over an area of plan management or
administration. Under this last category, “a party not specifically named as a fiduciary of a plan
owes a fiduciary duty only ‘to the extent’ that party (i) exercises any discretionary authority or
control over management of the plan or its assets; (ii) offers ‘investment advice for a fee’ to plan
members; or (iii) has ‘discretionary authority’ over plan ‘administration.’” McCaffree Fin. Corp.
v. Principal Life Ins. Co., 811 F.3d 998, 1002 (8th Cir. 2016) (citing 29 U.S.C. § 1002(21)(A)). In
order for a party to be a de facto fiduciary with respect to a particular activity, there must be a
“nexus” between the discretionary authority the party wields and the activity. Id.
Plaintiffs allege that Defendants breached their fiduciary duties by, inter alia, charging
Plaintiffs and other Plan participants excessive fees for FCE’s administrative services. Defendants
challenge these allegations primarily on the basis that they owed no fiduciary duty with respect to
the amount of fees charged, and that, even if they did, Plaintiffs have failed to adequately allege
that the fees charged were excessive. For the reasons described below, the Court finds these
arguments unavailing, and concludes that Plaintiffs have stated a plausible claim for relief for
Defendants’ alleged violations of the duties of loyalty and prudence imposed on fiduciaries by
1. FCE’s Fiduciary Status
FCE asserts that it was not a fiduciary with respect to the fees that it charged because those
fees were set by a contract that was negotiated at arm’s-length by FCE and Colonial. FCE Mem.
at 14. A number of courts outside of the District of Columbia Circuit (“D.C. Circuit”) have held
that service providers such as FCE are not fiduciaries with respect to fee amounts that are set by
contractual arrangements negotiated at arm’s-length. See Santomenno ex rel. John Hancock Trust
v. John Hancock Life Ins. Co. (U.S.A), 768 F.3d 284, 293 (3d Cir. 2014) (“when a service provider
and a plan trustee negotiate at arm’s length over the terms of their agreement, discretionary control
over plan management lies not with the service provider but with the trustee, who decides whether
to agree to the service provider’s terms”); Danza v. Fid. Mgmt. Trust Co., 533 F. App’x 120, 124
(3d Cir. 2013) (“At the point in time when Fidelity actually charged the fee for reviewing a DRO,
Fidelity did have a fiduciary duty to the A & P Plan and its participants with respect to the
administration of those services, but it did not then control the fee structure, as it was set in the
agreement with A & P and Fidelity did not have unilateral discretion to change it.”); Hecker v.
Deere & Co., 556 F.3d 575, 583 (7th Cir. 2009) (relying on cases holding that “a service provider
does not act as a fiduciary with respect to the terms in the service agreement if it does not control
the named fiduciary’s negotiation and approval of those terms”); Chicago Dist. Council of
Carpenters Welfare Fund v. Caremark, Inc., 474 F.3d 463, 473 (7th Cir. 2007) (“Given that this
scheme was the very deal for which Carpenters bargained at arm’s length, Caremark owed no
fiduciary duty in this regard.”).
By the same token, a number of courts outside of the D.C. Circuit have held that if a service
provider does retain discretion over the fees that it charges, the service provider can be held liable
as a fiduciary with respect to those fees. F.H. Krear & Co. v. Nineteen Named Trustees, 810 F.2d
1250, 1259 (2d Cir. 1987) (“On the other hand, after a person has entered into an agreement with
an ERISA-covered plan, the agreement may give it such control over factors that determine the
actual amount of its compensation that the person thereby becomes an ERISA fiduciary with
respect to that compensation.”); Golden Star, Inc. v. Mass Mut. Life Ins. Co., 22 F. Supp. 3d 72,
81 (D. Mass. 2014) (“The caselaw is clear that a service provider's retention of discretion to set
compensation can create fiduciary duties under ERISA with respect to its compensation.”); United
Teamster Fund v. MagnaCare Admin. Servs., LLC, 39 F. Supp. 3d 461, 470–71 (S.D.N.Y. 2014)
(holding that allegation that service provider charged fees that were not expressly set by contract
was sufficient to defeat a motion to dismiss); see also Seaway Food Town, Inc. v. Med. Mut. of
Ohio, 347 F.3d 610, 619 (6th Cir. 2003) (“We agree with the Seventh Circuit’s reasoning that
where parties enter into a contract term at arm’s length and where the term confers on one party
the unilateral right to retain funds as compensation for services rendered with respect to an ERISA
plan, that party’s adherence to the term does not give rise to ERISA fiduciary status unless the
term authorizes the party to exercise discretion with respect to that right.” (emphasis added)).
FCE contends that the change in fee structure from a nominal amount per Plan participant,
to one based on a percentage of contributions to the Plan, was expressly permitted by the contract
negotiated between FCE and Colonial. FCE Mem. at 14. Contrary to FCE’s view of this matter,
however, the change in fee structure is not alleged to have been one negotiated and performed at
arm’s length between FCE and Colonial, but rather one undertaken for the mutual benefit of FCE
and Colonial, at the expense of Colonial’s employees. Compl. ¶ 29. Plaintiffs allege that the
percentage-based fee structure permitted FCE to charge substantially higher fees, while allowing
Colonial to shed the administrative burdens of managing its employees’ health insurance coverage,
id. ¶¶ 25, 29; that Colonial and FCE never disclosed the change in fee structure to Colonial’s
employees, because such disclosure would have allegedly led the employees to choose less
expensive insurance coverage, which would have lowered the contributions to the Plan, and by
extension, the amount of fees charged by FCE, id. ¶¶ 27–28, 38; and that FCE’s “business practice
was to provide financial incentives to employers so that they would conspire in FCE’s extraction
of unreasonable fees from the employees,” id. ¶ 41. Consequently, under the particular factual
allegations of this case, the Court finds that Plaintiffs have plausibly alleged that FCE exercised
discretion over its compensation, meaning Plaintiffs have plausibly alleged that FCE acted as a
fiduciary with respect to its compensation. See Santomenno v. Transamerica Life Ins. Co., No. CV
12-02782 DDP MANX, 2013 WL 603901, at *6–*7 (C.D. Cal. Feb. 19, 2013) (denying motion to
dismiss because of skepticism that a service provider contract was negotiated at arm’s length).
Moreover, because the Court finds that Plaintiffs have plausibly alleged that FCE exercised
discretion over its fees, the Court need not address FCE’s contention that it was not a fiduciary
because it only performed ministerial, non-discretionary services. FCE Mem. at 11; see Strumsky
v. Washington Post Co., 922 F. Supp. 2d 96, 104 (D.D.C. 2013) (“Persons who perform only
‘administrative’ or ‘ministerial functions’ are not plan fiduciaries.” (citing 29 CFR § 2509.75–8)).
2. Colonial’s Fiduciary Status
Colonial contends that it was not a fiduciary with respect to the amount of fees charged by
FCE because the determination of those fees was a “settlor” function. Col. Mem. at 7. The Supreme
Court of the United States has instructed that when plan sponsors such as Colonial “adopt, modify,
or terminate . . . plans . . . they do not act as fiduciaries, but are analogous to the settlors of a trust.”
Lockheed Corp. v. Spink, 517 U.S. 882, 890 (1996) (citations omitted). Nevertheless, although “a
plan sponsor does not become a fiduciary by performing settlor-type functions such as establishing
a plan and designing its benefits . . . a plan sponsor does become a fiduciary . . . if . . . it retains or
exercises any discretionary authority over the management or administration of a plan.” Perez v.
Chimes D.C., Inc., No. CV RDB-15-3315, 2016 WL 4993293, at *5 (D. Md. Sept. 19, 2016)
(internal quotation marks and citations omitted). Here, there are two independent reasons to
conclude that Colonial retained management discretion over FCE’s fees.
First, “[u]nder ERISA, fiduciaries who have appointed other fiduciaries have a continuing
duty to monitor the actions of the appointed fiduciaries.” Cannon v. MBNA Corp., No. CIVA 05429 GMS, 2007 WL 2009672, at *5 (D. Del. July 6, 2007) (citing Coyne & Delany Co. v. Selman,
98 F.3d 1457, 1465 (4th Cir. 1996)). “[T]he power (through plan amendment) to appoint, retain
and remove plan fiduciaries constitutes ‘discretionary authority’ over the management or
administration of a plan . . . .” Coyne, 98 F.3d at 1465. The Complaint alleges that Colonial
“established or maintained . . . [the Plan] for the benefit of its employees . . . ,” Compl. ¶ 10, and
that it contracted with FCE to administer the Plan, id. ¶ 4. This allegation reasonably suggests that
Colonial had “the power . . . to appoint, retain and remove [FCE],” and consequently to determine
FCE’s compensation, which means that Colonial was a fiduciary to the extent of its discretionary
authority to appropriately monitor FCE’s performance and fees. Coyne, 98 F.3d at 1466; Chimes,
2016 WL 4993293, at *6 (finding that employer had a fiduciary duty to monitor “FCE’s fees and
Second, Plaintiffs have plausibly alleged that FCE exerted de facto control over the amount
of fees charged by FCE. Namely, Plaintiffs allege that Colonial benefitted from the change in fee
structure because it was able to shift its administrative burden to FCE, Compl. ¶ 29, and that it
facilitated this fee structure by not disclosing the structure to its employees, id. ¶¶ 27, 38.
Accordingly, because Plaintiffs have plausibly alleged that Colonial exercised discretion over the
amount of fees charged by FCE, they have plausibly alleged that Colonial had a fiduciary duty
with respect to those fees.
3. Plaintiffs Have Plausibly Alleged that Defendants Breached Their Fiduciary Duties
Both Colonial and FCE contend that even if they had a fiduciary duty with respect to FCE’s
fees, Plaintiffs have failed to plausibly allege that those fees were so excessive as to constitute a
breach of fiduciary duty. Col. Mem. at 9–10; FCE Mem. at 16. Both Defendants cite Young v.
General Motors Investment Management Corp., 325 F. App’x 31, 33 (2d Cir. 2009) for the
proposition that Plaintiffs have failed to plausibly allege that FCE’s fees were sufficiently
excessive to constitute a breach of fiduciary duty because Plaintiffs “failed to allege facts which
would support a finding that the fees charged were excessive relative to the services rendered . . .
.” Col. Mem. at 9; FCE Mem. at 17; see also Chimes, 2016 WL 4993293, at *8 (noting that the
“essential question . . . in determining the reasonableness of a fee is whether the charges are
reasonable in relation to what the plan receives” (internal quotation marks and alterations
The Court, however, finds that the Complaint sufficiently alleges that FCE’s fees were
excessive relative to the services performed by FCE. In particular, Plaintiffs allege that FCE’s fee
rate went from a nominal, fixed amount per Plan participant, to one based on a percentage of the
contributions made to the Plan for a given participant, which Plaintiffs claim was not industry-
standard because “when insurance premiums rise, the administrator [receives additional fees] even
though the level of work stays the same.” Compl. ¶ 25. This change resulted in a substantial
increase in fees for FCEs. Id. ¶ 31 (alleging that FCE’s fees increased by “4000–5000 percent” in
one month). By contrast, despite the increase in administrative fees, Plaintiffs contend that FCE’s
services were habitually deficient. Plaintiffs allege, inter alia, that FCE failed to consistently
provide account statements to Plan participants, id. ¶ 33; to administer any sort of claims process,
id. ¶ 38; and that FCE made distributions from an account that is not formally associated with the
Plan, id. ¶ 35. Accordingly, given the allegations that FCE’s fees were unusually high, while its
services were unusually poor, the Court concludes that Plaintiffs have plausibly alleged that FCE’s
fees were so excessive that they constitute a breach of fiduciary duty by FCE and Colonial. As a
result, Plaintiffs have stated a plausible claim for relief for violations of ERISA’s duties of loyalty
and prudence, as codified in sections 1104(a)(1)(A) and (B). Although Plaintiffs plead additional
factual allegations to support their claim that Defendants breached their fiduciary duties under
ERISA, given that Plaintiffs have already stated a plausible claim based on the factual allegations
just recounted, the Court need not address whether such other factual allegations would
independently suffice to state a claim for relief under sections 1104(a)(1)(A) and (B). See Col.
Reply at 2 (noting certain factual predicates for breach of fiduciary liability that Colonial
B. Co-Fiduciary Liability - § 1105
ERISA imposes liability on one fiduciary for the acts of another in certain cases. The
relevant statutory language provides that:
a fiduciary with respect to a plan shall be liable for a breach of fiduciary
responsibility of another fiduciary with respect to the same plan in the following
(1) if he participates knowingly in, or knowingly undertakes to conceal, an act
or omission of such other fiduciary, knowing such act or omission is a breach;
(2) if, by his failure to comply with section 1104(a)(1) of this title in the
administration of his specific responsibilities which give rise to his status as a
fiduciary, he has enabled such other fiduciary to commit a breach; or
(3) if he has knowledge of a breach by such other fiduciary, unless he makes
reasonable efforts under the circumstances to remedy the breach.
29 U.S.C. § 1105. Both FCE and Colonial challenge Plaintiffs’ co-fiduciary claim on the basis that
they did not have a fiduciary duty with respect to the activities challenged in the Complaint, and
therefore cannot be held liable as a co-fiduciaries. 3 Col. Mem. at 14; FCE Mem. at 19–20.
However, the Court has now concluded that Plaintiffs have plausibly alleged that Colonial and
FCE breached their fiduciary duties. Furthermore, as detailed in the preceding section, Plaintiffs
allege that Colonial and FCE moved to a percentage-based fee structure for their mutual benefit,
at the expense of Plan participants, and that the two sought to conceal the new fee structure and its
impact from the Plan participants. This, in the Court’s view, suffices to state a plausible claim
under section 1105 for each Defendant’s knowing participation in a breach of fiduciary duty by
C. Statute of Limitations - § 1113
ERISA’s statute of limitations provides that:
No action may be commenced under this subchapter with respect to a fiduciary's
breach of any responsibility, duty, or obligation under this part, or with respect to a
violation of this part, after the earlier of—
(1) six years after (A) the date of the last action which constituted a part of the
breach or violation, or (B) in the case of an omission the latest date on which
the fiduciary could have cured the breach or violation, or
Although Colonial asks the Court to treat the co-fiduciary claim against Colonial as conceded,
Colonial itself admits that Plaintiffs have opposed Colonial’s challenge, albeit briefly. Col. Reply
at 2 (citing Col. Opp’n Mem. at 16). As a result, the Court reaches the merits.
(2) three years after the earliest date on which the plaintiff had actual knowledge
of the breach or violation;
except that in the case of fraud or concealment, such action may be commenced not
later than six years after the date of discovery of such breach or violation.
29 U.S.C. § 1113. Colonial contends that Plaintiffs’ claims are time-barred because Colonial hired
FCE more than six years ago, and the increase in fees alleged in the Complaint likewise occurred
more than six years ago. Col. Mem. at 18–19.
Defendants may raise a statute of limitations defense in a motion to dismiss “when the facts
that give rise to the defense are clear from the face of the complaint.” Smith–Haynie v. District of
Columbia, 155 F.3d 575, 578 (D.C. Cir. 1998). Because statute of limitations defenses often are
based on contested facts, the court should be cautious in granting a motion to dismiss on such
grounds; “dismissal is appropriate only if the complaint on its face is conclusively time-barred.”
Firestone v. Firestone, 76 F.3d 1205, 1209 (D.C. Cir. 1996).
Two considerations preclude the Court from deciding the statute of limitations issues raised
by Colonial at this procedural juncture. First, although the Complaint alleges that the fee increase
occurred in 2006, it also alleges that Colonial and FCE sought to conceal the fee structure from
Colonial’s employees so they would continue to opt for more expensive health coverage, thereby
increasing the contributions to the Plan, and the amount of fees received by FCE. Compl. ¶ 27–28.
Consequently, it is not evident from the face of the Complaint that the “date of the last action
which constituted a part of the breach or violation” occurred more than six years before the
Complaint was filed. Moreover, in Tibble v. Edison, the Supreme Court instructed that where a
breach of fiduciary duty is based on a failure to monitor, as it is here with respect to Colonial, “so
long as the alleged breach of the continuing duty [to monitor] occurred within six years of suit, the
claim is timely.” 135 S. Ct. 1823, 1828–29 (2015). Here, Plaintiffs allege that FCE continued to
charge excessive fees after October 2006, and that Colonial continuously failed to appropriately
monitor those fees. Compl. ¶ 55(h). Accordingly, for this reason as well, the Court cannot conclude
from the face of the Complain that Plaintiffs’ claims are “conclusively time-barred.”
D. Prohibited Transactions - § 1106
“ERISA supplements [its] general fiduciary obligations . . . by prohibiting certain
categories of transactions believed to pose a high risk of fiduciary self-dealing.” Kindle v. Dejana,
No. 14CV6784SJFARL, 2017 WL 837692, at *8 (E.D.N.Y. Feb. 28, 2017). In particular, ERISA
mandates that a “fiduciary with respect to a plan shall not cause the plan to engage in a transaction,
if he knows or should know that such transaction constitutes a direct or indirect . . . furnishing of
goods, services, or facilities between the plan and a party in interest . . . [or] transfer to, or use by
or for the benefit of a party in interest, of any assets of the plan . . . .” 29 U.S.C. § 1106(a)(1)(C),
(D). A “party in interest” includes other fiduciaries. 29 U.S.C. § 1002(14). Plaintiffs bring claims
on this statutory basis against both Colonial and FCE. Compl. ¶¶ 56(c), (d); 61(j), (k). Only
Colonial directly challenges these claims, primarily on the basis that “[a]bsent from the Complaint
is any identification of a [prohibited] transaction in which Colonial allegedly engaged.” Col. Mem.
at 13. 4 However, the Complaint alleges that Colonial contracted with FCE, and that as a result of
that contract, FCE was able to draw excessive fees from the assets of the Plan. Given that Plaintiffs
have plausibly alleged that FCE was a Plan fiduciary, and thereby a “party in interest,” the Court
finds that under the particular factual circumstances of this case, they have plausibly alleged that
Colonial engaged in a prohibited transaction with FCE as defined in sections 1106(a)(1)(C) and
Although Colonial contends that Plaintiffs have not opposed this challenge, Col. Reply at 2,
Plaintiffs have in fact contested the issue in their opposition brief, Col. Opp’n Mem at 8 (asserting
that Colonial violated sections 1106(a)(1)(C) and (D) in connection with FCE’s administrative
(D). See In re Northrop Grumman Corp. Erisa Litig., No. CV0606213MMMJCX, 2015 WL
10433713, at *27 (C.D. Cal. Nov. 24, 2015) (declining to grant summary judgment on section
1106 claim based on finding that payment of excessive administrative fees could constitute a
prohibited transaction under ERISA); In re Regions Morgan Keegan ERISA Litig., 692 F. Supp.
2d 944, 961 (W.D. Tenn. 2010) (finding that allegations of excessive advisory fees stated viable
claims under sections 1106(a)(1)(C) and (D)).
E. Insufficient Claims Procedure – § 1133
Plaintiffs allege that although the “claim process mandated by ERISA is supposed to
provide a means for employees to challenge the amount of their benefits, . . . Colonial and FCE
provide[d] no claims process.” Compl. ¶ 38. The claims process referred to by Plaintiffs is
specified by statute and associated regulations. In particular, ERISA requires that
In accordance with regulations of the Secretary, every employee benefit plan
(1) provide adequate notice in writing to any participant or beneficiary whose
claim for benefits under the plan has been denied, setting forth the specific
reasons for such denial, written in a manner calculated to be understood by the
(2) afford a reasonable opportunity to any participant whose claim for benefits
has been denied for a full and fair review by the appropriate named fiduciary of
the decision denying the claim.
29 U.S.C. § 1133; see generally Lee v. Hartford Life & Acc. Ins. Co., 928 F. Supp. 2d 51, 53
(D.D.C. 2013) (explaining that “ERISA requires that a plan administrator follow certain
procedures if it denies a claim for benefits”); James v. Int’l Painters & Allied Trades Indus.
Pension Plan, 844 F. Supp. 2d 131, 152 (D.D.C. 2012), aff’d, 738 F.3d 282 (D.C. Cir. 2013)
(noting that the D.C. Circuit has adopted a “substantial compliance” test for evaluating section
1133 violations—namely, whether the denial notice provided to a Plan participant substantially
complied with section 1133 and associated regulations); Sage v. Automation, Inc. Pension Plan &
Trust, 845 F.2d 885, 893 (10th Cir. 1988) (“Although the statute, 29 U.S.C. § 1133(2), may not
literally require a written claims review procedure, it does require a reasonable opportunity for a
full and fair review of the denial of a claim.”).
Plaintiffs bring their section 1133 claim only against Colonial, which challenges that claim
primarily on the basis that no denial of benefits has been alleged in the Complaint. Col. Mem. at
18. 5 However, Plaintiffs have not opposed Colonial’s challenge in any way, and Colonial asserts
that Plaintiffs have thereby conceded their section 1133 claim. Col. Reply at 2. “[T]he Court may
treat those arguments that the [P]laintiffs failed to address as conceded,” and the discretion to do
so “lies wholly with the district court . . . .” Hopkins v. Women’s Div., Gen. Bd. of Glob. Ministries,
238 F. Supp. 2d 174, 178 (D.D.C. 2002) (internal quotation marks omitted). The Court elects to
exercise that discretion here, and accordingly, treats Plaintiffs’ section 1133 claim as conceded,
and dismisses the claim without prejudice.
F. Reporting and Disclosure Obligations
ERISA imposes certain disclosure and reporting obligations on plan “administrators.” See
generally 29 U.S.C. §§ 1021–1024. Plaintiffs allege that Colonial and FCE failed to satisfy those
obligations because they did not submit annual reports to the federal government, and did not
provide Plan participants with summary plan descriptions. See id. § 1021 (requiring the
“administrator of each employee benefit plan” to furnish a summary plan description to plan
participants, and to file an annual report with the Department of Labor). “Congress has provided
Colonial also challenges this claim on the basis that the trust agreement allocated responsibility
over claims management to FCE, Col. Mem. at 17–18, but for the reasons more fully discussed in
the following section, the Court declines to rule on this basis given the factual dispute over what
documents constitute the entirety of the trust agreement.
for three classes of persons who may be sued as the plan administrator . . . .” Moran v. Aetna Life
Ins. Co., 872 F.2d 296, 299 (9th Cir. 1989). In particular, ERISA defines “administrator” as:
(i) the person specifically so designated by the terms of the instrument under which
the plan is operated;
(ii) if an administrator is not so designated, the plan sponsor; or
(iii) in the case of a plan for which an administrator is not designated and a plan
sponsor cannot be identified, such other person as the Secretary may by regulation
29 U.S.C. § 1002(16)(A). Although a small minority of courts have contemplated that a party
acting as a “de facto” plan administer could be subject to ERISA’s disclosure and reporting
obligations, the “de facto administrator argument has been flatly rejected by at least eight circuits.”
Elite Ctr. for Minimally Invasive Surgery, LLC v. Health Care Serv. Corp., No. 4:15-CV-00954,
2016 WL 6236328, at *1 (S.D. Tex. Oct. 24, 2016) (collecting cases). Consequently, in order to
be liable under sections 1021–1024, a party must generally be a plan administrator as defined by
section 1002. See generally Davis v. Liberty Mut. Ins. Co., 871 F.2d 1134, 1138 & n.5 (D.C. Cir.
FCE contends that it is not liable under sections 1021–1024 because it was not designated
as the plan administrator. FCE Mem. at 18 (“FCE was never (nor is it alleged to have ever been)
the plan administrator”). In particular, FCE asserts that the trust agreement for the Plan named
Colonial, and not FCE, as the plan administrator. FCE Mem., Ex. 1B ¶¶ 1.11, 2.1. The trust
agreement, in pertinent part, provides that “Employer shall serve as Plan Administrator until such
time as Employer appoints another Plan Administrator.” Id. ¶ 2.1. Colonial, for its part, contends
that it delegated to FCE “the duty to ‘prepare, sign, and file any and all’ reports to governmental
authorities, and disclosures to employees, required by applicable law.” Col. Mem. at 16 (citing Ex.
1 ¶ 4.3(b)). Colonial also asserts that certain forms filed with the Department of Labor show that
the Plan has submitted the requisite annual reports. Id. Plaintiffs concede that only the plan
administrator is subject to ERISA’s reporting and disclosure obligations, but contend that there is
a factual dispute as to which Defendant was appointed to that role. FCE Opp’n Mem. at 15; Col.
Opp’n Mem. at 16. The waters are further muddied as the forms referenced by Colonial seemingly
list both Colonial and FCE as plan administrator, Col. Opp’n Mem., Ex. A, and because
Defendants disagree as to what documents constitute the entirety of the trust agreement, Col. Reply
at 3 n.3.
The Court may take notice of the trust agreement and the publicly availably forms and
other information cited by the parties, and accordingly, for purposes of the pending motions, grants
FCE’s motion to take judicial notice of those materials. See Al-Aulaqi v. Panetta, 35 F. Supp. 3d
56, 67 (D.D.C. 2014) (“judicial notice may be taken of public records and government documents
available from reliable sources”); In re Mut. Fund Inv. Litig., 403 F. Supp. 2d 434, 440 (D. Md.
2005) (“In ruling on a motion to dismiss in an ERISA action, the court is not confined to the
allegations in the complaint, but may review the plan documents referred to in the complaint and
relied on by the plaintiff.”). Nonetheless, at this procedural juncture, the Court need not wade into
the thicket of factual issues that the parties have raised with respect to Plaintiffs’ claims under
sections 1021–1024. See Kellogg Brown & Root Servs., Inc. v. United States, 109 Fed. Cl. 288,
299 n.8 (2013) (declining to decide contractual ambiguities on a motion to dismiss). Accordingly,
the Court concludes that Plaintiffs have stated a plausible claim for relief against Colonial and
FCE for their alleged failure to comply with ERISA’s reporting and disclosure obligations, as
Plaintiffs have alleged that the Plan failed to furnish summary plan descriptions and annual reports
in a manner that complies with sections 1021–1024. Moreover, as a practical matter, the Court
finds it more prudent to decide the issue of which entity served as plan administrator with the aid
of discovery, rather than on the basis of documents whose import and completeness are less than
G. Motion to Strike
Pursuant to Federal Rule of Civil Procedure 12(f), FCE has moved to strike references in
the Complaint to the Chimes litigation. FCE Mem. at 21–22. “Under Rule 12(f), a party may move
the district court to strike from a pleading an insufficient defense or any redundant, immaterial,
impertinent, or scandalous matter. However, courts recognize that striking portions of pleadings is
a drastic remedy and, accordingly, motions to strike are generally disfavored.” NCB Mgmt. Servs.,
Inc. v. F.D.I.C., 843 F. Supp. 2d 62, 72 (D.D.C. 2012) (Kollar-Kotelly, J.) (internal quotation
marks and citations omitted).
Contrary to FCE’s view of the matter, the Court finds that Plaintiffs’ references to the
Chimes litigation are appropriate under the circumstances. Most notably, Plaintiffs cite the Chimes
litigation in order to buttress the pertinent allegation that FCE’s business practice was to “provide
financial incentives to employers so that they would conspire in FCE’s extraction of unreasonable
fees from the employees.” Compl. ¶ 41; see Rodriguez v. City of N.Y., No. CV1600214ENVST,
2016 WL 3264166, at *3 (E.D.N.Y. June 13, 2016) (“the Court finds unpersuasive Defendant’s
contention that allegations in a complaint referencing or relying on complaints in other actions are
necessarily immaterial for purposes of a motion to strike”); Lakits v. York, 258 F. Supp. 2d 401,
409–10 (E.D. Pa. 2003) (denying motion to strike references to an unrelated lawsuit because
evidence of defendant’s prior misconduct could be admissible at trial). Accordingly, the Court
declines to grant the “drastic remedy” of striking Plaintiffs’ references to the Chimes litigation
from the Complaint.
For all of the foregoing reasons, the Court DENIES FCE’s  Motion to Dismiss and
Motion to Strike; GRANTS FCE’s  Motion to Take Judicial Notice; GRANTS IN PART AND
DENIES IN PART Colonial’s  Motion to Dismiss; and DENIES FCE’s  Motion to Strike
Plaintiffs’ Notice of Supplemental Authority. Plaintiffs’ section 1133 claim against Colonial is
DISMISSED WITHOUT PREJUDICE. Plaintiffs’ other claims against Defendants may
An appropriate Order accompanies this Memorandum Opinion.
Dated: March 20, 2017
United States District Judge
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