Muri v. National Indemnity Company

Filing 128

MEMORANDUM AND ORDER - The defendant's motion for summary judgment (filing 83 ) is granted. The plaintiff's motion to exclude expert testimony by Samuel E. Bonderoff (filing 79 ) is denied as moot. The defendant's motion to exclude the expert testimony of Charles Wert (filing 86 ) is denied as moot. The plaintiff's motion to certify class (filing 70 ) is denied as moot. A separate judgment will be entered. Ordered by Chief Judge John M. Gerrard. (LKO)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
MARC J. MURI, individually and on
behalf of all others similarly situated,
8:17-CV-178
Plaintiff,
vs.

MEMORANDUM AND ORDER

NATIONAL INDEMNITY
COMPANY,
Defendants.
The plaintiff, Marc Muri, is suing his former employer, National
Indemnity Company, for allegedly breaching the fiduciary duties owed to him,
and all others similarly situated, under the Employee Retirement Income
Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq. National Indemnity has
moved for summary judgment on Muri's claims. For the reasons discussed
below, the Court will grant National Indemnity's motion and Muri's claims will
be dismissed.
BACKGROUND
The Court's prior Memorandum and Order (filing 38) set forth the
background of this case in detail. Muri was employed by National Indemnity,
an insurance provider located in Omaha, Nebraska. Filing 1 at 7. During his
employment, Muri participated in National Indemnity Company's Employee
Retirement Savings Plan ("the Plan"). Filing 1 at 2. The Plan––which is a
defined contribution plan––in essence, allows participating employees to
contribute a portion of their salary, which National Indemnity then matches,
towards individual retirement accounts. Filing 100 at 13. Participants do so by

choosing from a variety of fund options, all of which offer different investment
styles and risk profiles, in which to invest their contributions. Muri elected to
invest in the Sequoia Fund. Filing 100 at 13.
Generally speaking, the Sequoia Fund is a non-diversified, long-term
growth, mutual fund managed by Ruane, Cunniff & Goldfarb, Inc. Filing 100
at 37. The Sequoia Fund invests in "common stocks it believes are undervalued
at the time of purchase and have the potential for growth." Filing 1 at 13. And
it

sells

common

stocks

"when

the

company

shows

deteriorating

fundamentals . . . or its value appears excessive relative to its expected future
earnings." Filing 1 at 11.
But Muri alleges that the Sequoia Fund was, as of January 2015, no
longer a prudent investment option. Filing 1 at 4. And Muri contends the
Sequoia Fund violated its own "value policy" by over-concentrating its
investments in one, high risk stock: Valeant Pharmaceuticals. Filing 1 at 3; see
also filing 1 at 2. In essence, Valeant's business model is to acquire various
competitors, and products, then drastically cut research and development costs
in an effort to boost profits. Filing 1 at 16.
According to Muri, Valeant's acquisition strategy, along with its
accounting practices, began raising "red flags" around the industry. See filing
1 at 16-17. Specifically, investors began questioning Valeant's "cash earnings
per share" accounting method, which appeared to vastly overstate Valeant's
net income. Filing 1 at 18. And suspicions also arose surrounding Valeant's
stock price which, at its peak, had a trade value almost ninety-eight times
higher than its previous year's earnings. Filing 1 at 17. As a result, Valeant
became the subject of intense scrutiny by investors, analysts, and elected
officials. See filing 1 at 22-26. Despite that skepticism, however, Sequoia Fund

2

managers allegedly refused to diminish the Fund's concentration in Valeant
stock, and instead, acquired more. See filing 1 at 24.
In October 2015, Valeant's stock price fell dramatically, and by
November 2015, Valeant had lost more than $65 billion in market value. Filing
1 at 27. This, in turn, caused the Sequoia Fund to lose approximately twenty
five percent of its value––vastly diminishing the retirement account of Muri,
and other Plan participants, who invested in the Fund. See filing 1 at 27.
It is with that backdrop that this litigation ensued. Muri claims that
from January 1, 2015, through the date of judgment in this action (the "Class
Period"), National Indemnity violated the fiduciary duties it owed to Muri and
other Plan participants by: (1) failing to prudently manage the Plan by offering
"shortsighted" investment options, such as the Sequoia Fund; and (2) failing to
avoid conflicts of interest in choosing its investment options, specifically those
with close relationships to National Indemnity's parent company, Berkshire
Hathaway. Filing 1 at 34-37. National Indemnity moves for summary
judgment on both Muri's duty of prudence and duty of loyalty claims. See filing
79 at 1.
STANDARD OF REVIEW
Summary judgment is proper if the movant shows that there is no
genuine dispute as to any material fact and that the movant is entitled to
judgment as a matter of law. See Fed. R. Civ. P. 56(a). The movant bears the
initial responsibility of informing the Court of the basis for the motion, and
must identify those portions of the record which the movant believes
demonstrate the absence of a genuine issue of material fact. Torgerson v. City
of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc). If the movant does
so, the nonmovant must respond by submitting evidentiary materials that set
out specific facts showing that there is a genuine issue for trial. Id.
3

On a motion for summary judgment, facts must be viewed in the light
most favorable to the nonmoving party only if there is a genuine dispute as to
those facts. Id. Credibility determinations, the weighing of the evidence, and
the drawing of legitimate inferences from the evidence are jury functions, not
those of a judge. Id. But the nonmovant must do more than simply show that
there is some metaphysical doubt as to the material facts. Id. In order to show
that disputed facts are material, the party opposing summary judgment must
cite to the relevant substantive law in identifying facts that might affect the
outcome of the suit. Quinn v. St. Louis County, 653 F.3d 745, 751 (8th Cir.
2011). The mere existence of a scintilla of evidence in support of the
nonmovant's position will be insufficient; there must be evidence on which the
jury could conceivably find for the nonmovant. Barber v. C1 Truck Driver
Training, LLC, 656 F.3d 782, 791-92 (8th Cir. 2011). Where the record taken
as a whole could not lead a rational trier of fact to find for the nonmoving party,
there is no genuine issue for trial. Torgerson, 643 F.3d at 1042.
DISCUSSION
To prevail on a claim of breach of fiduciary duty under ERISA, the
plaintiff "must make a prima facie showing that [a] defendant acted as a
fiduciary, breached [his] fiduciary duties, and thereby caused a loss to the
Plan." Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009). As
explained in the Court's prior Memorandum and Order, ERISA imposes upon
fiduciaries twin duties of loyalty and prudence. Those duties generally require
fiduciaries to act in the sole interest of plan participants and to carry out their
duties with the care, skill, prudence, and diligence under the circumstances
then prevailing that a prudent man acting in a like capacity and familiar with

4

such matters would use in the conduct of an enterprise of a like character and
with like aims. Id. at 595.
According to National Indemnity, however, the record evidence does not
contain any, much less sufficient, evidence from which a reasonable fact finder
could find that National Indemnity acted imprudently or disloyally in its
administration of the Plan. As such, National Indemnity urges dismissal of
Muri's duty of prudence and duty of loyalty claims.
I. DUTY OF PRUDENCE
As briefly noted above, the duty of prudence requires fiduciaries to act
solely in the interest of plan participants and beneficiaries and ERISA requires
fiduciaries to carry out their duties with care, skill, prudence, and diligence
under the circumstances. Id. But that duty requires fiduciaries to act with
prudence, not prescience, and thus, the relevant inquiry focuses on the
information available to the fiduciary at the time of the relevant investment
decision. Pension Benefit Guar. Corp. ex rel. St. Vincent Catholic Med. Ctrs.
Ret. Plan v. Morgan Stanley Inv. Mgmt., Inc., 712 F.3d 705, 716. (2d Cir. 2013).
Relatedly, a plan fiduciary also has a continuing duty to monitor and
evaluate the fund options in the Plan and to remove imprudent ones. Tibble v.
Edison Int'l, 135 S. Ct. 1823, 1828 (2015). That means the fiduciaries must
"systematically consider all the investments of the [Plan] at regular intervals
to ensure that they are appropriate." Id. But even if a fiduciary did not
adequately engage in a review process before making a decision, that fiduciary
is insulated from liability if a hypothetical prudent fiduciary would have made
the same decision anyway. Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915,
917–18 (8th Cir. 1994) (citation omitted).
Generally speaking, Muri contends that because "[n]o reasonable
fiduciary would have made the poor choices that [National Indemnity] made
5

and cost the Plan and its participants tens of millions of dollars in lost
retirement savings[,]" National Indemnity has breached its duty of prudence.
Filing 100 at 13. More specifically, Muri points out that Charles Wert––an
institutional trustee for many major corporations including Boeing, AT&T,
Ford Motor Company, and Parsons––opined that the Committee had "failed to
follow an appropriate process under the circumstances for monitoring and
removing the Sequoia Fund" and "failed to implement an investment policy
and thus had no legitimate process to evaluate investments." Filing 77-1 at 1,
14; filing 100 at 51. And as a result, Muri claims, "a reasonable plan fiduciary,
following a well-designed monitoring process, would have placed the Sequoia
Fund on a watch list by the third quarter of 2014." Filing 77-1 at 14.
But even viewing those facts in the light most favorable to Muri, no
reasonable fact finder could determine that National Indemnity failed to meet
its duty of prudence. Indeed, nothing in Wert's opinion suggests that National
Indemnity's Plan committee was not thinking about, or consistently reviewing,
the prudence of the Sequoia Fund. See generally filing 77-1 at 1-40. Nor has
Muri pointed the Court to any authority suggesting that the failure to have an
investment policy in place , standing alone, proves imprudence. See filing 100
at 51.
Instead, when evaluating whether a fiduciary has acted prudently, the
Court must focus on the process by which the fiduciary makes its decisions
rather than the results of those decisions. Braden, 588 F.3d at 595. Fiduciaries
breach the continuing duty to monitor when they fail to investigate whether
an investment is imprudent after changed financial circumstances increase the
risk of holding stock. Schaefer v. Ark. Med. Soc'y, 853 F.2d 1487, 1492 (8th Cir.
1988) (fiduciaries must "investigate all decisions that will affect the pension
plan"); see Vigeant v. Meek, 352 F. Supp. 3d 890, 898 (D. Minn. 2018); see also
6

Armstrong v. LaSalle Bank Nat'l Ass'n, 446 F.3d 728, 733 (7th Cir. 2006) (a
trustee who simply ignores changed circumstances that have increased the
risk of loss to beneficiaries is imprudent).
But here, the record evidence demonstrates that the committee did not
ignore the increased risk of maintaining the Sequoia Fund. Instead, as
National Indemnity correctly points out, the Committee monitored Sequoia
and the Plan's other investments by meeting quarterly, reviewing performance
evaluation reports from Wells Fargo, and relying on information in the
financial press surrounding Valeant and the Sequoia Fund. Filing 84 at 11. In
particular, around August 2014, the time that the Sequoia Fund began
performing lower than its initial benchmarks, the Committee regularly
discussed the prudence of that fund. Filing 77-8 at 2. And at the August 21
quarterly meeting, the Committee reviewed the Wells Fargo performance
evaluation for the Sequoia Fund. As reflected in the committee minutes of that
meeting,

the

committee

discussed

the

Sequoia

Fund's

recent

underperformance and Wells Fargo's downgrade of Sequoia from an "A" rating
to a "B" rating was addressed. See filing 77-8 at 2. But despite its
underperformance, and Wells Fargo's downgrade of the Sequoia Fund's rating,
the committee recognized that "Wells Fargo considers it to still be an excellent
fund," and noted that the Sequoia Fund's three, five, and ten year performance
projections were higher than its benchmarks. Filing 77-8 at 2.
A few months later, in November 2014, the Committee again discussed
the Sequoia Fund, which had since been downgraded to a "C" rating by Wells
Fargo. Filing 77-9 at 2. The committee, in particular, noted that Sequoia was
highly concentrated in Valeant Pharmaceuticals which had been buying small
pharmaceutical firms and was in the midst of a "takeover battle." Filing 77-9
at 2. But the Committee noted that the Sequoia Fund held 18.2 percent of its
7

assets in cash and that Wells Fargo considered Sequoia "to still be an excellent
fund." Filing 77-9 at 2. And so, the Committee didn't take any action at that
time with respect to the Sequoia Fund––which it noted had been in the fund
lineup since the latter 1970s. Filing 77-9 at 3.
Soon after, Sequoia's performance improved. At the February 2015
committee meeting, the committee noted that the Sequoia Fund's rating
improved from a "C" rating to a "B" rating. At the next quarterly meeting, the
committee notes, again, reflect that the Sequoia Fund's performance was
improving––specifically noting that its Wells Fargo rating improved from a "B"
to an "A" rating. Filing 84-17 at 3. And during the August 2015 meeting, the
Committee noted that the Sequoia Fund's Wells Fargo rating remained at an
"A" rating. Filing 84-19 at 2-3; Filing 77-11 at 15.
But around this time, Valeant stock price began to dramatically decline,
and as a result, the Sequoia Fund lost significant value. So, on October 28,
2015, Committee members discussed the stability of the Sequoia Fund and its
investment in Valeant stock. Filing 27-22 at 1-2. Specifically, the committee
reviewed an investor letter from Sequoia concerning its Valeant position,
Valeant's negative impact on its performance, and its rationale for continuing
to invest in Valeant. Filing 27-22 at 1-2. Based on this information, National
Indemnity sent a communication to Plan participants notifying them that
Valeant was Sequoia's largest holding, that Valeant was in the news due to a
significant price decline, and that two of Sequoia's outside directors had
resigned. Filing 84-20 at 2; filing 77-12 at 2-3. The letter did not take a position
as to whether plan participants should reconsider investing in the Sequoia
Fund, but it did highlight to participants that the Sequoia Fund was not
performing to expectations and that "[i]t is up to each plan participant to make

8

her or his investment decisions in the Plan." Filing 84-20 at 3; filing 77-12 at
2-3.
A few weeks later, at the November 24, 2015 Committee Meeting, the
committee discussed the Sequoia Fund. Filing 84-20 at 3. Specifically, the
committee minutes reflect that the Sequoia Fund began decreasing in value
due to the Fund's largest holding, Valeant Pharmaceuticals––which was
experiencing a significant decline in its market value. Filing 84-20 at 2-3. The
committee also discussed "Valeant's business model, its practices as reported
in the news, and the volatility of Valeant's stock that included the drop in value
since June 30, 2015." Filing 84-20 at 2-3. And ultimately, the committee
decided to place the Sequoia Fund "on the watch list to be discussed at the
February 2016 meeting." Filing 84-20 at 4.
In February 2016, the Sequoia Fund was, again, the topic of extensive
discussion. The Committee "discussed the many issues facing Valeant in
January and February 2016 including its business model, its practices as
reported in the news, the continued volatility of Valeant's stock and drop in
value, [the Securities Exchange Commission's] investigation into its
relationship with a drug distributor and its delay in submitting its annual
filing with SEC." Filing 84-21 at 3. More specifically,
[t]he Committee discussed various options with regard to Sequoia,
one of which was whether to remove Sequoia as an investment
option in the Plan. There are alternative investment options in the
Plan available to participants that do not want to invest in Sequoia
or who want to liquidate their investment in Sequoia. However,
the Committee did not want to force participants into liquidating

9

which would happen if the Plan removed Sequoia as an investment
option.
Filing 84-21 at 3. Instead, the Committee decided "to watch Sequoia and allow
plan participants to decide based on their individual investment goals whether
to continue their investment in Sequoia or to liquidate." Filing 84-21 at 3.
So, in March 2016, National Indemnity sent a second communication to
its employees notifying plan participants that the Sequoia Fund is one of the
options in the Plan, and that employees should read about the recent
developments concerning Valeant. Filing 84-22 at 2. This announcement also
included a link from the Sequoia Fund to its shareholders concerning the
retirement of the co-manager of the Sequoia Fund. Filing 84-22 at 2.
And at the following quarterly meeting, the committee discussed Valeant
and its negative impact on the Sequoia Fund. In particular, the committee
noted that market value of Valeant was decreasing and highlighted a Wall
Street Journal article published on March 23, 2016 entitled "Valeant Losses
Could Hurt Retirement Plans of More Than 50 Companies." Filing 84-23 at 3.
But because the Plan "provides alternative investment options to participants
that do not want to invest in Sequoia or who want to liquidate their investment
in Sequoia", the Committee decided to continue to watch Sequoia and allow
"participants to decide based on their individual investment goals whether to
continue their investment in Sequoia or to liquidate." Filing 84-23 at 4.
That decision was based, at least in part, on the Committee's
understanding that "Sequoia sold Valeant in the first quarter reducing its
holdings significantly." Filing 84-23 at 4. And the Committee also noted that
because the "Sequoia [Fund was] taking steps to make sure what has happened
will not happen again, the Committee did not want to recommend removing
10

Sequoia as an investment option in the Employee Retirement and Savings
Plan." Filing 84-23 at 4. Soon after, the Sequoia Fund completely divested itself
of Valeant stock. Filing 84-11 at 7.
In other words, there is extensive undisputed evidence in the record
demonstrating that the Committee monitored funds in the Plan, and
specifically, evidence that the Committee analyzed and reviewed the prudence
of maintaining the Sequoia Fund as a plan option.1 Tibble, 135 S. Ct. at 1828;
see also Vigeant, 352 F. Supp. 3d at 898 (finding that annually determining the
fair market value of the stock at issue with the opinion of an independent
appraiser was sufficient in the face of changed financial circumstances). That
conduct satisfies National Indemnity's continuing duty to monitor and
evaluate the fund options in the Plan, and no reasonable fact finder could
conclude otherwise. See Tibble, 135 S. Ct. at 1828.
Even so, Muri argues that National Indemnity's monitoring process was
still insufficient. But that argument is not based on Muri's contention that

1

Muri appears to argue that the Committee's minutes do not accurately reflect the

discussions at the quarterly committee meeting. Filing 100 at 13. For example, Muri points
out that the Committee minutes suggest that "Wells Fargo still considers [Sequoia] to be an
excellent fund" but what the Wells Fargo representative actually said was that Wells Fargo
was "not panicked" about the state of the Fund. See filing 100 at 13. Muri also takes issue
with the Committee notes reflecting the fact that the Sequoia Fund has been a Plan option
since the late 1970s but Karen Rainwater, who drafted the Committee minutes, could not
specifically remember that statement being discussed. Filing 100 at 30. But these
discrepancies, if any, do not create a genuine dispute of material fact. Indeed, Muri has not
provided the Court with any persuasive evidence that the Committee minutes are
meaningfully inaccurate—it is, rather, the sort of "metaphysical doubt" that will not suffice
to oppose summary judgment. See Scott v. Harris, 550 U.S. 372, 380 (2007) (quoting
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)).

11

National Indemnity was not monitoring the Sequoia Fund. See id. Instead, that
argument hinges on Muri's contention that National Indemnity's reliance on
publicly available information––such as Valeant's declining market value, the
financial press concerning Valeant and the Sequoia Fund, and signs that the
Sequoia Fund may be overly concentrated in a high-risk stock (i.e., Valeant)—
did not satisfy its duty to prudently monitor its Plan assets. See filing 100 at
51-52. In particular, Muri claims that Plan fiduciaries should have placed
Sequoia Fund on the watch list earlier than it actually did, filing 99-5 at 8-25,
done "additional research" on the Sequoia Fund's investment in Valeant, filing
100 at 51-52, sought assistance from disinterested experts, filing 77-2 at 17,
and engaged in a "quantitative analysis of [the Plan's] investment options" to
determine, under the circumstances, whether continuing to offer the Sequoia
Fund was imprudent, filing 100 at 51-52; see also filing 99-5 at 8-25.
But that notion—that a plan fiduciary must go beyond the review of
publicly available information when nothing in the record suggests that a
particular investment's market price is unreliable—was recently rejected by
the Eighth Circuit in Usenko v. MEMC LLC et al., No. 18-1626, slip op. at 1-9
(8th Cir. June 4, 2019). In Usenko, the plaintiff alleged that SunEdison
Semiconductor, LLC; the investment committee in charge of the plaintiff's
employers' retirement savings plan; and the members of the investment
committee; breached their fiduciary duties under ERISA. Id. at 2. More
specifically, the plaintiff claimed that the defendants "knew or should have
known" that one of the stocks offered in the retirement savings plan at issue,
SunEdison, was in poor financial condition and thus, should have been
removed from the plan's assets. Id. at 2. And because by July 2015, it was
"widely reported" that SunEdison was facing liquidity problems and was in
financial distress following a series of ambitious acquisitions, the plaintiff's
12

complaint "fault[ed] the defendants for failing to act on this publicly available
information and allege[d] that the decline[] in SunEdison's stock price and
reports of SunEdison's extraordinary debts and liquidity problems should have
prompted them to investigate and ultimately determine that divesting from
SunEdison stock would be prudent." Id. at 7
Missing from the record, however, were any "allegations that the
circumstances indicating [] that [the defendants] could not rely on the market's
valuation of SunEdison stock." Id. To the contrary, the Eighth Circuit noted
that the evidence suggested that the financial press' negative commentary and
SunEdison's liquidity problems were reflected in the decline of SunEdison's
stock price. Id. And "a security's price in an efficient market reflects all publicly
available information and represents the market's best estimate of its value in
light of its riskiness and the future net income flows that those holding it are
likely to receive." Id. at 6. So, where the plaintiff's allegations turn on the
assumption that the defendants "breached their fiduciary duties because they
failed to outperform the market based solely on their analysis of publicly
available information" there cannot, as a matter of law, be a breach of the duty
of prudence. Id.; see also Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. 409,
426-27 (2014).
The Eighth Circuit extended that same analysis to the plaintiff's
contention that the defendants failed to prudently monitor the plan
investments.2 Id. at 8. In particular, the court noted that although "an ERISA

2

The Court acknowledges Muri's contention that the Court's previous Memorandum

highlights the fact that Muri's duty of prudence allegations include Muri's contention that
National Indemnity failed to adequately monitor and investigate the Sequoia Fund's
prudence. Filing 127 at 2. But that decision was before Usenko. And Unseko explicitly applies

13

fiduciary has a continuing duty to monitor trust investments and remove
imprudent ones," there must be some "special circumstances undermining the
market price" to state a duty of prudence claim based on public information.
Id. Simply put, following Usenko, a plaintiff cannot prevail on a duty of
prudence claim by arguing that the Plan fiduciaries failed to act prudently, or
failed to adequately monitor the investments in the Plan, by not removing an
excessively risky stock "based solely on their analysis of publicly available
information." Id. at 7-8. (internal quotation omitted).
The similarities between Usenko and the underlying litigation cannot be
denied. Similar to the fiduciaries in Usenko, in this case, National Indemnity
relied on publicly available information, including Valeant's market price,
Wells Fargo's fund reports, statements from Valeant leadership, and the
financial press, when it considered the appropriateness of the Sequoia Fund.
Tibble, 135 S. Ct. at 1828 (internal quotations removed); see filing 77-8 at 2;
filing 77-9 at 2; filing 84-17 at 3; filing 27-22 at 1-2; filing 84-20 at 3; Filing 8423 at 3; filing 84-11 at 6. Nothing in the record, however, suggests that reliance
on Valeant's market price or other publicly available information was
imprudent under the circumstances.
In fact, like Usenko, the evidence is to the contrary: as Valeant's stock
price and reports of its questionable acquisition strategy surfaced, the market
valuation of Valeant also declined and as a result, the Sequoia Fund's Wells
Fargo rating also decreased. And as Valeant's market price declined in value,
so did the Sequoia Fund's Wells Fargo rating. This, in turn, prompted the
Committee to watch the Sequoia Fund more closely and inform Plan
participants of the financial news concerning Valeant. See filing 77-8 at 2;
the Supreme Court's holding in Dudenhoeffer to failure to monitor claims based on public
information. Slip op. at 8.

14

filing 77-9 at 2; filing 84-17 at 3; filing 27-22 at 1-2; filing 84-20 at 3; Filing 8423 at 3; filing 84-11 at 6.
In sum, contrary to Muri's contentions, National Indemnity was
regularly monitoring and discussing Valeant's performance and its impact on
the Sequoia Fund, and the Committee reviewed relevant, and most
importantly reliable, valuation information. As such, the Court concludes that
no reasonable fact finder could find for Muri on his duty of prudence claim.
Usenko, slip op. at 4-6; see also Tibble, 135 S. Ct. at 1828; Dudenhoeffer, 573
U.S. at 426-27.
II. DUTY OF LOYALTY
Next, National Indemnity argues that Muri's duty of loyalty claim fails
as a matter of law. The duty of loyalty requires fiduciaries to act "for the
exclusive purpose of providing benefits to participants and their beneficiaries
and defraying reasonable expenses of administering the plan." 29 U.S.C. §
1104(a)(1)(A); Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 598 (8th Cir.
2009). This duty is analyzed under a subjective standard where "what matters
is why the defendant acted as he did." In re Wells Fargo ERISA 401(k) Litig.,
331 F. Supp. 3d 868, 875 (D. Minn. 2018); see also Wildman v. Am. Century
Servs., LLC, 362 F. Supp. 3d 685, 700 (W.D. Mo. 2019). The test focuses on "the
reason" that the fiduciary took the challenged action, and whether it was
motivated by "subjective good faith." Id. at 875 (emphasis in original).
As noted above, Muri contends that National Indemnity fell victim to
conflicts of interest in choosing its investment options, especially those with
close relationships to its parent company, Berkshire Hathaway—specifically,
because the Sequoia Fund owned Berkshire Hathaway stock. So, to support
that claim, Muri must point to evidence from which a reasonable fact finder
could infer that the subjective motivation behind the Committee's conduct
15

placed Berkshire Hathaway's interests over those of the Plan participants. See
id. But here, there is no evidence in the record to support Muri's conclusory
allegation that the primary reason for National Indemnity's "retention of the
Sequoia Fund in the Plan is that the Sequoia Fund represented a vehicle for
Plan participants to invest in the stock of [National Indemnity's] corporate
parent, Berkshire Hathaway." Filing 100 at 127.
Instead, the only evidence before the Court is that the Committee was
skeptical of removing the Sequoia Fund from the Plan because they did not
want to "force participants into liquidating their investments" and wanted "to
allow participants to decide based on their individual investment goals
whether to continue their investment in [the] Sequoia [Fund] or to liquidate."
Filing 84-23 at 4. And to that end, Muri's own expert found that "committee
members seem to have believed that the fund's popularity among the
participants was an important reason to defer any removal decision." Filing
99-5 at 13. But it is not disloyal for an investment committee to consider what
the Plan participants they represent might want. In fact, it simply bolsters the
conclusion that the committee members were acting with the participants'
interests in mind. Wildman, 362 F. Supp. 3d at 702 n.11 (noting committee
members' belief that participants preferred active funds).
Nonetheless, Muri argues that keeping the Sequoia Fund, which is
allegedly one of the largest shareholders of Berkshire Hathaway, as an
investment option may have "elevated the interests of Berkshire Hathaway" to
some degree. See filing 105 at 127. But what interests were those? The evidence
Muri points to indicates only that the Committee considered the opinions of
some at Berkshire Hathaway regarding the Sequoia Fund as an investment,
see filing 105 at 127. But, there is nothing to suggest that any such

16

consideration was intended to benefit Berkshire Hathaway, or that anything
the Committee did actually had the effect of benefitting Berkshire Hathaway.
And alternatively, even if it had, "an act which has the effect of
furthering the interests of a third party is fundamentally different from an act
taken with that as a goal." Sacerdote v. New York Univ., No. 16-CV-6284, 2017
WL 3701482, at *6 (S.D.N.Y. Aug. 25, 2017), reconsideration denied, 2017 WL
4736740 (S.D.N.Y. Oct. 19, 2017); see also Larson v. Allina Health Sys., 350 F.
Supp. 3d 780, 804 (D. Minn. 2018). While the former "may well not be a
violation of the duty of loyalty, . . . the latter may well be." Sacerdote, 2017 WL
370182 at *6; Larson, 350 F. Supp at 804.
And here, Muri has provided the Court with no evidence from which a
reasonable fact finder could conclude that the committee's decision to keep the
Sequoia Fund can only be explained by an intent to further the interests of
Berkshire Hathaway rather than Plan participants. Sacerdote, 2017 WL
370182 at *6, see Brotherston, 907 F.3d at 41; see also Wildman, 362 F. Supp.
3d at 702.3 Accordingly, the Court will grant National Indemnity's motion for
summary judgment on those grounds.
CONCLUSION
In sum, the evidence before the Court demonstrates that based on the
undisputed material facts, Muri's duty of prudence and duty of loyalty claims

3

The Court has also noted Muri's suggestion that somehow, a conflict of interest was

generated because the Sequoia Fund was "started by former Berkshire Hathaway colleagues
and confidantes." Filing 105 at 127. But even assuming that's the case, it does not establish
a breach of the duty of loyalty absent evidence of action intended to benefit the Sequoia Fund
at the expense of plan participants—and as explained above, there is little to establish that,
except the sort of speculation and conjecture that will not suffice to oppose summary
judgment. Gannon Int'l, Ltd. v. Blocker, 684 F.3d 785, 794 (8th Cir. 2012).

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cannot survive summary judgment. So, the Court will grant National
Indemnity's motion in its entirety.

IT IS ORDERED:
1.

The defendant's motion for summary judgment (filing 83) is
granted.

2.

The plaintiff's motion to exclude expert testimony by Samuel
E. Bonderoff (filing 79) is denied as moot.

3.

The defendant's motion to exclude the expert testimony of
Charles Wert (filing 86) is denied as moot.

4.

The plaintiff's motion to certify class (filing 70) is denied as
moot.

5.

A separate judgment will be entered.

Dated this 18th day of June, 2019.
BY THE COURT:

John M. Gerrard
Chief United States District Judge

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