Kennedy et al v. Aegis Media Americas, Inc. et al

Filing 77

ORDER granting #66 Motion to Stay re: #66 MOTION to Stay All Proceedings. As such, Defendants Motion to Stay All Proceedings, Dkt. No. 67, is granted. The parties are directed to write the Court promptly following the Supreme Courts decision in Hughes. The Clerk of Court is directed to note the stay on the docket of this case. SO ORDERED. (Signed by Judge Gregory H. Woods on 9/7/2021) (tg)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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STACEY PARK KENNEDY, ANGELA
:
BOZELL, and BRITTNEY WILLIAMS,
:
individually and on behalf of all others similarly situated, :
:
Plaintiffs, :
-against:
:
AEGIS MEDIA AMERICAS, INC., BOARD OF :
DIRECTORS OF AEGIS MEDIA AMERICAS, :
INC., THE PLAN INVESTMENT
:
COMMITTEE, JOHN DOES 1-30,
:
:
Defendants.
:
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USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: 9/7/2021

1:20-cv-3624-GHW
ORDER

GREGORY H. WOODS, United States District Judge:
On August 9, 2021, Defendants filed a motion to stay all proceedings in this case, Dkt. No.
66, pending the Supreme Court’s decision in Hughes v. Northwestern University, No. 19-1401 (2021).
For the reasons discussed below, Defendants’ motion is granted.
The following facts are taken from the Amended Complaint, Dkt. No. 41 (“Complaint”) and
are undisputed unless otherwise noted. Defendants sponsor a large 401(k) defined contribution plan
called the BenefitsPlus 401(k) Profit Sharing Plan (the “Plan”). Plaintiffs, investors in the Plan, filed
an amended putative class action Complaint on May 8, 2020, bringing allegations that Defendants
violated their duty of prudence under the Employee Retirement Income Security Act of 1974
(“ERISA”). As is relevant here, Plaintiffs argue that Defendants “maintain[ed] certain funds in the
Plan despite the availability of identical or similar investment options with lower costs and/or better
performance histories.” Complaint ¶ 11; see also, e.g., ¶¶ 93, 107, 111. Defendants moved to dismiss
the Complaint, and their motion is currently pending. Dkt. No. 66.
On July 2, 2021, the Supreme Court granted certiorari in Hughes v. Northwestern University.
2021 WL 2742780, at *1 (2020). The question presented to the Supreme Court in Hughes is

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Whether allegations that a defined-contribution retirement plan paid or charged its
participants fees that substantially exceeded fees for alternative available investment
products or services are sufficient to state a claim against plan fiduciaries for breach
of the duty of prudence under ERISA, 29 U.S.C. § 1104(a)(1)(B).
Dkt. No. 67, Ex. A.
On August 9, 2021, Defendants moved to stay all proceedings in this case, arguing that “the
Supreme Court will address issues identical to the claims Plaintiffs assert here, and the issues raised
in Defendants’ motion to dismiss.” Defendants’ Memorandum in Support of Motion to Stay
Proceedings at 2, Dkt. No. 67 (“Mot. to Stay”). Plaintiffs oppose that motion. See Plaintiff’s
Memorandum of Law in Opposition to Defendants’ Motion to Stay Proceedings, Dkt. No. 69
(“Opp’n to Stay”).
“A district court’s ‘power to stay proceedings is incidental to the power inherent in every
court to control the disposition of the cases on its docket with economy of time and effort for itself,
for counsel, and for litigants.’” Loftus v. Signpost Inc., 464 F. Supp. 3d 524, 526 (S.D.N.Y. 2020)
(quoting Louis Vuitton Malletier S.A. v. LY USA, Inc., 676 F.3d 83, 96 (2d Cir. 2012)). Courts in this
district consider five factors when determining whether to grant a stay:
(1) [T]he private interests of the plaintiffs in proceeding expeditiously with the civil
litigation as balanced against the prejudice to the plaintiffs if delayed; (2) the private
interests of and burden on the defendants; (3) the interests of the courts; (4) the
interests of persons not parties to the civil litigation; and (5) the public interest.
Id. “A court may also properly exercise its staying power when a higher court is close to settling an
important issue of law bearing on the action.” Sikhs for Just. v. Nath, 893 F. Supp. 2d 598, 622
(S.D.N.Y. 2012).
The balance of relevant factors weighs in favor of staying all proceedings in this case
pending the Supreme Court’s decision in Hughes.
First, the Supreme Court’s decision in Hughes will settle a key issue that has direct bearing on
Defendants’ motion to dismiss—namely, whether a plaintiff states a claim for breach of the duty of
prudence under ERISA when it alleges that the fiduciaries of a defined-contribution plan should
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have invested in lower-cost, identical funds to those actually offered. Here, plaintiffs allege exactly
that: their position is that Defendants violated their duty of prudence by failing to invest in
identical, but lower-cost, Plan funds. See, e.g., Plaintiff’s Memorandum of Law in Opposition to
Defendant’s Motion to Dismiss at 1, Dkt. No. 50 (arguing the Defendants breached their duties by
“selecting a slate of investment options for [the Plan] participants that were imprudent due to their
poor performance and high fees where identical or nearly identical alternative funds—differing only
in price—were available in the marketplace”). Thus, Hughes could prove dispositive of Defendants’
motion to dismiss and ultimately determine whether this case will be dismissed; this weighs in favor
of a stay. See Marshel v. AFW Fabric Corp., 552 F.2d 471, 472 (2d Cir. 1977) (ordering the district
court to stay proceedings because a key issue on remand would, “in all likelihood, turn upon” a
Supreme Court decision in an upcoming case); Aleisa v. Square, Inc., 493 F. Supp. 3d 806, 815 (N.D.
Cal. 2020) (granting a stay where an upcoming Supreme Court decision “might not only decide an
important legal question in this case, it could altogether dispose of Plaintiffs’ complaint as a matter
of law”).
In response, Plaintiffs argue that the Second Circuit’s recent decision in Sacerdote et al. v.
NYU, 2021 WL 3610355 (2d Cir. Aug. 12, 2021) settles the issue of whether plaintiffs state a claim
for breach of the duty of prudence when they allege that fiduciaries should have invested in lowercost, identical plans. In Sacerdote, the Second Circuit held that plaintiffs who alleged that plan
fiduciaries failed to invest in lower-cost, identical funds stated a claim and could withstand a motion
to dismiss. See id. at *5-8. But Plaintiffs overlook that Hughes will decide the same issue and thus has
the potential to abrogate the relevant holding in Sacerdote. As such, though Sacerdote certainly bears
on the arguments in Defendant’s Motion to Dismiss, its impact may be temporary. Ultimately, a

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stay is favored because it is Hughes, and not Sacerdote, that will ultimately “settl[e] an important issue
of law bearing on the action.” Sikhs for Just., 893 F. Supp. 2d at 622. 1
The interests of the Court and the public also weigh in favor of a stay. The Court’s decision
in Hughes will clarify a critical issue currently before the Court, and in doing so, promote the public
and judicial “interest in the efficient conduct of litigation.” Loftus, 464 F. Supp. 3d at 527. As other
courts in this district have found, “[e]ven a decision from the Supreme Court that would not be
dispositive of issues in this case could contain guidance that would allow this litigation to proceed on
a reasonable and efficient basis.” 2 Id.
The interests of Defendants and third parties also weigh in favor of a stay. The decision in
Hughes could result in the dismissal of this case, allowing Defendants to avoid the significant burdens
imposed by continued proceedings and the potential opening of discovery in this matter. This is
particularly true given “that the case is asserted as a class action.” Id. at 527. Moreover, third parties
have an interest in the stay because the Supreme Court’s decision could negate any need for third
party discovery. See id.
By contrast, Plaintiffs will not suffer significant prejudice because of a stay. While Plaintiffs’
alleged damages (which amount to recouped administrative fees that could have been avoided
Defendants chose to invest in lower-cost funds) may amount to “millions of dollars” on a class-wide
basis, the harm to any given class member individual is unlikely to be so significant as to outweigh
the significant potential benefits of a stay. 3 Further, there is no indication that Defendants would be

1

Plaintiffs appear to suggest that the Court should deny the stay because the Solicitor General has taken the position, in
an amicus brief, that plaintiffs state a claim when they argue that plan fiduciaries fail to invest in lower-cost, identical
funds—the position favorable to Plaintiffs. Opp’n to Stay at 4–5. But this speculation about what the Supreme Court
may do is not persuasive. Indeed, the Supreme Court has no obligation to adopt the position of the Solicitor General
and could hold to the contrary.
2
Recent decisions have also recognized that “the exigencies of the COVID-19 pandemic have made the process of
litigation more difficult. A stay in these circumstances conserves judicial resources and avoids unnecessary expense for a
cause of action that may ultimately be rendered moot.” Id.
3
The same rationale applies to Plaintiff’s claims for injunctive relief, which request that the Court order the Plan’s
fiduciaries to cease its ERISA violations and remedy its wrongful governance.

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unable to satisfy a judgment for damages, or that a delay would impact their ability to do so.
Similarly, litigation holds already in place will mitigate any concern over spoliation of documents
throughout the pendency of the stay.
As such, Defendants’ Motion to Stay All Proceedings, Dkt. No. 67, is granted. The parties
are directed to write the Court promptly following the Supreme Court’s decision in Hughes.
The Clerk of Court is directed to note the stay on the docket of this case.
SO ORDERED.
Dated: September 7, 2021
New York, New York

_____________________________________
GREGORY H. WOODS
United States District Judge

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