Boley et al v. UNIVERSAL HEALTH SERVICES INC et al

Filing 56

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE MARK A. KEARNEY ON 3/8/21. 3/8/21 ENTERED AND COPIES E-MAILED.(jaa, )

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 1 of 22

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
MARY K. BOLEY, et al.
v.
UNIVERSAL HEALTH SERVICES,
INC., et al.

: CIVIL ACTION
:
: NO. 20-2644
:
:
:

MEMORANDUM
KEARNEY, J.

March 8, 2021

Three participants in their former employer’s defined contribution plan are suing the
plan’s fiduciaries for allegedly breaching fiduciary duties owed to them under ERISA. The three
plan participants move to certify and represent a class of over 60,000 active participants. The
plan participants invested in different funds but focus their allegations on the fiduciaries
allegedly retaining more expensive and underperforming funds despite the availability of lower
cost funds, failing to monitor excessive record keeping and administrative fees and costs relative
to similar plans, offering an excessively expensive menu of investment options, and failing to
monitor their appointees. We denied the fiduciaries’ partial motion to dismiss four months ago.
The fiduciaries now oppose class certification arguing individualized defenses under
ERISA section 404(c), potentially differing limitations periods, and the three participants’
investments in different funds render the participants atypical and the defenses create issues
unable to be resolved on a class-wide basis. Following discovery, we find the three participants
may proceed in representing a class of current and former plan participants. We agree with the
persuasive reasoning from courts around the country rejecting the fiduciaries’ arguments at this
stage. We grant the three participants’ motion for class certification.

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 2 of 22

I.

Background
Universal Health Services, Inc. sponsors the Universal Health Services, Inc. Retirement

Savings Plan (“Plan”), a defined contribution plan under which its qualified employees can
invest a portion of their paycheck in one or more of thirty available investment options.
Universal Health Services matches a portion of those contributions. 1 Universal Health Services
and its Investment Committee appointed by the Board of Directors serve as the Plan’s fiduciaries
and administrators. 2 The fiduciaries must administer the Plan under Congress’ mandates in the
Employee Retirement Income Security Act of 1974 (“ERISA”). 3
The Plan had 60,018 active participants in 2018 with 41,872 holding active account
balances. 4 The Plan had net assets totaling over $1.9 billion. 5 From June 5, 2014 through at least
last month, the Plan offered participants a menu of thirty-seven investment options including
some offered for a limited time. 6
Former Universal Health Services employees Mary Boley, Kandie Sutter, and Phyllis
Johnson (“Participants”), on behalf of the Plan and a purported class of similarly situated Plan
participants and beneficiaries, sue Universal Health and its Investment Committee (the
“Fiduciaries”) under ERISA. The Participants allege the Fiduciaries breached their fiduciary
duties, including by: (1) retaining a suite of thirteen expensive and underperforming actively
managed target date funds despite the availability of lower cost, passively managed index funds;
(2) failing to monitor the excessive recordkeeping fees and administrative costs charged to Plan
participants relative to other similarly large plans; (3) offering an excessively expensive menu of
investment options; and (4) failing to monitor the Committee’s appointees. 7 The Participants are
either current or former Plan participants: Ms. Boley invests in the Fidelity Freedom K 2050
target date fund; Ms. Sutter invests in the Fidelity Freedom K 2025 target date fund, the Fidelity

2

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 3 of 22

Contrafund, the Fidelity Managed Income Portfolio II, the PIMCO Total Return Fund, and the
MetWest Total Return Bond Fund; and Ms. Johnson invested in the Fidelity Freedom K 2045
target date fund. 8
The Fiduciaries, largely relying on the Supreme Court’s recent decision in Thole v. U.S.
Bank, N.A., 9 moved to partially dismiss the Participants’ claims several months ago arguing they
lacked constitutional standing to pursue claims relating to alleged losses in discrete investments
they never selected. 10 We denied the Fiduciaries’ motion after finding Thole to be of limited
relevance in the context of defined contribution plans. 11 We found the Participants plead
individualized injury – and therefore standing – with respect to each of their claims. 12 The
Participants invested in one of the allegedly imprudent investments in target date funds 13 We
further found their remaining claims involved the Fiduciaries’ decision-making processes
impacting all Plan participants. 14
II.

Analysis
The Participants move under Federal Rule of Civil Procedure 23(a) and 23(b)(1) to

certify a class of “[a]ll participants and beneficiaries in [the Plan] at any time on or after June 5,
2014 to the present (the “Class Period”), including any beneficiary of a deceased person who was
a participant in the Plan at any time during the Class Period.” 15 The Participants must satisfy the
four requirements of Rule 23(a) and the requirements of either Rule 23(b)(1), (b)(2), or (b)(3).
We may grant class certification if, “after a rigorous analysis,” we are satisfied the Participants
established each of the Rule’s requirements by a preponderance of the evidence. 16
A.

The Class satisfies the Rule 23(a) requirements.

Under Rule 23(a), a class may be certified only if “(1) the class is so numerous that
joinder of all members is impracticable; (2) there are questions of law or fact common to the

3

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 4 of 22

class; (3) the claims or defenses of the representative parties are typical of the claims or defenses
of the class; and (4) the representative parties will fairly and adequately protect the interests of
the class.” 17 The Participants argue they meet Rule 23(a) because the: (1) Plan consisted of over
60,000 participants during the class period; (2) same overarching questions of law and fact apply
to all Plan participants’ claims; (3) Participants suffered the same or similar injuries the Plan
participants did; and (4) class counsel will adequately represent the interests of all Plan
participants. 18 The Fiduciaries do not dispute the putative Class satisfies the numerosity and
adequacy requirements but argue the Participants’ claims are neither common nor typical of the
claims of the putative Class for three reasons: (1) the claims of the Participants and putative
Class are subject to individualized defenses available to fiduciaries under section 404(c) of
ERISA; (2) individualized factual determinations will be required to determine whether the
claims are untimely under ERISA’s statute of limitations; and (3) the Participants only invested
in a few of the investment options available to the Plan. We conclude the putative Class satisfies
the requirements of Rule 23(a).
a.

The Class satisfies the numerosity requirement.

Rule 23(a)(1) requires a proposed Class be “so numerous that joinder of all members is
impracticable.” 19 While no threshold number is required, “a plaintiff in this circuit can generally
satisfy Rule 23(a)(1)’s numerosity requirement by establishing ‘that the potential number of
plaintiffs exceeds 40.’” 20 The Plan’s Form 5500 demonstrates it had 60,108 active participants as
of 2018; 41,872 of those participants had active account balances. 21 The Fiduciaries do not
dispute the putative Class satisfies the numerosity requirement. We agree it satisfies the
requirement.

4

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 5 of 22

b.

The Class satisfies the commonality requirement.

Rule 23(a)(2) requires a plaintiff demonstrate “there are questions of law or fact common
to the class.” 22 This requirement is satisfied if the proposed class members “share at least one
question of fact or law with the grievances of the prospective class.” 23 “A complaint’s mere
recital of questions that happen to be shared by class members is ‘not sufficient to obtain class
certification.’” 24 Commonality instead requires the plaintiff to demonstrate the class members
“have suffered the same injury.” 25
The Participants satisfy the commonality requirement. They allege the Fiduciaries
breached their duties to the Plan by, among other things, allowing excessive recordkeeping and
administrative costs to be charged to Plan participants, retaining high-cost actively managed
funds as investments despite the availability of low-cost index funds, and failing to have a
prudent investment evaluation process. 26 All Plan participants chose from the same menu of
investment options and paid the same administrative and recordkeeping fees. Many common
questions of law and fact will drive the resolution of the litigation. The alleged Plan-wide
conduct further impacted all Plan participants in a similar way, for example, through the payment
of excessive fees. 27
c.

The Class satisfies the typicality requirement.

Rule 23(a)(3) requires a plaintiff demonstrate “the claims or defenses of the
representative parties are typical of the claims or defenses of the class.” 28 The typicality
requirement “ensur[es] that the class representatives are sufficiently similar to the rest of the
class . . . so that certifying those individuals to represent the class will be fair to the rest of the
proposed class.” 29 To determine whether the requirement has been met, we focus on “the
similarity in the legal theory and legal claims; the similarity of the individual circumstances on

5

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 6 of 22

which those theories or claims are based; and the extent to which the proposed representative
may face significant or atypical defenses to her claims.” 30
The similarity between the legal theory and legal claims asserted by the Participants and
the proposed class “does not have to be perfect.” 31 The claims must instead be “typical, in
common-sense terms, of the class, thus suggesting that the incentives of the plaintiffs are aligned
with those of the class.” 32 There likewise need not be complete overlap in the individual factual
circumstances underlying the legal claims but “just enough…so that maintaining a class action is
reasonably economical and the interests of the other class members will be fairly and adequately
protected in their absence.” 33 Our Court of Appeals explained “even relatively pronounced
factual differences will generally not preclude a finding of typicality where there is a strong
similarity of legal theories.” 34
In Schering Plough, our Court of Appeals explained “there is no doubt” a plan participant
bringing ERISA breach of fiduciary duty claims on behalf of a plan met this threshold of legal
and factual similarity. 35 Not only did the plan participant have legal claims identical to those of
the proposed class, but the “basic factual circumstances supporting those claims – namely,
defendants’ conduct, [plaintiff’s] participation in the [p]lan, and her investment in [the
challenged stock] – are shared by the rest of the proposed class.” 36 Judge Bartle similarly found
the participant met the typicality requirement in an ERISA breach of fiduciary duty action
despite the fact the sole plaintiff signed a release barring her recovery for part of the proposed
class period. 37 Judge Bartle explained “[w]hile [plaintiff’s] specific claim may occur over a
shorter or different time period than other class members’ claims, there is a ‘strong similarity of
legal theories’ based on a single ‘course of conduct.’” 38 Consistent with this reasoning, courts in

6

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 7 of 22

other circuits have found the typicality requirement satisfied in analogous ERISA cases
challenging fiduciaries’ conduct and decision-making processes. 39
The Fiduciaries argue the Participants have not shown the requisite commonality and
typicality for three reasons. They initially argue, relying heavily on the Court of Appeals for the
Fifth Circuit’s decision in Langbecker v. Electric Data Systems Corporation, 40 the “potential
applicability of the individualized defense under Section 404(c) renders class certification
inappropriate.” 41 Section 404(c) provides an affirmative defense to fiduciaries under certain
circumstances:
(1)(A) In the case of a pension plan which provides for individual accounts and permits a
participant or beneficiary to exercise control over the assets in his account, if a participant
or beneficiary exercises control over the assets in his account (as determined under
regulations of the Secretary)—
…
(ii) no person who is otherwise a fiduciary shall be liable under this part for any loss, or
by reason of any breach, which results from such participant’s or beneficiary’s exercise
of control,…” 42
The Fiduciaries overstate the significance of Langbecker. The Court of Appeals for the
Fifth Circuit vacated and remanded the district court’s grant of class certification in an ERISA
breach of fiduciary duty case brought on behalf of a plan because the district court, “[f]astening
on the directive suit characterization” of the action, categorically found the section 404(c)
defense inapplicable to a suit brought on behalf of a plan as a whole. 43 The court of appeals in
Langbecker did not hold, as the Fiduciaries contend, the potential applicability of section 404(c)
automatically defeats commonality or typicality, but instead found it improper that the lower
court “incorrectly eliminated the Section 404(c) defense from its evaluation of the suitability…of
class treatment” altogether. 44
Since Langbecker, courts in our Circuit have consistently found the potential applicability
of the section 404(c) defense does not defeat class certification because, if applicable, the
7

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 8 of 22

defense would defeat claims on a class-wide basis. 45 In Stanford, for example, Judge Yohn
rejected the argument section 404(c) precluded class certification in an ERISA case brought on
behalf of a plan challenging specific transactions made by the fiduciaries. 46 Judge Yohn first
found this defense would not be unique to the class representative because “[i]t seems clear that
the 404(c) defense, if applicable, would presumably work to defeat the claims of the class as a
whole.” 47 Judge Yohn further found an analysis into 404(c) would not result in individualized
inquiries explaining, “because the Section 404(c) defense, appears to apply, if at all, on a classwide basis, adjudication of a Section 404(c) defense in a class action setting seems quite
appropriate.” 48 In Zhu v. Schering Plough Corporation, Judge Hayden similarly rejected the
theory a putative class could not be certified under Rule 23(b) due to the section 404(c) defense
because, if the fiduciaries raised the defense, it would not be unique to the named plaintiffs and
instead would apply to all class members, “given that it is clearly [d]efendants’ position in this
case that they bear no responsibility for the [p]lan losses at issue here in light of the control
[p]lan participants exercised over the investment of their accounts in [the challenged ] stock.” 49
Other district courts have likewise concluded the potential applicability of the section
404(c) defense does not defeat commonality or typicality where the claims “focus on defendants’
actions towards the [p]lan, and whether those actions were prudent,” rather than on “individual
investment patterns.” 50 In Brieger v. Tellabs, Inc., Judge Kennelly found the section 404(c)
defense did not render plan participants’ claims regarding fiduciaries’ allegedly imprudent
management of a plan’s investments atypical because the defense would not be unique to the
claims but would apply to the plan as a whole. 51 Judge Kennelly also discussed the limited
significance of Langbecker, explaining it only suggested the availability of section 404(c)
defenses “should have some bearing on class certification” and did not regard the possibility of

8

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 9 of 22

section 404(c) defenses “as [a] barrier[] to typicality in suits brought under Section 502(a)(2) of
ERISA.” 52 Judge Lungstrum in In re YRC Worldwide Inc. ERISA Litigation similarly “joined
what appears to be every other court that has addressed this issue” in concluding the section
404(c) defense does not defeat typicality or class certification generally for breach of fiduciary
duty claims alleging plan fiduciaries acted imprudently in managing the plan’s investments. 53
Consistent with several district court decisions after Langbecker, we also conclude the
potential applicability of the section 404(c) defense does not defeat commonality or typicality.
The claims here focus on Fiduciaries’ plan-wide conduct rather than on the investment decisions
of individual plan participants. The evidence required to establish the applicability of the section
404(c) defense likewise hinges on the Plan rather than on individual Plan participants. The
defense would not be unique to the Participants or other Class members and instead would apply
to defeat the claims on a class-wide basis.
The Fiduciaries next argue the individualized inquiry into whether the claims of the
Participants or those of the putative Class are time-barred precludes class certification. 54 A
plaintiff cannot bring suit under ERISA alleging breach of fiduciary duties after the earlier of
(1) six years after the last action constituting a breach or violation or (2) three years after the
earliest date on which the plaintiff had “actual knowledge” of the breach or violation. 55 The
Fiduciaries contend some of the Participants’ deposition testimony suggests receipt of Planrelated communications before filing suit.

The Fiduciaries then argue claims of some

Participants or putative Class members could be barred by the statute of limitations.
Courts have rejected this theory under similar circumstances, finding statute of
limitations issues to be common to putative class members and therefore capable of class-wide
resolution. In Henderson v. Emory University, for example, Judge Pannell, Jr. rejected the

9

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 10 of 22

fiduciaries’ theory individualized statute of limitations inquiries defeated commonality based on
proof some named plaintiffs received disclosures with plan-related information over three years
before they filed suit. 56 Judge Pannell, Jr. found instead the statute of limitations presented
common inquiries, for example, “whether the disclosures that the [fiduciaries] point to – which
appear to be materials made available to the [p]lans’ participants generally – did, in fact, provide
a given plaintiff or class member with ‘actual knowledge’ of the claims.” 57 Judge Pannell further
explained even assuming the statute of limitations raised some individualized inquiries, it “does
not negate the many other common issues” present in cases alleging fiduciaries breached their
duties on a plan-wide basis. 58 Judge Eagles in Clark v. Duke University similarly found statute of
limitations inquiries could be common to putative class members based on plan-wide
communications providing actual knowledge of alleged breaches of fiduciary duties. 59 Even if
individual statute of limitations questions existed, they could only limit damages rather than
preclude them entirely and could not outweigh the “abundance of common legal and factual
questions” presented by the claims. 60
Since Henderson and Clark, however, the Supreme Court in Intel Corporation
Investment Policy Committee v. Sulyma clarified the “actual knowledge” needed to trigger the
statute of limitations under Section 1113 of ERISA. 61 In Sulyma, the Court held actual
knowledge is not the same as constructive knowledge and therefore “requires more than
evidence of disclosure alone.” 62 The Court explained disclosure of information to the plaintiff “is
no doubt relevant in judging whether he gained knowledge of that information,” but to meet the
actual knowledge standard, “the plaintiff must in fact have become aware of that information.” 63
We are not yet aware of any decisions applying Sulyma in the class certification context.

10

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 11 of 22

We conclude the Fiduciaries cannot defeat class certification based solely on their
speculative theory individualized statute of limitations issues may arise as to the Participants or
putative Class members. 64 The Fiduciaries establish only the Participants received or had access
to Plan-wide communications. 65 This is insufficient under Sulyma to demonstrate statute of
limitations issues exist or they will become a major focus of the litigation. Even if such issues do
arise, they likely cannot defeat the many common legal and factual issues described above
underlying the Participants’ claims based on plan-wide conduct.
The Fiduciaries finally argue the Participants’ claims are atypical of the claims of
putative Class members because the Participants only invested in a few of the many investment
options available to Plan participants. 66 The Fiduciaries’ argument misses the mark. The focus of
the Participants’ claims is on the Fiduciaries’ conduct as to all Plan participants rather than about
the individual investment choices made by Participants and putative Class members. As we
explained in our decision denying the Fiduciaries’ motion for partial dismissal, the Participants’
claims primarily involve allegedly imprudent decision-making processes as to the Plan as a
whole. The Participants’ claims, challenging uniform conduct across the Plan, are typical of the
claims of putative Class members. The varying choices of the Participants and putative Class
members may result in varying levels of recovery, but that inquiry is beyond the scope of class
certification. 67
The putative Class meets the commonality and typicality requirements of Rule 23(a).
d.

Class counsel and the Participants will adequately represent the Class
members.

Rule 23(a)(4) requires class representatives “will fairly and adequately protect the
interests of the class.” 68 “Class members are adequately represented if class counsel is qualified
to represent the class and the interests of the class representatives are not in conflict with the
11

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 12 of 22

interests of the class members.” 69 The Fiduciaries do not dispute the qualifications of Class
counsel. Mark Gyandoh, James Miller, and their respective law firms Capozzi Adler, P.C. and
Shepherd Finkelman Miller & Shah, LLP have competently represented the Participants in this
case thus far by actively engaging in motions practice and discovery. They further have
extensive experience in litigating ERISA class actions in this Circuit and throughout the
country. 70 As discussed in our analysis of typicality, the Participants’ interests and incentives
align with those of the proposed Class members. The Participants satisfy this requirement.
B.

The Class satisfies Rule 23(b)(1).

Having determined the proposed Class meets all the Rule 23(a) requirements, we next
determine whether the proposed Class falls into one of the categories outlined in Rule 23(b). The
Participants seek class certification under Rule 23(b)(1), which allows us to certify a class if
“prosecuting separate actions by or against individual class members would create a risk of:
(A) inconsistent or varying adjudications with respect to individual class members that
would establish incompatible standards of conduct for the party opposing the class;
or
(B) adjudications with respect to individual class members that, as a practical matter,
would be dispositive of the interests of the other members not parties to the
individual adjudications or would substantially impair or impede their ability to
protect their interests.” 71
Both types of class actions under Rule 23(b)(1) are “designed to prevent prejudice to the parties
arising from multiple potential suits involving the same subject matter.” 72 Our Court of Appeals
explained breach of fiduciary duty claims brought under section 502(a)(2), like those asserted
here, are “paradigmatic examples of claims appropriate for certification as a Rule 23(b)(1)
class.” 73
The Participants argue certification under Rule 23(b)(1) is proper because the focus of the
litigation is on the Fiduciaries’ uniform treatment of Plan participants and allowing separate
12

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 13 of 22

actions to proceed would create inconsistent standards for the Fiduciaries and would
substantially impair the interests of other class members. 74 The Fiduciaries argue, relying on the
Supreme Court’s decision in Wal-Mart Stores v. Dukes, 75 certification under Rule 23(b)(1) is
improper because the Participants and putative Class seek individual monetary relief. 76 We
conclude Dukes does not apply to these facts and class certification is proper under Rule
23(b)(1).
The Fiduciaries overstate Dukes by arguing all classes seeking individualized monetary
claims can only be brought under Rule 23(b)(3). In Dukes, the Supreme Court held putative class
members’ claims for backpay in a Title VII case had been improperly certified under Rule
23(b)(2) – not Rule 23(b)(1) – because Rule 23(b)(2) “applies only when a single injunction or
declaratory judgment would provide relief to each member of the class” and it consequently
“does not authorize class certification when each class member would be entitled to an
individualized award of monetary relief.” 77 The Court held certification under Rule 23(b)(3) to
be proper because “the procedural protections attending the [Rule 23](b)(3) class….are missing
from [Rule 23](b)(2).” 78
Even assuming the Court’s holding in Dukes extended to class certification under Rule
23(b)(1), we find it inapplicable because the Participants and putative Class members here do not
seek individualized monetary relief. Courts since Dukes have declined to extend its holding to
ERISA claims where, as here, recovery is being sought on behalf of a plan rather than at the
individual level. In Henderson, for example, Judge Pannell found class certification under Rule
23(b)(1) of ERISA breach of fiduciary duty claims because regardless of whether the logic of
Dukes extended to Rule 23(b)(1), “plaintiffs do not seek ‘individualized monetary damages,’ but
recovery for losses to the [p]lans as a whole.” 79 In Jacobs v. Verizon Communications, Judge

13

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 14 of 22

Gardephe recently certified a Rule 23(b)(1) class in an analogous ERISA case brought on behalf
of a plan, and in doing so, expressly rejected defendants’ objection certification was improper
because the class members sought individualized damages. 80 In the report and recommendation –
adopted by Judge Gardephe in its entirety – Magistrate Judge Lehrburger explained:
These arguments have been floated before in other similar cases and soundly
rejected. The principal flaw in [d]efendants’ argument is a misapprehension of the
nature of an ERISA class action case such as this one. Regardless whether
damages and/or injunctive relief are sought, the named [p]laintiff brings suit in a
derivative capacity seeking relief on behalf of the [p]lan….[T]he fact that
damages awarded to the [p]lan may provide plaintiffs with an indirect benefit
does not convert their derivative suit into an action for individual relief as
[d]efendants seek to portray it. 81
We agree with the reasoning in Henderson and Jacobs under analogous circumstances.
The Participants seek, in addition to injunctive and declaratory relief, compensatory damages for
losses to the Plan. If any damages are awarded, they would belong to the Plan in the first instance
rather than to Plan participants. The fact the Plan would subsequently distribute damages to Plan
participants does not convert the lawsuit into one where putative Class members are directly
seeking individualized monetary damages, as in Dukes.
Having determined we are not barred from certifying the Class under Rule 23(b)(1), we
now must consider whether the putative Class otherwise meets the requirements of the Rule.
1.

Certification is appropriate under Rule 23(b)(1)(A).

Our analysis under Rule 23(b)(1)(A) focuses on whether allowing separate actions would
create “inconsistent orders” or “unworkable standards” for the party opposing the class. 82
Certification under Rule 23(b)(1)(A) is appropriate “in cases where the party is obliged by law to
treat the members of the class alike…or where the party must treat all alike as a matter of
practical necessity.” 83 Courts have certified classes under Rule 23(b)(1)(A) in analogous cases
because “the nature of a defined contribution plan means a fiduciary must treat participants
14

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 15 of 22

uniformly” and allowing individual actions to proceed could subject the fiduciaries to differing
standards of duty. 84 In Stanford, for example, Judge Yohn found certification appropriate under
Rule 23(b)(1)(A) for an ERISA breach of fiduciary duty action due to the potential for
inconsistent adjudications:
When raising a plan-wide claim, a plaintiff is purs[u]ing a claim on behalf of the
entire plan, which necessarily includes discrete accounts within the plan.
Accordingly, if a court entertaining an individual account claim were to reach a
different conclusion from a court entertaining a plan-wide claim, the fiduciaries
would be left with incompatible orders concerning the same account. 85
The breach of fiduciary duty claims alleged here raise similar concerns. The Participants
– on behalf of the Plan – generally allege the Fiduciaries mismanaged the Plan’s investments,
failed to monitor the decision-making process regarding investments, and allowed participants to
be charged excessive fees. If we allowed separate actions to proceed, the Fiduciaries could be
subject to varying and incompatible standards of conduct and liability. Class certification is
appropriate under Rule 23(b)(1)(A).
2.

Certification is also appropriate under Rule 23(b)(1)(B).

The Advisory Committee Notes to Rule 23 confirm certification under Rule 23(b)(1)(B)
is typically appropriate in “an action which charges a breach of trust by an indenture trustee or
other fiduciary similarly affecting the members of a large class of security holders or other
beneficiaries, and which requires an accounting or like measures to restore the subject of the
trust.” 86 In Schering Plough, our Court of Appeals explained the requirement of Rule
23(b)(1)(B) would “clearly” be met in ERISA breach of fiduciary duty claims brought on behalf
of a plan because the claims “are based on defendants’ conduct, not…on unique facts and
individual relationships” and “[plaintiff’s] proofs regarding defendants’ conduct will, as a
practical matter, significantly impact the claims of other [p]lan participants and of employees

15

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 16 of 22

who invested in the [challenged] [f]und.” 87 Judges in this District and elsewhere have
accordingly certified classes under Rule 23(b)(1)(B) in analogous ERISA breach of fiduciary
duty actions brought on behalf of plans. 88
Our Court of Appeals’ reasoning in Schering Plough applies with equal force here. The
Participants’ claims focus on the Fiduciaries’ conduct in administering the Plan – which is
identical for all Plan participants – rather than the unique circumstances of each Plan participant.
Allowing individual participants to pursue separate actions would result in outcomes likely to be
dispositive of the interests of other Plan participants.
III.

Conclusion
The Participants established their proposed Class meets the requirements of Rules 23(a)

and 23(b)(1) warranting class certification.

1

P000129-30. Under our Policies, we require the parties submit an Appendix supporting a
motion for class certification. Ms. Boley, Ms. Sutter, and Ms. Johnson submitted an Appendix at
ECF Doc. No. 52, bates stamped P000001-332. Universal Health Services and its Investment
Committee submitted an Appendix at ECF Doc. No. 53-1, bates stamped Defs.’ Appx 333-961.
2

P000139; P000292-95.

3

P000139.

4

P000002.

5

P000025.

6

Defs.’ Appx 339.

7

ECF Doc. No. 18.

8

P000298 ¶ 5; P000301 ¶ 5; P000304 ¶ 5; Defs.’ Appx. 339.

9

140 S. Ct. 1615 (2020).

10

ECF Doc. Nos. 20, 30, 33.
16

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 17 of 22

11

Boley v. Universal Health Servs., Inc., No. 20-2644, 2020 WL 6381395, at *2-7 (E.D. Pa. Oct.
30, 2020).
12

Id.

13

Id. at *5.

14

Id.

15

ECF Doc. No. 52 at 1.

16

Ferreras v. Am. Airlines, Inc., 946 F.3d 178, 183-84 (3d Cir. 2019) (quoting Wal-Mart Stores,
Inc. v. Dukes, 564 U.S. 338, 350-51 (2011)).
17

Fed. R. Civ. P. 23(a)(1)-(4).

18

ECF Doc. No. 52 at 15-24.

19

Fed. R. Civ. P. 23(a)(1).

20

Mielo v. Steak ‘n Shake Operations, Inc., 897 F.3d 467, 486 (3d Cir. 2018) (quoting Stewart v.
Abraham, 275 F.3d 220, 226-27 (3d Cir. 2001)).
21

P000001-02.

22

Fed. R. Civ. P. 23(a)(2).

23

In re Schering Plough Corp. ERISA Litig., 589 F.3d 585, 597 (3d Cir. 2009) (quoting Baby
Neal v. Casey, 43 F.3d 48, 56 (3d Cir. 1994)).
24

Mielo, 897 F.3d at 487 (quoting Dukes, 564 U.S. at 349-50).

25

Id. (quoting Dukes, 564 U.S. at 349-50)); see also Ferreras, 946 F.3d at 185 (commonality
requires a plaintiff demonstrate “the capacity of a class-wide proceeding to generate common
answers apt to drive the resolution of the litigation”) (quoting Dukes, 564 U.S. at 350) (emphasis
in original).
26

ECF Doc. No. 18 ¶¶ 22-50.

27

See Schering Plough, 589 F.3d at 596-97 (finding commonality requirement met where named
plaintiff and proposed class shared many common questions including “whether defendants were
fiduciaries, whether defendants breached their duties to the Plan by failing to conduct an
appropriate investigation into the continued investment in Schering-Plough stock, … whether the
defendants in supervisory roles failed in their monitoring of the Investment Committee
Defendants; whether defendants failed to retain independent fiduciaries; and whether the Plan
suffered losses as a result of defendants’ breaches”); see also Stanford v. Flomex L.P., 263
17

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 18 of 22

F.R.D. 156, 166 (E.D. Pa. 2009) (“As plaintiff correctly points out, because the focus of each
count is squarely on the behavior of the fiduciary defendants, common questions of law and fact
exist as to each count regarding whether, and to what extent, defendants breached any fiduciary
duty or duties owed to plaintiff and members of the prospective class.”).
28

Fed. R. Civ. P. 23(a)(3).

29

Schering Plough, 589 F.3d at 597.

30

Id. at 597-98.

31

Id. at 598.

32

Id. (quoting Beck v. Maximus, 457 F.3d 291, 295-96 (3d Cir. 2006)).

33

Id. (citing Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 182-85 (3d
Cir. 2001)).

34

Baby Neal, 43 F.3d at 58; Stanford, 263 F.R.D. at 167 (“Typicality will generally be found to
exist when the named plaintiffs and the proposed class members ‘challenge[] the same unlawful
conduct.’”) (quoting Baby Neal, 43 F.3d at 58)).
35

589 F.3d at 599.

36

Id.

37

Moore v. Comcast Corp., 268 F.R.D. 530, 535-538 (E.D. Pa. 2010).

38

Id. at 538 (quoting Baby Neal, 43 F.3d at 58)).

39

See, e.g., Clark v. Duke Univ., No. 16-1044, 2018 WL 1801946, at *5-7 (M.D.N.C. Apr. 13,
2018) (finding typicality requirement satisfied where “each named plaintiff’s claim and each
class member’s claim is based on the same events and legal theory—a breach of fiduciary duty
stemming from the defendants’ alleged disloyal and imprudent process for selecting,
administering, and monitoring the Plan’s recordkeepers and investments. The same is true of the
remedial theory, which is identical for the named plaintiffs and the class members.”) (internal
citations omitted); Henderson v. Emory Univ., No. 16-2920, 2018 WL 6332343, at *6 (N.D. Ga.
Sept. 13, 2018)) (“The plaintiffs have met their burden as to typicality. The class members’
claims are based on the same events and legal theories—breach of fiduciary duty in managing
and monitoring the Plans. Proof of the defendants’ alleged misconduct and the alleged harm
would be the same for each class member rather than turning on individual circumstances.”).
40

476 F.3d 299 (5th Cir. 2007).

41

ECF Doc. No. 53 at 12-19.
18

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 19 of 22

42

29 U.S.C. § 1104(a).

43

476 F. 3d at 305, 310-13.

44

Id. at 313.

45

Our Court of Appeals’ decision in In re Unisys Savings Plan Litig., 74 F.3d 420 (3d Cir. 1996)
highlights this point. See ECF Doc. No. 53 at 15. In Unisys, a class of plan participants appealed
the district court’s grant of summary judgment to the defendant on various issues, including on
the applicability Section 404(c) defense. 74 F.3d at 443-48. Our Court of Appeals vacated the
district court’s grant of summary judgment on this issue because it found the “record is
inadequately developed as to critical facts and demonstrates the existence of disputed material
facts as to whether the [p]lans fall within the statute’s coverage.” Id. at 446. The evidence our
Court of Appeals found to be missing involved the plans rather than individual plan participants.
See id. at 446-48. For example, the court found the defendant failed to provide sufficient factual
information regarding whether (1) the plans gave participants a wide array of investments; (2)
the information defendant disseminated to plan participants regarding their investments was
sufficient; (3) the plans gave their participants sufficient ability to make contributions and
transfers. See id. This underscores the applicability of the section 404(c) defense is capable of
class-wide resolution and does not turn on individual plan participants’ investment behavior.
46

263 F.R.D. at 170-71.

47

Id. at 170 (citations and quotations omitted).

48

Id. at 170-71 (further noting that “courts have recognized that there is a problematic
inconsistency in contending both that 1) [d]efendants have a viable § 404(c) defense, which
would defeat the claims of the entire class; and 2) application of that defense is highly
individualized”) (citations and quotations omitted).
49

No. 03-1204, 2008 WL 4510039, at *4-5 (D.N.J. Sept. 30, 2008) (quotations and citations
omitted).
50

See Brieger v. Tellabs, Inc., 245 F.R.D. 345, 352 (N.D. Ill. 2007); George v. Kraft Foods
Global, Inc., 251 F.R.D. 338, 349-50 (N.D. Ill. 2008) (“It is simply not the case that the [c]ourt
will need to analyze whether each and every one of the 40,000 putative class members had
sufficient control over his or her [p]lan investments in order to decide whether defendants’
Section 404(c) defense ultimately has merit….The majority of the case law supports this view.”)
(internal citations and quotations omitted) (emphasis in original); Kanawi v. Bechtel Corp., 254
F.R.D. 102, 109-10 (N.D. Cal. 2008) (rejecting argument that the availability of the Section
404(c) defense defeated commonality because “the existence of a Section 404(c) affirmative
defense is an issue shared by many members of the class” and finding fiduciaries’ reliance on
Langbecker to be “misplaced”).

51

Id. at 352-53.
19

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 20 of 22

52

Id.

53

No. 09-2593, 2011 WL 1303367, at *6 (D. Kan. Apr. 6, 2011) (“[I]t appears that every district
court to have addressed [the Section 404(c)] issue since Langbecker has held that the assertion of
a Section 404(c) defense does not defeat typicality (or otherwise bar certification), in large part
because the defense is not unique to the claims of certain plaintiffs or class members but
presumably would apply to all [p]lan participants.”) (collecting cases).
54

ECF Doc. No. 53 at 20-21.

55

29 U.S.C. § 1113.

56

No. 16-2920, 2018 WL 6332343, at *5 (N.D. Ga. Sept. 13, 2018).

57

Id.

58

Id.

59

No. 16-1044, 2018 WL 1801946, at *5-7 (M.D.N.C. Apr. 13, 2018).

60

Id. at *6.

61

140 S. Ct. 768, 776-77 (2020).

62

Id. at 777.

63

Id. (emphasis in original).

64

See Ramos v. Banner Health, 325 F.R.D. 382, 390-91 (D. Colo. 2018) (“[B]etween the
weakness of [d]efendants’ factual record as to specifically what [named plaintiff] knew, and
when, and the uncertainty of the legal standard, [d]efendants have at most shown there is a
remaining dispute over this defense….The potential time-bar issue raised by [d]efendants is not
enough to defeat class certification, even as to [named plaintiff] individually, much less to defeat
certification overall.”) (emphasis in original); see also Henderson, 2018 WL 6332343 at *6
(“While the defendants also hypothesize that the putative class members may have had ‘actual
knowledge’ of their claims from other sources, that assertion is based on mere speculation and
therefore cannot defeat certification.”).
65

ECF Doc. No. 53 at 20 (citing deposition testimony of Ms. Boley, Ms. Sutter, and Ms. Johnson
explaining they understood they had access to Plan-related information through a website or
mobile app and they received communications in the mail).
66

ECF Doc. No. 53 at 21-22. We need not address the Fiduciaries’ argument the Participants
lack Article III standing to pursue claims regarding the particular funds they did not personally
invest in because we addressed – and rejected – this argument at length in denying the
20

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 21 of 22

Fiduciaries’ motion to partially dismiss the Participants’ claims. See Boley, 2020 WL 6381395 at
*2-6.
67

See Ramos, 325 F.R.D. at 391-93 (finding typicality requirement met despite differing
investment choices because the nature of plaintiffs’ claims “allege an overall failed process in
selecting, reviewing, and monitoring investments, rather than fiduciary failures particular to any
individual fund or funds”); Kanawi, 254 F.R.D. at 110 (rejecting argument that how any
recovery will be returned to plan participants would make class certification inappropriate
because participants chose differing investment options because “the common focus is on the
conduct of [d]efendants….Plaintiffs’ claims do not focus on injuries caused to each individual
account, but rather on how the [d]efendants’ conduct affected the pool of assets that make up”
the plan’s assets; Henderson, 2018 WL 6332343 at *9 (finding no intra-class conflict created by
plan participants’ individual investment strategies because “this does not affect the core legal
interest at stake for this theory of liability – whether including those investments in the [p]lans
amounts to a breach of fiduciary duty in violation of ERISA requirements.”); Munro v. Univ. of
S. Cal., No. 16-06191, 2019 WL 7842551 at *4 (“That not all participants used the same
recordkeeping services, invested in the same funds, or paid more than $30 annually for
recordkeeping services does not defeat commonality. As other courts considering cases involving
university defined contribution plans have held, focusing on the individuals who benefitted from
the allegedly imprudent investments does not affect the overarching legal issue of whether such
investments constituted a breach of defendants’ fiduciary duty.”) (internal quotations omitted)
(collecting cases).
68

Fed. R. Civ. P. 23(a)(4).

69

Galt v. Eagleville Hosp., 310 F. Supp. 3d 483, 491 (E.D. Pa. Apr. 19, 2018) (citing In re
Warfarin Sodium Antitrust Litig., 391 F.3d 516, 532 (3d Cir. 2004); In re Gen. Motors Corp.
Pick–Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 800 (3d Cir.1995)).
70

P000323-24; P000329-31.

71

Fed. R. Civ. P. 23(b)(1).

72

Stanford v. Flomex L.P., 263 F.R.D. 156, 173 (E.D. Pa. 2009).

73

Schering Plough, 589 F.3d at 604 (collecting cases); see also Kanawi, 254 F.R.D. at 111
(“Most ERISA class action cases are certified under Rule 23(b)(1).”).
74

ECF Doc. No. 52-1 at 24-27.

75

564 U.S. 338 (2011).

76

ECF Doc. No. 53 at 24-26.

77

564 U.S. at 360-61.
21

Case 2:20-cv-02644-MAK Document 56 Filed 03/08/21 Page 22 of 22

78

Id. at 363.

79

2018 WL 6332343 at *10; see also Clark, 2018 WL 1801946 at *10 (certifying class under
Rule 23(b)(1) and finding Dukes to be inapplicable because “plaintiffs are not requesting
individualized monetary claims but rather are seeking relief to the [p]lan as a whole”); Krueger
v. Ameriprise Fin., Inc., 304 F.R.D. 559, 575-76 (D. Minn. 2014) (finding class certification
under Rule 23(b)(1) to be appropriate for ERISA breach of fiduciary duty claims brought on
behalf of a plan because “the claims are made on behalf of the [p]lan rather than individual
participants” and fiduciaries did “not demonstrate[] the existence of a blanket prohibition on
Rule 23(b)(1) class certification of actions in which monetary relief is sought”).
80

No. 16-01082, 2020 WL 4601243, at *13-14 (S.D.N.Y. June 1, 2020).

81

Id. at 14.

82

See Stanford, 263 F.R.D. at 173.

83

Amchem Products, Inc. v. Windsor, 521 U.S. 591, 614 (1997) (citations and quotations
omitted).
84

Munro, 2019 WL 7842551, at *8-10 (certifying class under Rule 23(b)(1)(A) in ERISA breach
of fiduciary duty action); Clark, 2018 WL 1801946 at *9-10 (finding certification of class
asserting ERISA breach of fiduciary duty claims proper under Rule 23(b)(1)(A) because
“[s]eparate actions over whether the defendants’ investment procedures and management
methods violated their fiduciary duties could result in decisions that place incompatible
requirements on the defendants in terms of either the losses that defendants would have to pay
back to the [p]lan, or the requirements for obtaining future [p]lan services, or both”).
85

Stanford, 263 F.R.D. at 173.

86

Fed. R. Civ. P. 23 advisory committee notes.

87

Schering Plough, 589 F.3d at 604.

88

See, e.g., Stanford, 263 F.R.D. at 156 (finding class certification under Rule 23(b)(1)(B)
appropriate in ERISA breach of fiduciary duty action because “a participant’s individual account
is still a part of the [p]lan, and, therefore, an adjudication as to the [p]lan will likewise impact a
participant’s individual accounts”); Moore, 268 F.R.D. at 538 (certifying class under Rule
23(b)(1)(B) in ERISA breach of fiduciary duty action for a defined contribution plan); Clark,
2018 WL 1801946 at *9 (finding Rule 23(b)(1)(B) certification proper in ERISA breach of
fiduciary duty action “because the claims concern the same actions in managing the [p]lan and
because damages are owed to the [p]lan as a whole and not individual plaintiffs”).

22