Trauernicht, et al. v. Genworth Financial Inc., et al.

Filing 313

MEMORANDUM OPINION. Signed by District Judge Robert E. Payne on 8/27/2024. (adun, )

IN THE
FOR THE

UNITED STATES DISTRICT
EASTERN DISTRICT

COURT

OF VIRGINIA

Richmond Division

PETER TRAUERNICHT,

et al.,

Plaintiffs,
Civil Action No.

V.

GENWORTH FINANCIAL,

3:22-cv-532

INC.,

Defendant.

MEMORANDUM OPINION

This

matter

is

EXCLUDE OPINIONS AND

WERMERS,

PH.D.

opposing,

before

the

Court

TESTIMONY OF

(ECF No.

207) (the

and reply memoranda

on

LORIE

Plaintiffs"

TO

LATHAM AND RUSSELL R.

L.

and the supporting.

"Motion"),

(ECF Nos.

MOTION

211,

231,

250) .

For the

following reasons, the Motion will be denied.
BACKGROUND

I.

Factual Background

Class Representatives Peter Trauernicht
("Plaintiffs"),

Inc.

Retirement

on behalf

and

similarly

situated

Financial,

Inc.

of

themselves,

Savings

Plan

individuals.

("Genworth" or

(the
filed

the
\\

and Zachary Wright
Genworth Financial

Plan") ,

suit

and

against

all

other

Genworth

Defendant") alleging that Genworth

breached its fiduciary duties under the Employee Retirement Income
Security Act

("ERISA"),

29

U.S.C.

§

1001

et

seq.

ECF No.

103

SAC")

("Second Amended Class Action Complaint" or

1 1. Plaintiffs

claim that Genworth violated its fiduciary duties under ERISA by

failing

to

appropriately monitor,

and

as

a

result,

retaining the BlackRock LifePath Target Date

imprudently

Funds

{"BlackRock

TDFs") in the Plan despite their significant underperformance. SAC

1, 6,
the

57-63,

84-86. According to Plaintiffs, the retention of

BlackRock TDFs

SAC

63,

caused

the

Plan

to

incur substantial

losses.

90.

To help prove their claims. Plaintiffs retained three expert
witnesses: Marcia S. Wagner, Richard A. Marin, and Dr. Adam Werner.

ECF No.

211 at 7. Wagner submitted a report addressing fiduciary

governance

monitoring

and

and

BlackRock TDFs

process

standards

applicable

to

investment

of

the

comported with minimum fiduciary standards.

Id.

opined

on

whether

Genworth's

monitoring

Marin submitted a report which depicted appropriate frameworks for

determining
Plan's

when

investment

Investment

frameworks

to

the

Policy
Plan's

removal

should

Statement
retention

of

occur based on

("IPS"),
the

applied

BlackRock

TDFs,

the

those
and

identified suitable alternative investments to the BlackRock TDFs.

Id.

Werner submitted a report estimating the

result of the alleged conduct.

Id.

2

Plan's losses as a

Genworth

Plaintiffs'

produced

two

expert

in

reports

response

to

Latham to offer

experts.^ Genworth retained Lorie L.

opinions regarding the Plan's governance structure and monitoring

process in response to the opinions of Wagner and Marin.

ECF

No.

Latham opined that the Plan's governance structure and

231 at 8.
monitoring

processes

consistent

with

practices.

Id.

of

the

widely

BlackRock

accepted

TDFs

retirement

Latham also identified,

reasonable

were

and

fiduciary

plan

in her opinion,

various

inaccurate claims made by Wagner and Marin on those topics.

Id.

at

9 .

Genworth also

a rebuttal
Wagner's

expert

expert

retained Dr.

report

Russell

in response
Id.

reports.

at

5.

R.

Wermers who submitted
Werner's,

to Marin's,
Wermers

primarily

and

offered

performance

criticisms of Marin's analysis of the BlackRock TDFs'

and the methodology used by Marin to select suitable alternative
investments.

Id.

at 6.

Wermers explained that the BlackRock TDFs

are economically reasonable investments once you account for their

specific risk-balancing strategies and features,
asset

allocations

Wermers claims that

and

glide

paths.

Id.

at

5.

including their
Put

another

way,

the BlackRock TDFs performed as expected when

^ Genworth also produced an affirmative expert report from Dr. Russell R.
Wermers in support of Genworth's Opposition to Plaintiffs' Motion for Class
Certification.

ECF No.

231

admissibility of Wermers'
ECF

No.

250

at

at

4.

Plaintiffs

do

not

challenge the

opinions in this report in their Motion.

6-7.

3

Id.

at

5;

you consider their particular objectives and strategy. Id.

Wermers

also presents data from various industry sources to argue that the
broader retirement investment industry and market analysts viewed
the

BlackRock

Marin's

TDFs
that

claims

which

positively,
the

Wermers

BlackRock

investments during that time.

TDFs

says

were

\\

undermines

unreasonable

tt

Id.

Plaintiffs argue that Wermers' and Latham's opinions are not
ECF No.

admissible under Federal Rules of Evidence 702 or 403.

at

3-5.

Specifically,

objective

principles

and fail

industries,

the

argue

that

and

Latham's

Wermers'

are not helpful to the trier of fact, are not based in

opinions

and

they

211

evidence

in

opinions

the

and

mislead or confuse

Genworth

methods

or

recognized

adequately to consider

record.

Id.

testimony
the

responds

of

issues

that

at 18.

their

important documents

Plaintiffs also claim that

Wermers

and

in this action.

its

within

experts'

Latham

threaten

to

Id.

opinions

are

admissible under Rule 702 and 403, and that Plaintiffs'

readily

criticisms

go to the weight rather than admissibility of their testimony. ECF
No.

231

at

1.

II.

Procedural

Background

On April 17, 2023, Plaintiffs filed their SECOND AMENDED CLASS
ACTION
PARTIAL

COMPLAINT
MOTION

TO

{ECF

No.

DISMISS

103).

The

UNDER

RULE

4

Court

granted

12(b)(1)

(ECF

DEFENDANT'S
No.

106),

dismissing Plaintiffs' request for prospective injunctive relief,
and denied DEFENDANT'S
No.

104).

EOF

No.

UNDER RULE

12(b)(6)

2024,

Court

MOTION TO DISMISS

139.

On

May

29,

the

(EOF

denied

DEFENDANT'S MOTION TO EXCLUDE THE EXPERT OPINIONS AND TESTIMONY OF

RICHARD MARIN
EXPERT

No.

(ECF No.

OPINIONS

310.

AND

TESTIMONY

On August 15,

FOR CLASS

and DEFENDANT'S MOTION TO EXCLUDE THE

195)

WERNER

(ECF

No.

201).

ECF

the Court granted PLAINTIFFS' MOTION

2024,

CERTIFICATION

OF ADAM

(ECF No.

143).

ECF No.

312.

Also pending is DEFENDANT'S MOTION FOR SUMMARY JUDGMENT (ECF
No.

213).2
DISCUSSION

I.

Legal

Standard

Expert

testimony

Federal Rule of Evidence

Marketing,
II)

702.

the
//

federal

courts

is

governed

by

In re Lipitor (Atorvastatin Calcium)

Sales Practices and Products Liability Litigation (No

MDL 2502,

an expert

in

to

892

F.3d 624,

testify if

w

631

(4th Cir.

the expert's

2018).

Rule 702 permits

scientific,

technical,

or

2 At the summary judgment hearing, Plaintiffs suggested for the first time
that Genworth could not rely on Werraers' rebuttal report to support its
affirmative burden

on

loss

causation.

ECF

No.

281

51:23-52:8.

The

Court

ordered additional briefing to clarify which parts of Wermers' report were
direct rebuttal and which parts of his report were affirmative opinions. ECF
No.

283.

In

PLAINTIFFS'

RESPONSE

TO

GENWORTH'S

SUBMISSION ON EXPERT REPORT

MATTERS {ECF No. 294), Plaintiffs clarified that they intend to file motions
in limine at trial seeking to preclude Dr. Wermers from providing affirmative

testimony on issues for which Genworth bears the ultimate burden of proof.
294 at 5. Therefore, the Court will address Plaintiffs' Federal Rule
of Civil Procedure 26 objection after Plaintiffs have filed such motions and
the parties have had the opportunity to fully brief the issue.
ECF No.

5

other

specialized

understand the

knowledge

evidence

W

of

principles

reliable

applies
Fed.

R.

u

In
district

and

the principles

Evid.

the

trier

or to determine a fact

based on sufficient

testimony is

help

will

facts

methods,

and methods

fact

to

in issue,

and

the

or data,

and

//

of

is the product

It

the

to the

expert

facts

of

reliably

the case.

tt

702.

assessing
court

the

assumes

admissibility
a

of

'gatekeeping

testimony,

expert
to

role'

ensure

that

a
the

'testimony both rests on a reliable foundation and is relevant to
the

V.

task at

hand.

Merrell

Dow

/

In re Lipitor, 892 F.3d at 631 {quoting Daubert

a

Pharm. ,

Inc. ,

509

U.S.

579,

597

(1993)).
the

expertise based on professional studies or experience.
must

make

certain

that

[the]

,

expert.

employs

For
court

in

the

courtroom the same level of intellectual rigor that characterizes

the practice of an expert in the relevant field.
V.

Carmichael

be

based

on

526 U.S.

mere

\\

137,

152

(1999).

In the

context

gatekeeping
[is]

'little

of

function
danger'

250

a bench trial,

is much
of

less

See

1!

(4th Cir.

however.

critical

prejudicing

Co.

and inferences must be

derived using scientific or other valid methods.

190 F.3d 244,

Tire

Expert testimony cannot

belief or speculation,

General Motors Corp.,

Kumho

//

the

1999).

the

.

judge,

Oglesby v.

.

trial

court's

because

who

can,

there

after

hearing the expert's testimony or opinion, determine what. if any.

6

weight
No.

it

deserves.

15-CV-01129,

n

Federal

Trade

2017 WL 412263,

Commission

at *2

(N.D.

v.

Cal.

DIRECTV,

Inc.,

31,

Jan.

2017);

United States v. Brown, 415 F.3d 1257, 1269 (11th Cir. 2005)("There
is

less

need

for

the

gatekeeper

keep

to

the

gatekeeper is keeping the gate only for himself.
a bench trial

excluding
Quality

Company

*13

it

(E.D.

court may

later

Plus

of

the

if

the

Va.

Jan.

court

Inc.

Services,

Pittsburgh,

admit

PA.,

15,

V.

fundamental
decisions

relevant

concludes

it

Thus,

is

Union

3:18-CV-454,

(2d ed.

2019)).

when
\\

the
[i] n

\

subject

to

unreliable.
Fire

2020

WL

/

tt

Insurance

239598,

at

Gold,

Federal

Nonetheless,

even in

it is necessary that expert testimony meet the

in Daubert

evidence

).

2020) (quoting 29 Victor J.

admissibility

Additionally,

w

testimony

National

No.

Practice and Procedure § 6270

a bench trial case,

expert

gate

and

Rule
if

requirements

Rule

of

702

and

the

Kumho.

403
its

provides
probative

that

courts

value

outweighed by a danger of one or more of the

IS

\\

may

exclude

substantially
unfair

following:

prejudice, confusing the issues, misleading the jury, undue delay,

wasting time,
R.

Evid.

or needlessly presenting cumulative evidence.

n

Fed.

403.

The proponent of expert testimony bears the burden of proof
in establishing its admissibility. Cooper v.
259

F.3d

194,

199

(4th

Cir.

2001) ("The

7

Smith & Nephew,
proponent

of

Inc.,

[expert]

testimony must establish its admissibility by a preponderance of
proof.")
II.

Analysis

A. Whether Wermers and Latham Have Specialized Knowledge That
Will Assist the Trier of Fact under Rule 702(a)
702(a)

Rule

requires

that

an

expert's

knowledge,

will help the trier of fact to

experience, training, or education

understand the evidence or to determine a fact in issue.
Evid.

702(a).

In

other

words,

opinions must be relevant
opinion is relevant

if

the pertinent inquiry.
F.4th 268,
see

also

281

29

/

(4th Cir.

Charles

competence

witness's

testimony.")/

823

F.

scientific

Wright

6264.2

[must]

Supp.

expert's

Overhead Door Corporation,

10

&

Arthur

Geek

334,

509 U.S.

at 592);

Miller,

Federal

R.

2023) ("[t]he area of

the

match[]

2d

and

to

(2d ed.

Casey v.

An

R.

connection

2021)(quoting Daubert,

§

witness's

L. P. ,

'a valid

Fed.

qualifications

expert's

inquiry at hand.

Sardis v.

Alan

Practice and Procedure

Stores,

n

an

to the

it has

skill,

subject

Squad

341

of

the

Subsidiary Best

Buy

(D.

matter

the

Md.

2011) ("To

be

the expert's testimony must be 'sufficiently tied to the

relevant.

facts of the case that it will aid the jury in resolving a factual
dispute.

/

n

) .

In most cases, generalized knowledge on the subject

matter will

satisfy the

specialized

knowledge

relevancy

will

go

to

requirement.
the

weight

and

of

the

the

lack

of

expert's

testimony. Charles Alan Wright & Arthur R. Miller, Federal Practice

8

and Procedure § 6264.2

344

F.R.D.

319,

340

in

every

specialist

(2d ed.

(W.D.

see also lannone v. AutoZone,

2023) ;

Tenn.

subject

need not be a

2023) ("An expert

to

which

their

testimony

might

relate.")

1. Wermers'

Qualifications and Opinions

Plaintiffs

that

argue

Wermers

the

lacks

relevant

qualifications to address the issues in this case because he has
no

experience

with

retirement

plan

investing,

including

the

monitoring responsibilities of investment fiduciaries governed by
ERISA.

ECF

No.

211

at

13-14.

He

has

nor advised a retirement committee.

7

("Wermers Tr.")

Plaintiffs,
opinions

on

experience

26:18-28:6).

never

Id.

served

at 14

Wermers'

experience,

"economic

and

"economic

criteria

in

reasonableness

knowledge

rather

according to

//

are based on

than

whether
the

the

Plan's

is

the

in

the

anything

BlackRock

IPS.

Paul

ECF

J.

No.

TDFs
250

ECF

No.

231

at

Cinquegrana

2.

9

is

specific

not

violated

at

general

to

(citing Wermers Tr.

abstract

Finance at the Smith School of Business,

Park.

that

testimony

Plaintiffs argue that Wermers'

reasonableness If

Wermers

College

211-

is in general investing and economic concepts, and his

24:25-26:4). Furthermore,

determining

fiduciary

(citing ECF No.

fiduciary duties or investing under ERISA. Id.

on

a

as

relevant

the

to

specific

16.

'63

Endowed

Chair

in

University of Maryland at

Wermers'

research

focuses

on

analyzing investment strategies

of professional asset managers,

including how to properly measure the risk-adjusted performance of
such strategies. Id. He has published in academic and professional
journals

on

strategies,
flows,

investment

fund

evaluation,

performance

equity

the drivers of mutual fund and hedge fund investor

and the behavior of

institutional investors.

Id.

at

3.

He

has also previously testified as an expert on numerous ERISA cases

involving 401(k)

and other defined contribution plans.

Id.

Whether the BlackRock TDFs were economically reasonable, from

the perspective of an economist with Wermers'
certainly

relevant

and

helpful

qualifications,

determining

to

is
the

whether

BlackRock TDFs were an imprudent investment for the Plan to retain.
See

Garthwait v.

3019633,

at

economic

reasonableness

challenged

fund

determining
are

also

*14

Eversource Energy Co.,

(D.

in

losses

relevant

Conn.

a

and
to

July

29,

analysis
similar

loss

No.

3:20-cv-902,

2022} (finding

regarding the

ERISA

case

causation).

determining

which

Wermers'

be

WL

Wermers'

performance

would

fund(s)

that

2022

of

relevant

a
to

qualifications

could

serve

as

suitable replacements for the BlackRock TDFs. The record does not
provide,

and the Court does not see

any reason why an expert must

be trained in fiduciary monitoring or ERISA, as opposed to general
investment

theory.

to

testify

on

the

relative

comparability of various target date funds

10

performance

and

to aid the trier of

fact
the

in

the

IPS's

address

determination

of

whether

the

Nor is there any requirement

criteria.

that issue directly for his

TDFs violated

BlackRock

for Wermers

to

testimony to be relevant

in

deciding that issue. To the contrary, generalized expert testimony
on how to understand and evaluate target date funds is particularly
helpful given their complex nature.
more

generalized

comparators
monitoring

rather
goes

testimony.3
Wermers'

opinions

than

opinions

to the weight

lannone,

experience

the

on

offers

The fact that Wermers'
BlackRock

directly

TDFs

tied

and

to

their

fiduciary

rather than admissibility of

344 F.R.D. at 328-29,

researching,

writing,

340

and

his

(finding that

teaching

about

a

variety of investment products was sufficient to qualify him as an
expert to testify on the economic reasonableness of the challenged
investment

and

that

his

lack

of

specialization

in

stable

value

products went to the weight of his testimony).
2. Latham's

Qualifications and Opinions

Plaintiffs also argue that Latham does not have specialized
expertise or knowledge that will assist the trier of fact.
211

at

19.

generalized

Plaintiffs
personal

say

that

her

experience

observations

and

work

ECF

comes

experience

from

while

consulting with plan sponsors and discretionary fiduciaries.

^ Moreover,

Plaintiffs do not explain how the opinions of an expert on

general investment theory would diverge from an expert who focuses on
investing as an ERISA fiduciary.

11

No.

Id.

Plaintiffs also raise concerns that Latham was unwilling to

at 11.

identify the clients with whom she gained that experience during
her deposition.^

Id.

Latham is the founder and president of L. Latham Consulting,
LLC,

an independent consultancy where she provides financial and

strategic

advice

to

financial

firms

and

retirement

plan

boards, and committees. ECF No. 231 at 6. Before that,

fiduciaries,

Latham served in senior executive and consulting roles advising on

strategies

plans.

and

investment

selection

defined

for

contribution

Id. at 7. That work involved guiding plan fiduciaries in

establishing reasonable and appropriate governance and monitoring
practices
also

for

their

co-authored

defined

numerous

contribution

publications.

plans.

Id.

including

Latham

articles

defined-contribution plan governance decision making. Id.
The Court

finds that,

has

at

on
8 .

Latham

based on that experience.

has

the requisite qualifications to assist the trier of fact regarding
plan governance and fiduciary monitoring standards. The degree of
connection between her experience and her opinions
weight

Latham

of

her

states

testimony.

that

she

could

At

not

trial,

disclose

Plaintiffs

the names

goes to

will

have

information is
or

a matter
at

to

be

addressed

trial.

12

later at

the

the

of clients she worked

for due to confidentiality agreements she had with those clients. ECF No.
211-6 ("Latham Tr.") 37:10-14. The identity of clients as to which experts
contend provide all, or part of, their qualifications can, indeed, be a
factor in assessing credibility, but the expert's refusal to supply that
conference

the

final pretrial

opportunity

to

cross-examine

Latham

on

the

relevancy

of

experience and how that experience has informed her opinions.
509

Daubert,

U.S.

at

See

cross-examination,

("Vigorous

596

her

presentation of contrary evidence, and careful instruction on the
burden

of

proof

are

the

traditional

and

the

record

shows

that

Latham

has

of

For purposes of Rule

attacking shaky but admissible evidence.").
702(a),

means

appropriate

a

wealth

of

relevant

experience sufficient to qualify her as an expert and offer helpful
and

relevant

testimony

on

the

fiduciary monitoring

topics

she

addresses.

B. Whether

Latham's

and Wermers'

Opinions

Are

Supported by

Reliable Principles and Methods

Rule 702(c) requires that an expert's opinions be "the product
of reliable principles

and methods.

Daubert

articulates

several

factors that courts may consider in evaluating whether proffered

expert

testimony

including

is

based on

reliable

principles

and methods,

(1) whether the expert's methodology can be tested;

(2)

whether the theory or technique has been subjected to peer review
and publication;

(4)

(3)

the known or potential rate of error;

whether the theory or technique has gained general acceptance

within the relevant scientific community.

277 F.

Supp.

3d 821,

856

(E.D. Va.

Wood V.

Credit One Bank,

2017)(citing Daubert,

at 593-94) . However, the inquiry is a flexible one, and

list

and.

of

specific

factors

neither

13

necessarily

nor

509 U.S.
Daubert's

exclusively

applies to all experts or in every case.
The

\\

trial

judge

[has]

broad

526

Kumho,

//

latitude

to

U.S.

determine

ft

at
u

141.

whether

Daubert's specific factors are, or are not, reasonable measures of
reliability in a particular case.

testimony that

For

opposed to scientific,

at

153.

meaningful differences in how

are

United States v.

reliability must be examined.

267, 274

Id.

is primarily experiential in nature as
there

if

//

484

F.3d

(4th Cir. 2007). Inquiries into testability, peer review,

and error rates may not necessarily apply.

may

Wilson,

focus

on

whether

the

courtroom the same level of

experiential

Id.

Instead,

employs

expert

a

court

in

the

intellectual rigor that characterizes

the practice of an expert in the relevant field

f/

and

whether

the

expert's reasoning or methodology has general acceptance in the
relevant

professional

Additionally,

Rule

702

primarily on experience"
the conclusion reached,

for the opinion,
the

facts.

Amendment;

//

Fed.

see

requires
to

W

526

Kumho,
a

witness

\\

U.S.

relying

at

151-52.

solely

or

explain how that experience leads to

why that experience is a sufficient basis

and how that experience is reliably applied to
R.

also

Evid.

702

Wilson,

Reed v. MedStar Health,

10,

community.

Inc.,

484

Committee

F.3d at

Notes

274

2023 WL 5154507,

2023) (" [E]xperience is not a methodology.

on

Rules

{stating the
at *12

2000

same);

(D. Md. Aug.

Methodology is the

process by which the expert relates his experience to the facts at

14

hand

in

order

Thermwood
(N.D.

to

Corp.,

Okla.

reach

Civ.

Jan.

11,

an

expert

opinion.")(quoting

10-0433-CVE-PJC,

No.

2012

WL

Dean

90442,

at

V .

*7

2012)).

1. Whether Wermers' Economic Reasonableness Analysis is Based
on Reliable Principles and Methods

Plaintiffs

argue

that

Wermers'

assessment

of

economic

reasonableness" is not based on any method or discipline recognized

within his industry,
view of what
and return.

represents
ECF No.

methodology

not.

211

lacks

Plaintiffs assert

between an

and instead,

attractive

an
at

any

is based on his own subjective

21.

combination"

Plaintiffs

objective

investment that meets his

risk

also claim that Wermers

standards.

that Wermers could not

between

Id.

at

21-22.

articulate the difference

standard and one

that

does

and he could not specify what weight he gave to each factor

underlying his
reasonable

tt

opinion that the BlackRock TDFs are

investments.

Id.

at 23.

\>

economically

For those reasons,

Plaintiffs

argue that Wermers' opinions are merely ipse dixit rather than the
result of any reliable, rules-based,
framework.

The
that

at

Court

formulaic

to

22.

disagrees.

Wermers'

reducible

expert

Id.

concept

a

rigid,

Plaintiffs'
of

Wilson,

U

economic

rules-based

methodology is not

opinion.

or replicable methodology or

484

complaint

is

reasonableness

methodology.

required for a witness

F.3d

15

at

essentially

274

is

//

However,

to

not

a

offer an

("Experiential

expert

. ,

testimony,
method.

/

does

not

'rely on anything like a scientific

). As Plaintiffs acknowledge, an expert may be qualified

It

based on experience or specialized knowledge.
Wilson,

484

F.3d

from

set

of

a

experience♦

is

that

witness must

opinions

\\

experience

on

at 156.
not

F.3d

[may]

at

14;

and

specialized

important consideration
on

[mere]

Thus,

the

based
at

250

draw a conclusion

extensive

The

No.

250.

belief

or

experiential

explain how [his] experience leads to the conclusion

Wilson,

Here,

based

are
190

expert

an

526 U.S.

Oglesby,

tt

And,

observations

such

;/

274.

Kumho,

n

speculation.

reached.

at

ECF

484

F.3d at

274.

relies

to

guiding principles

offer

on

his

specialized

Wermers

knowledge

on how to

and

evaluate

and

compare the performance of target date funds, and he applies those

principles
\>

economic

an

u

ante
w

to

the

reasonableness.

economically
an

BlackRock
tt

under

a

standard

calls

he

ECF No. 231 at 5. Wermers explains that

reasonable"

attractive

TDFs

investment

combination

of

risk

is
and

one

offers

that

return

//

based

on

ex-

its

qualitative and quantitative characteristics and its investment

strategy.

n

Wermers

Tr.

64:22-65:13.

Rather

than

a

term

of

art.

economic reasonableness is just another way of saying an investment
is reasonable from an economic perspective.

Wermers explains that

he considers a variety of factors that experts in his field would
consider

about

an

investment

16

to

determine

its

economic

reasonableness,

Wermers Tr.

but that

//

72:23-73:3,

it is not

a

73:13-74:7,

simple recipe-based system.

\\

79:1-5.

Consistent with his definition, Wermers explains how a target

date fund's strategy and risk profile must be taken into account
when evaluating their returns,
26-41,

and

concludes

when

that

considering

the

ECF No.
those

BlackRock

TDFs

211-2

factors

are

u

("Wermers Rpt.")

1MI

(among

he

others) ,

economically reasonable.

n

Wermers Rpt. 1M| 42-69. He then explains how Marin's analyses failed
to take into account those considerations when comparing ex-post

returns

of

fundamentally

which Wermers

says,

different

types

of

date

target

makes Marin's conclusion that

funds,

the BlackRock

TDFs were "unreasonable" flawed. Wermers Rpt. HH 71-112.
Plaintiffs do not challenge the reliability of any of Wermer's

specific

analyses

or

only

conclusions.

concept of "economic reasonableness

//

that

his

overarching

lacks clear guiding rules and

principles. Such considerations may be important in evaluating the
reliability

of

a

scientific

for

expert,

knowledge or experience-based

expert

instance,

like Wermers,

but
the

for

a

relevant

inquiry is whether Wermers' opinions are sufficiently based on his
specialized

knowledge

speculation.

Oglesby,

and
190

experience

thoroughly

than

belief

or

F.3d at 250.

The Court finds that Wermers'
he

rather

articulates

his

17

opinions are reliable because
specialized

knowledge

on

the

evaluation of target date funds with supporting citations to peerreviewed articles and other industry sources, and then he applies
economic

that knowledge in evaluating the
BlackRock

TDFs

and

in

criticizing

reasonableness

Marin's

of

the

Therefore,

analyses.

Wermers does explain how his knowledge and experience leads to his
conclusions reached.
10

F.4th

at

See Wilson,

(finding that

296

peer-reviewed literature
added);

Small

2019) (same) .

v.
For

dixit or mere

formulaic

the

facts,

lack of

test

data,

or

creates a risk of ipse dixit) (emphasis

WellDyne,
that

see also Sardis,

484 F.3d at 274/

927

Inc.,

reason,

Wermers'

subjective belief.

framework or employ

a

That

F.3d

169,

177

conclusions
Wermers

does

are
not

of

specific weighting

(4th

Cir.

not

ipse

utilize

a

relevant

factors goes to the weight, rather than the admissibility, of his
testimony.

See

Fuller v.

SunTrust Banks,

Inc.,

No.

l:ll-cv-784,

2019 WL 5448206, at *21 (N.D. Ga. Oct. 3, 2019) (rejecting a similar

argument that an analysis of a fund for economic reasonableness
was

unreliable when it was conducted from the perspective of

an

economist).
2. Whether

Latham's

Accepted

Fiduciary Practices

Analysis

is Based on Reliable Principles and Methods
First,

Plaintiffs argue that Latham's testimony is unreliable

because her opinions on "accepted fiduciary practices
on

are

based

her work experience with unspecified clients rather than any

specified method or discipline recognized within her industry. EOF

18

No. 211 at 21. Her failure to explain how her opinions derive from
those

client

without

experiences,

other

guiding

industry

standards, makes her testimony unreliable according to Plaintiffs.
ECF No.

250

at

Genworth

14.

raised

similar

concerns

regarding Marin,^

Court held that,

in the context of a bench trial,

challenge

specifics

the

afford

the

evidence

(if

Salem,

465 F.3d 767,

777

the

Marin's

the

Genworth could

experience

on

cross-

and the Court could then determine how much weight to

examination,

and

of

and

gatekeeper

are

any) .

ECF

(7th Cir.
the

same,

No.

309

at

18-20;

See

In

re

2006) (" [W]here the factfinder
the

court

does

not

err

in

admitting the evidence subject to the ability later to exclude it

or disregard
reliability

it

if

it

turns

established by

2020 WL 239598,

at

*13.

The

out

Rule

not

to meet

702.");

Quality

the

standard

Plus

of

Services,

same will be true for Latham.

But at

this stage,

the Court is satisfied that Latham has the requisite

experience

to provide reliable experience-based opinions on the

topics she addresses.
Second,

Plaintiffs

claim

that

Latham's

opinions

are

unreliable and unhelpful ipse dixit because she does not rely on

any objective,

^

consistent,

Marin stated that he

relies on

or rules-based analytical

approaches

standards and criteria that are widely used

and
in the retirement industry and which [he] used throughout [his] career,
that
it's
not
something
he explains that his methods are so common and basic

that one would bother writing a research paper about.

19

ECF

No.

309

at

14.

ECF

for what she calls "accepted fiduciary practices.

211

at

Plaintiffs say that Latham could not articulate what makes

21-22.
a

No.

practice

"accepted"

or

not

identify

or

compared to others in the industry.^ Id.
As

discussed,

at

how

practices

23 .

rules-based

formulaic,

such

standards

are

not

necessary for an expert's opinion to be the product of reliable

principles and methods,
scientific
that

w

in

there's

nature.
not

a

particularly when the

Wilson,

written

484

F.3d

checklist

[p]Ian governance structures vary,

//

at

testimony is not

274.

Latham

explains

of accepted practices and

depending upon the size and

culture of the plan sponsor, the type of plan, and other factors."
ECF No.

H

15.

211-6

("Latham Tr.")

In other words,

\\

81:8-9; ECF No.

211-1

("Latham Rpt.")

[p]Ian governance is not a one-size-fits-

all endeavor". Latham Rpt. K 15 "Accepted fiduciary standards
therefore

more

akin

to

general

customs

rather

than

a

u

are

set

of

specific rules in Latham's view.

Consequently,

in

her

report,

Latham

reviews

the

specific

practices of the Genworth Committee from the evidentiary record
and

explains

whether,

in

her

professional

experience,

those

® Plaintiffs also say that Latham could not identify "even a single fiduciary
action that would fail to satisfy her concept of accepted fiduciary
practices." ECF No. 211 at 12. But this statement misconstrues Latham's
deposition testimony. She states that she could not recall any unreasonable

fiduciary practices with respect to her clients and did not want to speculate
regarding practices of plan sponsors or fiduciaries that were not her
clients.

Latham

Tr.

83:13-84:8.

20

individual practices comport with the typical industry practices
she has observed over her decades-long career. Latham is permitted

to rely on her experience to testify in that capacity. See,
In

re

Zetia

(Ezetimibe)

2021 WL 6690348,

*7

Antitrust

{E.D Va.

Aug.

Litigation,

No.

e.g. ,

2:18-md-2836,

2021) {"Molina applied his

16,

experience in the pharmaceutical industry to the facts of the case
and reviewed and addressed the opinions of Defendants'

.

experts

.

. This is an appropriate methodology for an experiential expert

to apply.

No.

n

); Clarendon Regency IV, LLC v. Equinox Clarendon,

l:20-cv-1433,

2022) ("an

expert

industry

when

Plaintiffs'

2022

WL

5101691,

may testify
pertinent

at

regarding

to

the

*3

(E.D.

custom

and

factfinder's

Va.

Inc.,

Oct.

usage

4,

in

inquiry.

an
if

concerns over the objectivity of Latham's opinions and

the specific experiences on which she relies can be addressed on
cross-examination and with contrary evidence.

C. Whether
Latham
and
Wermers
Reliably
Applied
Principles and Methods to the Facts of the Case
Rule 702(d)

requires

that

Their

the expert's opinion reflect[]

a

reliable application of the principles and methods to the facts of
the

case.

ft

Fed. R. Evid. 702(d). An expert may violate Rule 702(d)

by "cherry-picking" certain data or facts to produce a misleadingly
favorable result.

Cir.

See

E.E.O.C.

v.

2015)(collecting cases).

21

Freeman,

778

F.3d 463,

469

(4th

1. whether Wermers Reliably Applied His Principles and Methods
to

the

Facts

of

the

Case

Plaintiffs argue that Wermers failed to fully consider the
IPS

in his

analysis

and

relied

on other

data

that

picked and never relied on by the Plan's fiduciaries.
at

24;

Wermers'

ECF No.

250

analysis

at

17.

According

irrelevant

to

to

Plaintiffs,

whether

the

Plan's
ECF

acted prudently in retaining the BlackRock TDFs.
16.

Plaintiffs

also

claim

that

ignored

Wermers

cherry-

was
ECF

No.

that

211

makes

fiduciaries
No.

250

at

discrepancies

between his data and the data presented in materials provided to
the

Genworth

Committee.

ECF No.

211

at

24.

Plaintiffs' relevancy argument is addressed in the discussion
of

Rule

702(a).

But

even

under

Rule

702(d),

Wermers

reliably

applies his methods to the facts of the case for the purpose of
assessing "economic reasonableness.

//

Had Wermers been retained to

offer an opinion on whether the BlackRock TDFs violated the Plan's
IPS

criteria.

a

failure

to

consider

all

of

those

certainly impact the reliability of his analysis.
what Wermers

was

retained

to

do.

Wermers

Tr.

criteria would
But

that

97:16-98:4.

is

not

Instead,

Wermers was primarily retained to offer an opinion on whether the
BlackRock TDFs were an "economically reasonable

n

investment and to

rebut Marin's conclusions, particularly those based on his ex-post

performance comparisons of the BlackRock TDFs to other funds and
benchmarks.

Wermers

Rpt.

1,

22

4.

Therefore,

Plaintiffs'

criticisms

the

about

lack of references

to the

Plan's

Investment

Policy Statement does not undermine the reliability of

methodology"
evaluating
criteria.
For

because
the

BlackRock

same

methodology
TDFs'

reasons,

was

not

performance

2022 WL 3019633;

Garthwait,
the

that

at *13

[Wermers']

predicated
the

against

on

IPS' s

(holding the same).

it was not problematic for Wermers to

have relied on external data which was not provided to the Genworth
Committee.

ratings

For

of

the

instance,

Wermers

BlackRock

TDFs

as

looked
well

at
as

third-party
the

analyst

BlackRock

TDFs'

prevalence in the broader retirement plan market to demonstrate
that

Marin's

widely

held

views

on

among

the

the

BlackRock

industry.

TDFs'

Wermers

performance

Rpt.

H

59.

For

purpose, using such data was not irrelevant or unreliable
And,

picking .

were

not

that

cherry-

Plaintiffs' own expert, Marin, also relied on data

that was not provided to Genworth's Committee in his evaluation of
the performance of the BlackRock TDFs,
Wermers

to

a

double

standard.

See

so Plaintiffs cannot hold

ECF No.

309

at

24

(describing

Marin's Potential Alternative Funds analysis).

Finally, without context, Plaintiffs say that Wermers ignored
discrepancies between his data and the data presented to Genworth's
Committee.

ECF No.

211 at 24.

Based on their citations to Wermers'

What other plans did may also bear on the question of whether "a
hypothetical prudent fiduciary would have made the same decision anyway
purposes of loss causation. See Tatum v. RJR Pension Inv. Committee, 761
346,

357

(4th Cir.

2014) .

23

for

F.3d

deposition

transcript,

Plaintiffs

appear to be referring to the

Rpt. H 92. In

data Wermers uses for Table 4 of his report. Wermers

{but could not) replicate one of

that table, Wermers attempted to

Marin's analyses (Marin's Table 5) using the same Morningstar data
that Marin purported to rely on.

Wermers Rpt.

H 92.

So,

it would

seem appropriate for Wermers to use that data if Plaintiffs'
expert also used it.
In

the

sum,

8

Court

methodology to the

own

finds

that Wermers

reliably

applied his

facts of the case.

2 . Whether Latham Reliably Applied Her Principles and Methods
to

the

Facts

of

the

Case

Plaintiffs argue that Latham failed to sufficiently consider
the

Plan's

According
merely

a

IPS
to

in

forming

Plaintiffs,

non-binding,

her

opinions.

Latham

guiding

ECF

No.

stated

that

the

document

even

though

211

Plan's

the

at

IPS

25.

is

Plan's

fiduciary counsel provided advice to the Genworth Committee that
the IPS was a binding,

Plan document.

Id.;

ECF No.

250 at

17.

Plaintiffs do not dispute that Latham reviewed and relied on
the IPS in forming her opinions.

Instead,

8

Plaintiffs disagreement

Wermers also recreates Marin's peer percentile analysis using data
exclusively from Morningstar, rather than a combination of Morningstar data
and the data provided to Genworth's Committee, and reaches a different result
than Marin applying the same objective frameworks test. Wermers Rpt. H 92.
Plaintiffs offer no explanation as to why it is unreliable for Wermers to
tweak Marin's analysis, using the same source of data that Marin says he
relies on, to point out a flaw. Plaintiffs can dispute the proper
interpretationof that analysis and whether it was unreliable at trial if
that

is

their

concern.

24

is over Latham's understanding of the IPS's effect. ECF No.

25.

At Latham's

deposition,

211 at

for Plaintiffs asked Latham

counsel

whether she disagreed with the general proposition that failure to
follow an investment policy statement,
violate

a

fiduciary's

Latham

did

not

experience,
documents

disagree,

policy

and

guidelines."

Latham

but

statements

"plan document

offers guidelines,

the objective

duties.

typically
.

.

.

151:14-17.

that

suggested.

not

or not,

142:14-17,

Tr.

rather,
are

official

149:2-8,

her

plan

they did follow

in the policy statement and they did use
Tr.

in

the policy statement

and in the case of Genworth,

Latham

would

as a plan document,

151:19-152:4.

But,

it for

Latham

did

acknowledge that a policy statement could be violated if the plan
disregard[]

sponsors

the objectives built into it.

Latham

Tr.

143 :10-14.

So,

from that exchange,

constitutes

legally

a

violation

binding

plan

of

the dispute appears to be over what
the

document

IPS,

or

not

not.

whether

That

the

Plaintiffs

IPS

is

a

disagree

with Latham's understanding of the IPS's effect does not mean she

failed to reliably apply her methods to the facts of the case.
interpretation of

the

IPS

is

a factual

testimony will be relevant and helpful.
Gummi AB,

178

F.3d

257,

261

{4th Cir.

25

dispute

The

for which expert

See Westberry v.

Gislaved

1999)("the court need not

determine

that

the

expert

testimony

is

.

irrefutable

or

certainly correct.")
D. Whether The Testimony Is Admissible Under Rule 403

Plaintiffs argue that Wermers' and Latham's testimony should
also be excluded under Rule 403 because it threatens to mislead or

confuse the issues for the same reasons already discussed. ECF No.
211

at

26.

Rule 403 provides that courts

may exclude relevant evidence

if its probative value is substantially outweighed by a danger of
one

or

more

issues,

of

the

misleading

needlessly

following:
the

presenting

jury.

unfair prejudice,
undue

cumulative

delay,

evidence.

confusing

wasting
Fed.

R.

the

time,
Evid.

or
403.

Having found Wermers' and Latham's testimony to be admissible under
Rule

702,

the Court also finds

admissible under Rule 403
a bench trial.

that their testimony is generally

for the reasons discussed. Moreover,

in

the risk that an expert's testimony will be unduly

confusing or misleading is much lower and excluding evidence under
Rule 403 for such reasons is generally not appropriate. See Schultz
V.

Butcher,

24

F.3d 626,

632

(4th Cir.

1994){"[W]e hold that

in

the context of a bench trial, evidence should not be excluded under

403 on the ground that it is unfairly prejudicial.").

26

CONCLUSION

For the foregoing reasons, the Court finds that both
Wermers'

and Latham's testimony satisfies the requirements of

Rules 702 and 403.

Plaintiffs'

TESTIMONY OF LORIE

L.

No.

207)

It

MOTION TO EXCLUDE OPINIONS AND

LATHAM AND RUSSELL R.

WERMERS,

PH.D.

{ECF

will be denied.

is

so

ORDERED.

/s/
Robert E. Payne
Senior United States

Richmond,
Date:

Virginia

August

2024

27

District Judge