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Ramos v. Banner Health

United States District Court, D. Colorado

September 29, 2017

LORRAINE M. RAMOS, et al., Plaintiffs,
BANNER HEALTH, et al., Defendants.



         In this action brought pursuant to 29 U.S.C. § 1132 under the Employee Retirement Income Security Act of 1974 (“ERISA”), Plaintiffs Lorraine M. Ramos and others bring a putative class action against numerous Defendants including, as relevant here, Banner Health and numerous of its officers or employees (collectively, “Banner Health”), and against Jeffrey Slocum & Associates, Inc. (“Slocum”). Now before the Court is Slocum's Motion to Dismiss Counts I and II of the Amended Complaint. (ECF No. 182.) For the reasons explained below, Slocum's Motion is denied.


         Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss a claim in a complaint for “failure to state a claim upon which relief can be granted.” The 12(b)(6) standard requires the Court to “assume the truth of the plaintiff's well-pleaded factual allegations and view them in the light most favorable to the plaintiff.” Ridge at Red Hawk, LLC v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007). In ruling on such a motion, the dispositive inquiry is “whether the complaint contains ‘enough facts to state a claim to relief that is plausible on its face.'” Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Granting a motion to dismiss “is a harsh remedy which must be cautiously studied, not only to effectuate the spirit of the liberal rules of pleading but also to protect the interests of justice.” Dias v. City & Cnty. of Denver, 567 F.3d 1169, 1178 (10th Cir. 2009) (internal quotation marks omitted). “Thus, ‘a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely.'” Id. (quoting Twombly, 550 U.S. at 556).


         The Court assumes the following facts taken from Plaintiffs' Amended Complaint (ECF No. 118) to be true for purposes of resolving Slocum's Motion to Dismiss.

         Plaintiffs are current and former Banner Health employees who reside in Colorado. (ECF No. 118 ¶¶ 20-26.) During relevant time periods, Plaintiffs were participants in Banner Health's employee 401(k) plan (the “Plan”). (Id. ¶¶ 1, 20-26.) The Plan qualifies as an “employee pension benefit plan” under 29 U.S.C. § 1002(2)(A) and an “individual account plan” or “defined contribution plan” under 29 U.S.C. § 1002(34). (Id. ¶ 8.) Pursuant to 29 U.S.C. § 1102(a)(1), the Plan is established by a written plan document, which has been amended and restated over the years. (Id. ¶ 7.)

         The Plan provides for the Banner Health Retirement Plans Advisory Committee (the “Committee”) to advise Banner Health with respect to Plan investments and administration. (Id. ¶ 29.)[1] Committee members are appointed, and may be removed, by Banner Health's CEO. (Id.) The Plan document and its “Statement of Fiduciary Duties and Procedures and Investment Objectives and Policies” (the “IPS”) provide that the Committee is responsible for all investment and administrative functions, including selecting and removing Plan investment options and selecting an independent investment consultant to evaluate and make recommendations regarding the Plan investment options. (Id. ¶ 30.)

         Banner Health is the named fiduciary of the Plan under 29 U.S.C. § 1102(a), and the Committee acts as the Plan administrator, but may appoint another committee or individual to perform Plan administrative functions. (Id. ¶¶ 27, 32.) Plan assets are held in trust by a trustee appointed by Banner Health. (Id. at 12.) As of December 2007, Banner entered into a Trust Agreement with Fidelity Management Trust Company. (Id. ¶ 12.) Pursuant to this 2007 Trust Agreement, Fidelity has provided recordkeeping and administrative services to the Plan. (Id. ¶ 13.)[2]

         Slocum is a third-party investment consultant hired by Banner Health. Because the allegations regarding Slocum's role are central to the present Motion, the Court reproduces this portion of Amended Complaint in full:

Defendant Jeffrey Slocum & Associates, Inc. serves as an independent third-party investment consultant hired by Banner Health to function as a fiduciary with respect to the investment and administration of the assets of the Plan and other Banner Health corporate assets and sponsored retirement plans. In this role, Slocum conducted an ongoing review of the applicable investment policy statement that governed the investment of assets held in Banner Health's 401(k) plans, defined benefit plans, supplemental executive plans, as well as Banner Health's other corporate assets. Under the applicable IPS, Slocum was charged with the ongoing review of the investment options in the Banner Health-sponsored retirement plans, including the Plan. Slocum was also responsible for performing investment manager evaluations and searches when an investment manager was added to the Banner Health plans. During the transition to the selected investment manager, Slocum also assisted in [sic] the Committee in negotiating fees, among other duties. Slocum performed ongoing investment consulting services, such as providing written investment performance evaluations on a quarterly basis to the Committee, and performed asset liability and allocation evaluations. In performing investment services on behalf of the Plan, Slocum received a fee paid directly from Plan assets.
Under the agreement between Slocum and Banner Health dated June 28, 2010, and as confirmed by the Plan's IPS, Slocum acknowledges that it is a “fiduciary within the meaning of section 3(21)(A)(ii) of ERISA [29 U.S.C. § 1002(21)(A)(ii)] with respect to the Defined Benefit and 401(k) Plans.” During all relevant time periods applicable to Plaintiffs' claims, Slocum has functioned as a fiduciary to the Plan. Based on the services performed on behalf of the plan, Slocum is a fiduciary to the Plan because it rendered investment advice for a fee with respect to Plan assets, or had responsibility to do so. 29 U.S.C. § 1002(21)(A)(ii).

(ECF No. 118 ¶¶ 37-38 (brackets in original).)

         As relevant here, Plaintiffs bring two counts against Slocum for breach of the duties of loyalty and prudence, and for violation of Plan documents. (See generally id. ¶¶ 120-139.) In Count I, Plaintiffs allege that Banner Health and Slocum breached their duties by allowing excessive administrative fees to be charged to Plan participants. (Id. ΒΆΒΆ 120-130.) In Count II, Plaintiffs allege the Defendants breached their duties and violated Plan documents by making imprudent investment options available for Plan participants to invest ...

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