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Troudt v. Oracle Corp.

United States District Court, D. Colorado

February 4, 2018

DEBORAH TROUDT, et al., Plaintiffs,
ORACLE CORPORATION, et al., Defendants.


          Robert E. Blackburn United States District Judge.

         The matter before me is Plaintiffs' Motion for Class Certification [#104], [1] filed June 30, 2017. I grant the motion on the terms set forth herein.


         I have jurisdiction over this matter under 28 U.S.C. §1331(federal question) and 29 U.S.C. § 1132(e)(1) (ERISA).


         Pursuant to Fed.R.Civ.P. 23, a class may be certified if the following requirements are met: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of those of the class, and; (4) the representative parties will protect the interests of the class adequately. In addition, one of the three alternative requirements outlined in Rule 23(b) also must be satisfied. Sibley v. Sprint Nextel Corp., 254 F.R.D. 662, 670 (D. Kan. 2008).

         The question whether to certify a class certification is committed to the sound discretion of the trial court. Anderson v. City of Albuquerque, 690 F.2d 796, 799 (10thCir. 1982). As the proponent of class certification, plaintiffs bear a “strict burden of proof” to demonstrate the requirements of Rule 23 are satisfied. Trevizo v. Adams, 455 F.3d 1155, 1162 (10th Cir. 2006). Nevertheless, because a certified class may be altered, expanded, subdivided, or abandoned as the case develops, Daigle v. Shell Oil Co., 133 F.R.D. 600 (D. Colo. 1990), doubts as to the propriety of entertaining a class action should be resolved in favor of certification, see Esplin v. Hirschi, 402 F.2d 94, 99 (10th Cir. 1968) (“[I]f there is to be an error made, let it be in favor and not against the maintenance of the class action, for it is always subject to modification should later developments during the course of the trial so require.”).

         III. ANALYSIS

         This lawsuit concerns the Oracle 401(k) Savings and Investment Plan (“the Plan”), a defined contribution retirement benefits plan sponsored and maintained by defendant Oracle Corporation (“Oracle”) for the benefit of its employees. Oracle is the named fiduciary and administrator of the Plan. The Plan currently has more than 70, 000 participants and manages over $12 billion in assets.

         Pursuant to the terms of a Trust Agreement, Oracle delegated to the Oracle Corporation 401(k) Committee (“the Committee”), inter alia, its fiduciary responsibility for determining investment options for the Plan.[2] It also delegated its duties to serve as recordkeeper and trustee for the Plan to Fidelity Management Trust Company (“Fidelity”). In return for these services, Oracle agreed to pay Fidelity reasonable administrative expenses.

         By this lawsuit, named plaintiffs seek to represent a class consisting of

All participants and beneficiaries of the Oracle Corporation 401(k) Savings and Investment Plan from January 1, 2009 through the date of judgment, excluding the Defendants.

         This putative class asserts four claims based on two primary allegations: (1) that defendants allowed Fidelity to collect excessive and unreasonable recordkeeping and administrative fees from the Plan; and (2) that defendants caused the Plan to make certain imprudent investments. Defendants do not oppose class certification per se, but argue plaintiffs' proposed class definition does not meet the requirements of Rule 23.

         I begin by examining that definition. “Although not mentioned specifically in Rule 23 itself, a prerequisite to class certification is an appropriate class definition.” Maez v. Springs Automotive Group, LLC, 268 F.R.D. 391, 394 (D. Colo. 2010). The adequacy of the class definition must be determined before the court addresses the other requirements of Rule 23. Warnick v. Dish Network, LLC, 301 F.R.D. 551, 556 (D. Colo. 2014), appeal dismissed (October 7, 2015). This latent aspect of the class certification inquiry - the question of “ascertainability” - “ensures that a proposed class will actually function as a class” by ensuring “that class members can be identified.” Byrd v. Aaron's Inc., 784 F.3d 154, 162 (3rd Cir. 2015) (emphasis in original).

         A class is sufficiently defined when potential class members can be identified by reference to objective criteria. Rhodes v. Olson Associates, P.C., 83 F.Supp.3d 1096, 1111-12 (D. Colo. 2015). “[T]he description of the class must be sufficiently definite so that it is administratively feasible for the court to ascertain whether a particular individual is a member.” Joseph v. General Motors Corp., 109 F.R.D. 635, 639 (D. Colo. 1986). “[T]he district court has broad discretion to determine whether the class description is sufficiently definite.” 5 James W. Moore et al., Moore's Federal Practice § 23.21[5] at 23-61 (3rd ed. 1999).

         That prerequisite is ostensibly met in this case. “ERISA [fiduciary] litigation ... presents a paradigmatic example of a [Rule 23](b)(1) class.” In re Global Crossing Securities & ERISA Litigation, 225 F.R.D. 436, 453 (S.D.N.Y. 2004) (internal quotation marks omitted). Indeed, defendants do not suggest this class is unascertainable. Rather, they claim plaintiff's definition is both (1) overly broad generally in terms of its proposed time frame; and (2) with respect to the imprudent investment claims particularly, insufficiently specific in terms of which Plan participants and beneficiaries may be part of that class. The later argument will be addressed more fully in the context of considering the requirements of Rule 23(a).

         As for the former, defendants suggest the proposed class must be limited by the applicable six-year statute of repose which applies to ERISA claims. See 29 U.S.C. § 1113(1). Fulghum v. Embarq Corp., 785 F.3d 395, 415 (10th Cir.), cert. denied, 136 S.Ct. 537 (2015). However, I concur with plaintiffs that such a determination is premature. The Amended Complaint alleges defendants concealed the various breaches of their fiduciary duties on which plaintiffs' claims are based (see Am. Compl. ¶ 59 at 18 & ¶¶ 72-75 at 25-26 [#84], filed May 26, 2017), which circumstance, if proven, would toll limitations, see 29 U.S.C. § 1113. It would be inappropriate at this early juncture to attempt to discern the merits of those allegations. See Kanawi v. Bechtel Corp., 254 F.R.D. 102, 112 (N.D. Cal. 2008); Taylor v. United Technologies Corp., 2008 WL 2333120 at *6 (D. Conn. June 3, 2008).

         For the present, therefore, I will certify a class defined by the time frame suggested by plaintiffs, subject to later modification if discovery fails to bear out the truth of plaintiffs' allegations of concealment. See Fed. R. Civ. P. 23(c)(1)(C); In re Integra Realty Resources, Inc., 354 F.3d 1246, 1261 (10th Cir. 2004) (“[A] trial court overseeing a class action retains the ability to monitor the appropriateness of class certification throughout the proceedings and to modify or decertify a class at any time before final judgment.”).

         Having so concluded, I now turn to the explicit requirements of Rule 23. As noted above, defendants do not oppose certification of this action as a class action, but only challenge the manner in which plaintiffs purport to define the class as regards the imprudent investment claims. Examining the requirements of Rule 23, I agree with defendants that certification of more tightly defined subclasses as to those claims is appropriate here, as discussed in more depth below.

         There is no question here but that the proposed class, however defined or subdivided, satisfies the requirement of numerosity. Fed.R.Civ.P. 23(a)(1) (proposed class must be so numerous that joinder of all members of the class is impracticable). As of December 31, 2014, the Plan had more than 65, 000 participants; it now has more than 70, 000. Regardless whether the class is defined as a single entity, as plaintiffs suggest, ...

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