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Barrett v. Pioneer Natural Resources USA, Inc.

United States District Court, D. Colorado

June 29, 2018

WILLIAM M. BARRETT, individually and as the representative of a class consisting of the participants and beneficiaries of the Pioneer Natural Resources USA, Inc. 401K and Matching Plan, Plaintiff,
v.
PIONEER NATURAL RESOURCES USA, INC.; THE PIONEER NATURAL RESOURCES USA INC. 401K AND MATCHING PLAN COMMITTEE; THERESA A. FAIRBROOK; TODD C. ABBOTT; W. PAUL MCDONALD; MARGARET M. MONTEMAYOR; THOMAS J. MURPHY; CHRISTOPHER M. PAULSEN; KERRY D. SCOTT; SUSAN A. SPRATLEN; LARRY N. PAULSEN; MARK KLEINMAN; and RICHARD P. DEALY, Defendants.

          ORDER GRANTING DEFENDANTS' EARLY MOTION FOR PARTIAL SUMMARY JUDGMENT

          William J. Martinez United States District Judge.

         Plaintiff William M. Barrett (“Plaintiff”) sues various parties involved in the management of a retirement plan in which he previously participated (collectively, “Defendants”). Barrett argues that Defendants breached the fiduciary duties established by the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001 et seq.

         Currently before the Court is Defendants' Early Motion for Partial Summary Judgment (“Motion”), arguing that (1) Plaintiff lacks Article III standing to assert one of the fiduciary breaches alleged in his complaint; and (2) even if standing exists, the claim fails on its merits. (ECF No. 32.) Also before the Court is Defendants' Motion to Strike (ECF No. 55), which relates to what Defendants characterize as a surreply filed by Plaintiff in opposition to Defendants' second summary judgment argument. For the reasons explained below, the Court agrees with Defendants' Article III standing argument and grants partial summary judgment on that basis. Defendants' Motion to Strike is therefore moot.

         The Court recognizes that Plaintiff recently filed a motion to add an additional plaintiff whose presence, Plaintiff argues, would cure the standing defect described below. (See ECF No. 79.) That motion is not yet ripe and this order is not meant to prejudge the merits of Plaintiff's most recent motion.

         I. BACKGROUND

         A. Allegations from the Complaint[1]

         The Court accepts the following facts as true for present purposes.

         Plaintiff participated in the Pioneer Natural Resources USA, Inc. 401(k) and Matching Plan (“Plan”) from 2011 until September 2017. (ECF No. 57 ¶ 1.) The Plan was a defined contribution plan (as opposed to a defined benefit plan), meaning that each Plan participant's benefits turned on the participant's contributions, the employer's matching contributions (if any), and investment performance. (Id. ¶¶ 2-3.)

         Administrative and management fees, such as recordkeeping fees, can weigh down investment performance. (Id. ¶¶ 4, 7.) With over $665 million in assets, the Plan was large enough to possess the bargaining power needed to negotiate low administrative and management fees, and to negotiate for participation in mutual funds at lower expense ratios. (Id. ¶ 6.) The Plan, however, did not take advantage of this bargaining power. It instead continued to pay management fees to its designated recordkeeper (Vanguard Group Inc.) that were allegedly well above the industry average. (Id. ¶¶ 29-56.)

         In addition, the Plan imprudently gave its participants the choice between two “short-term reserve” funds, the “Retirement Trust” and the “Money Market Fund.” (Id. ¶ 64.) The Retirement Trust “averaged returns of 2% per year over five years” while the Money Market Fund “averaged returns of 0.12% per year” over the same time period. (Id. ¶¶ 62-63.) Offering both funds “provided no benefit to the Plan participants, but instead potentially confused and misled the Plan participants.” (Id. ¶ 66.) Defendants “recognized this issue as early as March 2013, but did not remove the [Money Market Fund] as an investment option” until 2016. (Id. ¶¶ 66, 71.) “As a result, many Plan participants who were eligible to invest in the [Retirement Trust] instead invested in the [Money Market Fund], which cost them an annual investment return of almost 2%.” (Id. ¶ 67.)

         Based on these allegations, Plaintiff asserts four claims for relief. Claim 1 asserts breaches of the duties of loyalty and prudence based on the unreasonably high recordkeeping fees. (Id. ¶¶ 93-101.) Claim 2 asserts breaches of the same duties for maintaining the Money Market Fund as a Plan option for three years after it became clear that it was an imprudent investment choice. (Id. ¶¶ 102-12.) Claim 3 is closely related to Claim 1 and asserts a violation of ERISA regulations regarding disclosure of administrative fees. (Id. ¶¶ 113-19.) Claim 4 accuses Defendant Pioneer Natural Resources USA, Inc. of failure to monitor the fiduciaries responsible for administering the Plan. (Id. ¶¶ 120-27.)

         Plaintiff seeks to assert these claims on a class-action basis. (Id. ¶¶ 87-92.) He proposes two separate classes:

(1) Administrative Fee Class and Investment Management Fee Class
All participants and beneficiaries of the Pioneer Natural Resources USA, Inc. 401(K) and Matching Plan from July 1, 2011 through the date of ...

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