Case 4:20-cv-01753-DMR Document 1 Filed 03/11/20 Page 1 of 43
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`ROSMAN & GERMAIN LLP
`Daniel L. Germain (Bar No. 143334)
`16311 Ventura Boulevard
`Suite 1200
`Encino, CA 91436-2152
`Telephone: (818) 788-0877
`Facsimile: (818) 788-0885
`E-Mail: Germain@Lalawyer.com
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`Counsel for Plaintiffs and the Putative Class
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`[Additional Counsel Listed on Signature Page]
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`CIVIL ACTION NO.:
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`CLASS ACTION COMPLAINT
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`JURY TRIAL DEMANDED
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`TIM DAVIS, GREGOR MIGUEL, and
`AMANDA BREDLOW, individually and
`on behalf of all others similarly situated,
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`Plaintiffs,
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`v.
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`SALESFORCE.COM, INC., BOARD OF
`DIRECTORS OF SALESFORCE.COM,
`INC., MARC BENIOFF, THE
`INVESTMENT ADVISORY
`COMMITTEE, JOSEPH ALLANSON,
`STAN DUNLAP, and JOACHIM
`WETTERMARK,
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`Defendants.
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`Case 4:20-cv-01753-DMR Document 1 Filed 03/11/20 Page 2 of 43
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`Plaintiffs Tim Davis, Gregor Miguel, and Amanda Bredlow (“Plaintiffs”), by
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`and through their attorneys, on behalf of the Salesforce 401(k) Plan (the “Plan”),1
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`themselves and all others similarly situated, state and allege as follows:
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`I.
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`INTRODUCTION
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`1.
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`This is a class action brought pursuant to §§ 409 and 502 of the
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`Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1109
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`and 1132, against the Plan’s fiduciaries, which include Salesforce.com, Inc.
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`(“Salesforce” or the “Company”), the Board of Directors of Salesforce (“Board”) and
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`its members during the Class Period, and the Investment Advisory Committee
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`(“Committee”) and its members during the Class Period for breaches of their
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`fiduciary duties.
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`2.
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`Defined contribution retirement plans, like the Plan, confer tax benefits
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`on participating employees to incentivize saving for retirement. As of the end of
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`2015, Americans had approximately $6.7 trillion in assets invested in defined
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`contribution plans. See INVESTMENT COMPANY INSTITUTE, Retirement Assets Total
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`$24.0 Trillion
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`in Fourth Quarter 2015
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`(Mar. 24, 2016), available at
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`https://www.ici.org/research/stats/retirement/ret_15_q4; PLAN SPONSOR,
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`2015
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`Recordkeeping Survey (June 2015), available at http://www.plansponsor.com/2015-
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`Recordkeeping-Survey/.
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`3.
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`In a defined contribution plan, participants’ benefits “are limited to the
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`value of their own investment accounts, which is determined by the market
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`performance of employee and employer contributions, less expenses.” Tibble v.
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`Edison Int’l, 135 S. Ct. 1823, 1826 (2015). Thus, the employer has no incentive to
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`keep costs low or to closely monitor the Plan to ensure every investment remains
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`1 The Plan is a legal entity that can sue and be sued. ERISA § 502(d)(1), 29 U.S.C. § 1132(d)(1).
`However, in a breach of fiduciary duty action such as this, the Plan is not a party. Rather, pursuant
`to ERISA § 409, and the law interpreting it, the relief requested in this action is for the benefit of
`the Plan and its participants.
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`Case 4:20-cv-01753-DMR Document 1 Filed 03/11/20 Page 3 of 43
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`prudent, because all risks related to high fees and poorly-performing investments are
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`borne by the participants.
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`4.
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`To safeguard Plan participants and beneficiaries, ERISA imposes strict
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`fiduciary duties of loyalty and prudence upon employers and other plan fiduciaries.
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`29 U.S.C. § 1104(a)(1). These twin fiduciary duties are “the highest known to the
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`law.” Tibble v. Edison Int’l, 843 F.3d 1187, 1197 (9th Cir. Dec. 30, 2016) (en banc).
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`Fiduciaries must act “solely in the interest of the participants and beneficiaries,” 29
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`U.S.C. § 1104(a)(1)(A), with the “care, skill, prudence, and diligence” that would be
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`expected in managing a plan of similar scope. 29 U.S.C. § 1104(a)(1)(B).
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`5.
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`The Plan had over a billion dollars in assets under management in 2016,
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`$1.8 billion in assets as of the end of 2017, and over $2 billion in assets at the end of
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`2018 that were/are entrusted to the care of the Plan’s fiduciaries. The Plan’s assets
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`under management qualifies it as a large plan in the defined contribution plan
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`marketplace, and among the largest plans in the United States. As a large plan, the
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`Plan had substantial bargaining power regarding the fees and expenses that were
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`charged against participants’ investments. Defendants, however, did not try to reduce
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`the Plan’s expenses or exercise appropriate judgment to scrutinize each investment
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`option that was offered in the Plan to ensure it was prudent.
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`6.
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`Plaintiffs allege that during the putative Class Period (March 11, 2014
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`through the date of judgment) Defendants, as “fiduciaries” of the Plan, as that term is
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`defined under ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A), breached the duties they
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`owed to the Plan, to Plaintiffs, and to the other participants of the Plan by, inter alia,
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`(1) failing to objectively and adequately review the Plan’s investment portfolio with
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`due care to ensure that each investment option was prudent, in terms of cost; and (2)
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`maintaining certain funds in the Plan despite the availability of identical or similar
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`investment options with lower costs and/or better performance histories.
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`7.
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`To make matters worse, Defendants failed to utilize the lowest cost share
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`class for many of the mutual funds within the Plan, and failed to consider collective
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`Case 4:20-cv-01753-DMR Document 1 Filed 03/11/20 Page 4 of 43
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`trusts, commingled accounts, or separate accounts as alternatives to the mutual funds
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`in the Plan, despite their lower fees.
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`8.
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`It appears that in 2019, five years into the Class Period, wholesale
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`changes were made to the Plan wherein certain Plan investment options, some of
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`which are the subject of this lawsuit, were converted to lower class shares.
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`9.
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`These changes were far too little and too late as the damages suffered by
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`Plan participants to that point had already been baked in. There is no reason to not
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`have implemented these changes by the start of the Class Period when the majority of
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`lower-class shares were available. Moreover, these changes may not have cured the
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`Company’s fiduciary breaches because the circumstances under which changes were
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`made have not been disclosed to Plaintiffs.
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`10. Defendants’ mismanagement of the Plan, to the detriment of participants
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`and beneficiaries, constitutes a breach of the fiduciary duties of prudence and loyalty,
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`in violation of 29 U.S.C. § 1104. Their actions were contrary to actions of a
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`reasonable fiduciary and cost the Plan and its participants millions of dollars.
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`11. Based on this conduct, Plaintiffs assert claims against Defendants for
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`breach of the fiduciary duties of loyalty and prudence (Count One) and failure to
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`monitor fiduciaries (Count Two).
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`II. JURISDICTION AND VENUE
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`12. This Court has subject matter jurisdiction over this action pursuant to 28
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`U.S.C. § 1331 because it is a civil action arising under the laws of the United States,
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`and pursuant to 29 U.S.C. § 1332(e)(1), which provides for federal jurisdiction of
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`actions brought under Title I of ERISA, 29 U.S.C. § 1001, et seq.
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`13. This Court has personal jurisdiction over Defendants because they
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`transact business in this District, reside in this District, and/or have significant
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`contacts with this District, and because ERISA provides for nationwide service of
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`process.
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`Case 4:20-cv-01753-DMR Document 1 Filed 03/11/20 Page 5 of 43
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`14. Venue is proper in this District pursuant to ERISA § 502(e)(2), 29
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`U.S.C. § 1132(e)(2), because some or all of the violations of ERISA occurred in this
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`District and Defendants reside and may be found in this District. Venue is also
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`proper in this District pursuant to 28 U.S.C. § 1391 because Defendants do business
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`in this District and a substantial part of the events or omissions giving rise to the
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`claims asserted herein occurred within this District.
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`III. PARTIES
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`Plaintiffs
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`15.
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` Plaintiff Tim Davis (“Davis”) resides in Tillamook, Oregon. During his
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`employment, Plaintiff Davis participated in the Plan investing in the options offered
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`by the Plan and which are the subject of this lawsuit.
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`16. Plaintiff Gregor Miguel (“Miguel”) resides in Oakland, California.
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`During his employment, Plaintiff Miguel participated in the Plan investing in the
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`options offered by the Plan and which are the subject of this lawsuit.
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`17. Plaintiff Amanda Bredlow (“Bredlow”) resides in Kirkland, Washington.
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`During her employment, Plaintiff Bredlow participated in the Plan investing in the
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`options offered by the Plan and which are the subject of this lawsuit.
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`18. Each Plaintiff has standing to bring this action on behalf of the Plan
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`because each of them participated in the Plan and were injured by Defendants’
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`unlawful conduct. Plaintiffs are entitled to receive benefits in the amount of the
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`difference between the value of their accounts currently, or as of the time their
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`accounts were distributed, and what their accounts are or would have been worth, but
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`for Defendants’ breaches of fiduciary duty as described herein.
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`19. Plaintiffs did not have knowledge of all material facts (including, among
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`other things, the investment alternatives that are comparable to the investments
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`offered within the Plan, comparisons of the costs and investment performance of Plan
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`investments versus available alternatives within similarly-sized plans, total cost
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`comparisons to similarly-sized plans, information regarding other available share
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`Case 4:20-cv-01753-DMR Document 1 Filed 03/11/20 Page 6 of 43
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`classes, and information regarding the availability and pricing of separate accounts
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`and collective trusts) necessary to understand that Defendants breached their
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`fiduciary duties and engaged in other unlawful conduct in violation of ERISA until
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`shortly before this suit was filed. Further, Plaintiffs did not have and do not have
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`actual knowledge of the specifics of Defendants’ decision-making process with
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`respect to the Plan, including Defendants’ processes (and execution of such) for
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`selecting, monitoring, and removing Plan investments, because this information is
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`solely within the possession of Defendants prior to discovery. Having never
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`managed a large 401(k) plan such as the Plan, Plaintiffs lacked actual knowledge of
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`reasonable fee levels and prudent alternatives available to such plans. Plaintiffs did
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`not and could not review the Committee meeting minutes (to the extent they exist) or
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`other evidence of Defendants’ fiduciary decision making, or the lack thereof.2 For
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`purposes of this Complaint, Plaintiffs have drawn reasonable inferences regarding
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`these processes based upon (among other things) the facts set forth herein.
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`Defendants
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`Company Defendant
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`20. Salesforce is the Plan sponsor with a principal place of business in San
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`Francisco, California. See 2018 Form 5500 at 1. Salesforce describes itself as “a
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`customer relationship management solution that brings companies and customers
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`together. It’s one integrated CRM platform that gives all your departments —
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`including marketing, sales, commerce, and service — a single, shared view of every
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`customer.3
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`2 See Braden v. Wal-mart Stores, Inc., 588 F.3d 585, 598 (8th Cir. 2009) (“If Plaintiffs cannot state
`a claim without pleading facts which tend systematically to be in the sole possession of defendants,
`the remedial scheme of [ERISA] will fail, and the crucial rights secured by ERISA will suffer.”)
`Indeed, several weeks prior to filing the instant lawsuit, Plaintiffs requested pursuant to ERISA
`§104(b)(4) that the Plan administrator produce several Plan governing documents, including any
`meeting minutes of the relevant Plan investment committee(s). Their request for meeting minutes
`was denied for the asserted reason that the request went beyond the scope of Section 104(b)(4).
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`3 See https://www.salesforce.com/products/what-is-salesforce/
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`Case 4:20-cv-01753-DMR Document 1 Filed 03/11/20 Page 7 of 43
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`21. At all times, the Company acted through its officers, including the Board
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`and Committee members, to perform Plan-related fiduciary functions in the course
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`and scope of their employment.
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`22. Additionally, the Company appointed the committee responsible for
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`selecting and monitoring the Plan’s investment options. See “Statement of
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`Investment Policy, Objectives and Guidelines for Salesforce 401(k) Plan, updated
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`September 9, 2016” (“Investment Policy”) at 4 (“In accordance with the Plan
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`provisions, the Committee has been appointed by the organization to supervise,
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`monitor and evaluate the investment of Plan assets.”)
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`23. Under ERISA, fiduciaries with the power to appoint have the
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`concomitant fiduciary duty to monitor and supervise their appointees. Accordingly,
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`the Company is a fiduciary of the Plan, within the meaning of ERISA Section
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`3(21)(A), 29 U.S.C. § 1002(21)(A).
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`Board Defendants
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`24. The Company acted through the Board (defined above) to perform some
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`of the Company’s Plan-related fiduciary functions, including appointing the
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`Committee. Investment Policy at 4.
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`25. The Board also had discretionary authority to make contributions to Plan
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`participants’ accounts. See Salesforce 401(k) Summary Plan Description, Effective
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`January 2, 2019 (“SPD”) at 6.
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`26. During the Class Period, Chief Executive Officer Marc Benioff
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`(“Benioff”) served on the Board as Chairman.
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`27. Mr. Benioff, and each member of the Board during the putative Class
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`Period is/was a fiduciary of the Plan, within the meaning of ERISA Section 3(21)(A),
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`29 U.S.C. § 1002(21)(A) because each exercised discretionary authority to appoint
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`and/or monitor the Committee and other Plan fiduciaries, which had control over Plan
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`management and/or authority or control over management or disposition of Plan
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`assets.
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`Case 4:20-cv-01753-DMR Document 1 Filed 03/11/20 Page 8 of 43
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`28. The members of the Board of Directors for Salesforce during the Class
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`Period are collectively referred to herein as the “Board Defendants.”
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`Committee Defendants
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`29. The Committee’s role with the Plan is to “supervise, monitor and
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`evaluate the investment of Plan assets.” Investment Policy at 4. Among other things,
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`the Committee is charged with the following responsibilities:
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` Identifying investment options or funds which it deems appropriate and
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`prudent to make available to Plan participants;
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` Selecting qualified investment funds;
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` Selecting a qualified Trustee and Recordkeeper, as required;
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` Reviewing the investment results of the funds;
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` Reviewing that the costs (direct and indirect) of the Plan’s service
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`providers including but not limited to investment funds, trustee,
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`recordkeeper, auditors, attorney, and investment advisers are reasonable
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`and disclosed to the extent required under ERISA Section 408(b)(2).
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` Taking appropriate action if objectives are not being met or if policy and
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`guidelines ae not being followed.
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`Id. at 5.
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`30. Further, “[f]rom time to time, the Committee at its discretion, may add
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`investment options/categories to the current core options.” Id. at 7.
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`31. Additionally, the Committee had monitoring responsibility for the
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`brokerage window. “If permitted by the Committee, participants may direct the
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`investment of their Plan account through and individual brokerage window under the
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`Plan.” Id. at 7. Further, “[t]he individual brokerage window will be reviewed
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`periodically as determined by the Committee based on criteria determined by the
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`Committee.” Id.
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`32. Lastly, the Investment Policy gave the Committee great latitude in
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`selecting investment fund types. “The Committee will select investment options that
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`Case 4:20-cv-01753-DMR Document 1 Filed 03/11/20 Page 9 of 43
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`are liquid, diversified and cost efficient.” Id. at 8. Specifically, the “Committee may
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`select registered mutual funds, collective investment trusts or separately managed
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`accounts for the Plan investments.” Id.
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`33. During the Class Period the following Salesforce employees served as
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`members of the Committee:
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` Joseph Allanson
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`(“Allanson”) – Executive VP, Chief
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`Accounting Officer
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` Stan Dunlap (“Dunlap”) – Senior VP Global Rewards
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` Joachim Wettermark (“Wettermark”) - SVP, Treasurer
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`34. The Committee and each of its members, including Allanson, Dunlap,
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`and Wettermark, were fiduciaries of the Plan during the Class Period, within the
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`meaning of ERISA Section 3(21)(A), 29 U.S.C. § 1002(21)(A) because each
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`exercised discretionary authority over management or disposition of Plan assets.
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`Bridgebay Financial, Inc.
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`Non-Defendant Fiduciaries
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`35. Bridgebay Financial, Inc. (“Bridgebay”) was the investment consultant
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`hired to “support[] the Committee through the provision of independent, third party
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`research and analysis. The Investment Consultant produces quarterly reports that
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`integrate the [Investment Policy] with ongoing performance monitoring of the
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`investment options.” Investment Policy at 6.
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`36. Although Bridgebay is a relevant party and likely to have information
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`relevant to this action, it is not named as a defendant given that the Committee
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`remains responsible for the overall selection and monitoring of all investment
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`options. Plaintiffs reserve the right to name Bridgebay as a defendant in the future if
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`deemed necessary.
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`IV. THE PLAN
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`37.
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`“The Plan is a multiple employer defined contribution plan that was
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`established in 2000 by [Salesforce] to provide benefits to eligible employees.”
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`Case 4:20-cv-01753-DMR Document 1 Filed 03/11/20 Page 10 of 43
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`Financial Statements and Supplemental Schedules (attached to 2018 Form 5500)
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`(“Financial Statements”) at 7. With regard to the two participating companies in the
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`Plan, “Salesforce.com, Foundation” contributes 2.7% to the Plan while Salesforce
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`contributes 97.3%. See Attachment to 2018 Form 5500, Multiple-Employer Plan
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`Information.
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`38.
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`“The purpose of the plan is to enable eligible Employees to save for
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`retirement.” SPD at 1.
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`39. The Plan is a “defined contribution” or “individual account” plan within
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`the meaning of ERISA § 3(34), 29 U.S.C. § 1002(34), in that the Plan provides for
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`individual accounts for each participant and for benefits based solely upon the
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`amount contributed to those accounts, and any income, expense, gains and losses, and
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`any forfeitures of accounts of the participants which may be allocated to such
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`participant’s account. Consequently, retirement benefits provided by the Plan are
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`based solely on the amounts allocated to each individual’s account.
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`40.
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`In general, all employees are eligible to participate in the Plan. SPD at 4.
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`Eligibility
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`Contributions
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`41. There are several types of contributions that can be added to a
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`participant’s account, including: an employee salary deferral contribution, employer
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`paid bonuses, an employee after-tax contribution, catch-up contributions for
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`employees aged 50 and over, rollover contributions, and employer matching
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`contributions. SPD at 6. Additionally, Salesforce “may make discretionary
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`nonelective contributions in an amount to be determined by the Board of Directors
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`for each Plan Year.” Id.
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`42. With regard to employee contributions, the percentage a participant
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`defers “is subject to an annual limit of the lesser of 50.00% of eligible compensation
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`or $19,000 (in 2019).” Id. at 5.
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`Case 4:20-cv-01753-DMR Document 1 Filed 03/11/20 Page 11 of 43
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`43.
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`“Discretionary matching contributions, if made, will be computed by
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`[Salesforce] based on [the participant’s] eligible compensation deferred into the Plan
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`each Plan Year.” Id. at 6.
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`44.
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`“Prior to March 1, 2017, the Company matched the lesser of 50 percent
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`of each eligible participant’s contributions up to a maximum of 6 percent of eligible
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`annual compensation or $4,000 per calendar year.” Financial Statements at 7.
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`“Effective March 1, 2017, the Company increased the amount in which a
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`participant’s contributions would be matched to 100 percent of each eligible
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`participant’s contributions up to the lesser of 6 percent of eligible annual
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`compensation or $5,000 per calendar year.” Id.
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`45. Like other companies that sponsor 401(k) plans for their employees,
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`Salesforce enjoys both direct and
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`indirect benefits by providing matching
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`contributions to Plan participants. Employers are generally permitted to take tax
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`deductions for their contributions to 401(k) plans at the time when the contributions
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`are made. See generally https:/www.irs.gov/retirement-plans/plan-sponsor/401k-
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`plan-overview.
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`46. Salesforce also benefits in other ways from the Plan’s matching
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`program. It is well-known that “[o]ffering retirement plans can help in employers’
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`efforts
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`to
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`attract
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`new
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`employees
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`and
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`reduce
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`turnover.”
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`See
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`https://www.paychex.com/articles/employee-benefits/employer-matching-401k-
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`benefits.
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`47. Given the size of the Plan, Salesforcce likely enjoyed a significant tax
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`and cost savings from offering a match.
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`Vesting
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`48. A participant is 100 percent vested at all times in their “Rollover
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`Contributions, Employer Matching Contributions, After-Tax Contributions, Qualified
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`Nonelective Contributions, Deferral Contributions and any earnings thereon.” Id. at
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`8-9. Nonelective Contributions are vested in accordance with a sliding scale
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`depending on years of service (between less than 1 and 5 years of service. Id. at 9.
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`Those with less than a year of service have zero percent vested while those with 5
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`years of service have 100% vested. Id.
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`The Plan’s Investments
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`49. Several funds were available to Plan participants for investment each
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`year during the putative Class Period. As of December 31, 2018, the Plan held
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`twenty-seven investment options which were all mutual funds. Plan participants also
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`had access to additional investment options through a brokerage link. Financial
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`Statements at 13.
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`50. The Plan’s assets under management for all funds as of December 31,
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`2018 was $2,018,134,000 and $1,800,084,000 as of December 31, 2017. Financial
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`Statements at 5.
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`V. CLASS ACTION ALLEGATIONS
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`51. Plaintiffs bring this action as a class action pursuant to Rule 23 of the
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`Federal Rules of Civil Procedure on behalf of themselves and the following proposed
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`class (“Class”):4
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`All persons, except Defendants and their immediate
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`family members, who were participants in or beneficiaries
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`of the Plan, at any time between March 11, 2014 to the date
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`of judgment (the “Class Period”). 5
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`
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`52. The members of the Class are so numerous that joinder of all members is
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`impractical. The 2018 Form 5500 filed with the Dept. of Labor lists 25,849 Plan
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`“participants with account balances as of the end of the plan year.” Id. at p. 2.
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`
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`4 Plaintiffs reserve the right to propose other or additional classes or subclasses in their motion for
`class certification or subsequent pleadings in this action.
`5 Plaintiffs reserve their right to seek modification of the close of the Class Period in the event that
`further investigation/discovery reveals a more appropriate end period.
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`Case 4:20-cv-01753-DMR Document 1 Filed 03/11/20 Page 13 of 43
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`
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`53. Plaintiffs’ claims are typical of the claims of the members of the Class.
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`Like other Class members, Plaintiffs participated in the Plan and have suffered
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`injuries as a result of Defendants’ mismanagement of the Plan. Defendants treated
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`Plaintiffs consistently with other Class members, and managed the Plan as a single
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`entity. Plaintiffs’ claims and the claims of all Class members arise out of the same
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`conduct, policies, and practices of Defendants as alleged herein, and all members of
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`the Class have been similarly affected by Defendants’ wrongful conduct.
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`54. There are questions of law and fact common to the Class, and these
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`questions predominate over questions affecting only individual Class members.
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`Common legal and factual questions include, but are not limited to:
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`A. Whether Defendants are fiduciaries of the Plan;
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`B. Whether Defendants breached their fiduciary duties of loyalty and
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`prudence by engaging in the conduct described herein;
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`C. Whether the Board Defendants failed to adequately monitor the
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`Committee and other fiduciaries to ensure the Plan was being
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`managed in compliance with ERISA;
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`D.
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`E.
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`The proper form of equitable and injunctive relief; and
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`The proper measure of monetary relief.
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`55. Plaintiffs will fairly and adequately represent the Class, and have
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`retained counsel experienced and competent in the prosecution of ERISA class action
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`litigation. Plaintiffs have no interests antagonistic to those of other members of the
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`Class. Plaintiffs are committed to the vigorous prosecution of this action, and
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`anticipate no difficulty in the management of this litigation as a class action.
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`56. This action may be properly certified under Rule 23(b)(1). Class action
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`status in this action is warranted under Rule 23(b)(1)(A) because prosecution of
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`separate actions by the members of the Class would create a risk of establishing
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`incompatible standards of conduct for Defendants. Class action status is also
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`warranted under Rule 23(b)(1)(B) because prosecution of separate actions by the
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`Case 4:20-cv-01753-DMR Document 1 Filed 03/11/20 Page 14 of 43
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`
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`members of the Class would create a risk of adjudications with respect to individual
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`members of the Class that, as a practical matter, would be dispositive of the interests
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`of other members not parties to this action, or that would substantially impair or
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`impede their ability to protect their interests.
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`57.
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`In the alternative, certification under Rule 23(b)(2) is warranted because
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`the Defendants have acted or refused to act on grounds generally applicable to the
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`Class, thereby making appropriate final injunctive, declaratory, or other appropriate
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`equitable relief with respect to the Class as a whole.
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`VI. DEFENDANTS’ FIDUCIARY STATUS AND
`
`OVERVIEW OF FIDUCIARY DUTIES
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`58. ERISA requires every plan to provide for one or more named fiduciaries
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`who will have “authority to control and manage the operation and administration of
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`the plan.” ERISA § 402(a)(1), 29 U.S.C. § 1102(a)(1).
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`59. ERISA treats as fiduciaries not only persons explicitly named as
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`fiduciaries under § 402(a)(1), 29 U.S.C. § 1102(a)(1), but also any other persons who
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`in fact perform fiduciary functions. Thus, a person is a fiduciary to the extent “(i) he
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`exercises any discretionary authority or discretionary control respecting management
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`of such plan or exercise any authority or control respecting management or
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`disposition of its assets, (ii) he renders investment advice for a fee or other
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`compensation, direct or indirect, with respect to any moneys or other property of such
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`plan, or has any authority or responsibility to do so, or (iii) he has any discretionary
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`authority or discretionary responsibility in the administration of such plan.” ERISA §
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`3(21)(A)(i), 29 U.S.C. § 1002(21)(A)(i).
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`60. As described in the Parties section above, Defendants were fiduciaries of
`
`the Plan because:
`
`(a)
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`they were so named; and/or
`
`(b)
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`they exercised authority or control respecting management or
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`disposition of the Plan’s assets; and/or
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`Case 4:20-cv-01753-DMR Document 1 Filed 03/11/20 Page 15 of 43
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`(c)
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`they exercised discretionary authority or discretionary control
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`respecting management of the Plan; and/or
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`(d)
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`they had discretionary authority or discretionary responsibility in
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`the administration of the Plan.
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`61. As fiduciaries, Defendants are/were required by ERISA § 404(a)(1), 29
`
`U.S.C. § 1104(a)(1), to manage and administer the Plan, and the Plan’s investments,
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`solely in the interest of the Plan’s participants and beneficiaries and with the care,
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`skill, prudence, and diligence under the circumstances then prevailing that a prudent
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`person acting in a like capacity and familiar with such matters would use in the
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`conduct of an enterprise of a like character and with like aims. These twin duties are
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`referred to as the duties of loyalty and prudence, and are “the highest known to the
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`law.” Tibble, 843 at 1197.
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`62. The duty of loyalty requires fiduciaries to act with an “eye single” to the
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`interests of plan participants. Pegram v. Herdrich, 530 U.S. 211, 235 (2000).
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`“Perhaps the most fundamental duty of a [fiduciary] is that he [or she] must display . .
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`. complete loyalty to the interests of the beneficiary and must exclude all selfish
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`interest and all consideration of the interests of third persons.” Pegram, 530 U.S. at
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`224 (quotation marks and citations omitted). Thus, “in deciding whether and to what
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`extent to invest in a particular investment, a fiduciary must ordinarily consider only
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`factors relating to the interests of plan participants and beneficiaries . . . . A decision
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`to make an investment may not be influenced by [other] factors unless the
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`investment, when judged solely on the basis of its economic value to the plan, would
`
`be equal or superior to alternative investments available to the plan.” Dep’t of Labor
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`ERISA Adv. Op. 88-16A, 1988 WL 222716, at *3 (Dec. 19, 1988) (emphasis added).
`
`63.
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`In effect, the duty of loyalty includes a mandate that the fiduciary
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`display complete loyalty to the beneficiaries, and set aside the consideration of third
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`persons.
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`Case 4:20-cv-01753-DMR Document 1 Filed 03/11/20 Page 16 of 43
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`64. ERISA also “imposes a ‘prudent person’ standard by which to measure
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`fiduciaries’ investment decisions and disposition of assets.” Fifth Third Bancorp v.
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`Dudenhoeffer, 134 S. Ct. 2459, 2467 (2014) (quotation omitted). In addition to a
`
`duty to select prudent investments, under ERISA a fiduciary “has a continuing duty to
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`monitor [plan] investments and remove imprudent ones” that exists “separate and
`
`apart from the [fiduciary’s] duty to exercise prudence in selectin