Employee Retirement Income Security Act (ERISA); Claim for overpayment for recordkeeping & administrative services by a 401(k) Plan; “Duty of prudence”; 29 USC § 1104(a)(1)(B); Tibble v Edison Int’l; Smith v CommonSpirit Health

[This appeal was from the ED-MI.] In this putative class action, the court affirmed the district court’s dismissal of plaintiffs-401(k) Plan participants’ ERISA claim asserting defendant-DENSO violated the ERISA fiduciary “duty of prudence” where they failed to allege “the required ‘context specific’ facts[.]” Plaintiffs claimed that DENSO breached its duty of prudence under ERISA by overpaying for recordkeeping and administrative services for its 401(k) Plan. Based on a “comparison with other plans’ fees,” they alleged that the Plan’s contract with its recordkeeper (Empower) “led to ‘lower net returns’ because of ‘excessive’ and ‘objectively unreasonable’ recordkeeping fees to the tune of an extra $39 per participant per year, totaling over $3.4 million over the applicable period.” Plaintiffs contended that “‘a prudent plan fiduciary should be able to negotiate’” lower fees that would then increase the returns from their pensions. The court noted that for excessive-recordkeeping claims, plaintiffs “must ‘allege that the fees were excessive relative to the services rendered’ or establish ‘other factors relevant to determining whether a fee is excessive under the circumstances.’” The court concluded that, measured against the applicable “standards, nothing in plaintiffs’ complaint permits us to reasonably infer a breach of the duty of prudence.” The complaint did not provide any “details about the specific types or quality of services that the comparator plans received relative to those the DENSO plan received.” The court was unable to determine whether the fees were “‘excessive under the circumstances.’” It noted that many of its “sister circuits have found implausible similar complaints in which the plaintiffs ‘allege[d] next to nothing about the recordkeeping services provided by the Plan or by the . . . lower-priced comparators.’” The court further noted that the complaint lacked “specific allegation that Empower’s competitors could have stood in its shoes for less money.”