United States District Court, S.D. New York
August 25, 2005.
ISADORE FISHER, JANNA M. WOOTEN, KELLI M. BUNN, TAMMY T. SOILEAU and AMY K. HARVEY, on Behalf of Themselves and a Class of Persons Similarly Situated, and on Behalf of the JP Morgan Chase 401(k) Savings Plan, Plaintiffs,
J.P. MORGAN CHASE & CO., J.P. MORGAN INVESTMENT SERVICES, THE PLAN INVESTMENT MANAGEMENT COMMITTEE, THE BENEFITS FIDUCIARY COMMITTEE, INA R. DREW, DINA DUBLON, PATRICK L. EDSPARR, JOHN J. FARRELL, PETER H. KOPP, MARIA ELENA LAGOMASINO, BLYTHE S. MASTER, EDWARD L. McGANN, MARC J. SHAPIRO, JOHN C. WILMOT, RICHARD DONALDSON JR., WILLIAM B. HARRISON, MARC J. SHAPIRO, HANS W. BECHERER, RILEY P. BECHTEL, FRANK A. BENNACK, JR., LAWRENCE A. BOSSIDY, M. ANTHONY BURNS, H. LAURANCE FULLER, ELLEN V. FUTTER, WILLIAM H. GRAY, III, WILLIAM B. HARRISON, JR., HELENE L. KAPLAN, LEE R. RAYMOND, JOHN R. STAFFORD, LLOYD D. WARD and JOHN DOES 1-30, Defendants.
The opinion of the court was delivered by: SIDNEY STEIN, District Judge
OPINION & ORDER
Plaintiffs Isadore Fisher, Janna M. Wooten, Kelli M. Bunn,
Tammy T. Soileau and Amy K. Harvey have brought this action for
alleged breaches of fiduciary duty in violation of section 409(a)
of the Employee Retirement Income Security Act of 1974 ("ERISA"),
29 U.S.C. § 1109(a). Plaintiffs, who are present and former
participants in JP Morgan Chase & Co.'s 401(k) Savings Plan (the "Plan"), contend that defendants are fiduciaries with
respect to the Plan who have breached their fiduciary duties in
connection with the investment of Plan funds in JP Morgan Chase &
Co. ("JPM Chase") stock. Plaintiffs have now moved for
certification of the proposed class of Plan participants whose
personal accounts included units of funds that held shares of
common stock of JPM Chase. To the extent plaintiffs' claims are
purportedly brought pursuant to the right of action contained in
ERISA section 502(a)(2), 29 U.S.C. § 1132(a)(2), plaintiffs lack
standing, because they are asserting claims for damages to
individuals on behalf of a subset of Plan participants. Insofar
as plaintiffs bring their claims pursuant to the right of action
contained in ERISA section 502(a)(3), 29 U.S.C. § 1132(a)(3),
they have failed to satisfy their burden to establish compliance
with the requirements of Fed.R.Civ.P. 23. Accordingly,
plaintiffs' motion for class certification is denied.
I. The Proposed Class
Individual participants in the Plan maintained personal
accounts and chose from among a menu of investment options,
including the JP Morgan Chase Stock Fund, which in turn made
investments in the common stock of JPM Chase. (Id. ¶¶ 35-37).
Defendants allegedly violated their fiduciary duties to those
Plan participants whose personal accounts contained units of the
JP Morgan Chase Stock Fund. Accordingly, plaintiffs seek to
certify a class comprised of the following members:
All current and former participants and beneficiaries
of the JP Morgan Chase 401(k) Saving Plan ("Plan")
for whose individual accounts the Plan held shares of
common stock of the Chase Manhattan Corporation
("Chase") and/or JP Morgan Chase & Co. ("JPMC" or the
"Company") (such shares of common stock being held in
the form of units of the J.P. Morgan Stock Fund
and/or the JP Morgan Chase Stock Fund) at any time
from April 1, 1999 to and including January 2, 2003.
Excluded from the Class are Defendants herein,
officers and directors of Defendant JPMC, members of
their immediate families, and the heirs, successors
or assigns of any of the foregoing.
(Pls.' Supplemental Submission in Supp. of Mot. for Class Cert.
at 8). II. Legal Standard for Certification
When considering a motion for class certification, a court
should not address whether the plaintiffs have "stated a cause of
action or will prevail on the merits, but whether the
requirements of [Federal] Rule [of Civil Procedure] 23 are met."
Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178,
94 S. Ct. 2140, 40 L. Ed. 2d 732 (1974) (citation and quotation marks
omitted). The burden is on the proponents of the class to
establish compliance with Rule 23. Amchem Prods., Inc. v.
Windsor, 521 U.S. 591, 614, 117 S. Ct. 2231, 138 L. Ed. 2d 689
(1997); Caridad v. Metro-North Commuter R.R., 191 F.3d 283, 291
(2d Cir. 1999). "Although the determination of whether to certify
a class is not an occasion for an examination of the merits of
the case, a court must conduct a `rigorous analysis' to decide if
the plaintiffs have met their burden of establishing the
prerequisites for certification under Rule 23." Spann v. AOL
Time Warner, Inc., 219 F.R.D. 307, 315 (S.D.N.Y. 2003) (quoting
In re Visa Check/Master Money, 280 F.3d 124, 135 (2d Cir. 2001)
(citation omitted), and Gary Plastic Packaging Corp. v. Merrill
Lynch, Pierce, Fenner & Smith, Inc., 903 F.2d 176, 180 (2d Cir.
Fed.R.Civ.P. 23 provides a two-tiered process for
determining whether certification of a proposed class is
appropriate. First, the Court must examine whether the four
threshold requirements of Fed.R.Civ.P. 23(a) have been met. To
achieve certification, the proponents of the class must show
that: "(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 the claims or defenses of the class, and
(4) the representative parties will fairly and adequately protect
the interests of the class." Fed.R.Civ.P. 23(a). The
proponents must also demonstrate that the action fits into one of
the categories set forth in Fed.R.Civ.P. 23(b). Before determining whether a proposed class satisfies the
requirements of Fed.R.Civ.P. 23, the Court must be satisfied
that plaintiffs possess standing to assert their claims, since
the Court cannot certify a proposed class if the proposed
representatives lack standing to sue. See O'Shea v.
Littleton, 414 U.S. 488, 494, 94 S. Ct. 669, 38 L.Ed.2d 674
(1974); Murray v. U.S. Bank Trust Nat'l Ass'n, 365 F.3d 1284,
1289 n. 7 (11th Cir. 2004); Piazza v. Ebsco Indus., Inc.,
273 F.3d 1341, 1351 (11th Cir. 2001); Carter v. West Publ'g Co.,
225 F.3d 1258, 1267 (11th Cir. 2000); Fallick v. Nationwide
Mutual Ins. Co., 162 F.3d 410, 423 (6th Cir. 1998); Selby v.
Principal Mut. Life Ins. Co., 197 F.R.D. 48, 56 (S.D.N.Y. 2000);
In re Bank of Boston Corp. Sec. Litig., 762 F. Supp. 1525, 1531
(D. Mass 1991); The Canadian St. Regis Band of Mohawk Indians v.
The State of N.Y., 573 F. Supp. 1530, 1533 (N.D.N.Y. 1983).
There are generally two aspects to standing, constitutional
standing pursuant to Article III of the Constitution and
prudential standing, which involves "`judicially self-imposed
limits on the exercise of federal jurisdiction. . . .'" Lerner
v. Fleet Bank, N.A., 318 F.3d 113, 126 (2d Cir. 2003) (quoting
Allen v. Wright, 468 U.S. 737, 751, 104 S. Ct. 3315,
82 L. Ed. 2d 556 (1984)); see also Warth v. Seldin, 422 U.S. 490, 500,
95 S. Ct. 2197, 45 L. Ed. 2d 343 (1975). "Prudential
considerations include `the general prohibitions on a litigant's
raising another person's legal rights, the rule barring
adjudication of generalized grievances more appropriately
addressed in the representative branches, and the requirement
that a plaintiff's complaint fall within the zone of interests
protected by the law invoked.'" Lerner, 318 F.3d at 126
(quoting Allen, 468 U.S. at 751). Included among prudential
considerations is the principle of statutory standing. Id.
Just as the requirement of constitutional standing imposes a
jurisdictional prerequisite to suit, id. at 126-27, so too
prudential standing considerations are generally treated as
jurisdictional. Id. at 127; see also Thompson v. County of
Franklin, 15 F.3d 245, 248 (2d Cir. 1994). The U.S. Court of Appeals for the Second Circuit has held that an
exception to that general rule exists "if merits issues are so
intertwined with the standing issue that any distinction becomes
`exceedingly artificial'" Lerner, 318 F.3d at 127-28 (quoting
Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 97 n. 2,
118 S. Ct. 1003, 140 L. Ed. 2d 210 (1998)). Plaintiffs have not
argued that that exception applies here. The statutory standing
question addressed below is sufficiently distinct from questions
relating to the merits of plaintiffs' causes of action that the
Court may properly adhere to the general rule that prudential
standing considerations constrict the Court's power to entertain
certain actions. The Court has therefore treated plaintiffs'
establishment of statutory standing as a jurisdictional
prerequisite to the perpetuation of this action. See id. at
III. Plaintiffs' Claims
Plaintiffs have brought three breach of fiduciary duty claims
one for imprudent investment, one for misrepresentation or
omission and one for improper supervision of other fiduciaries.
Plaintiffs assert these claims pursuant to two distinct statutory
provisions. The first is contained in ERISA section 502(a)(2),
29 U.S.C. § 1132(a)(2), and allows a participant to bring an action
for appropriate relief pursuant to ERISA section 409(a),
29 U.S.C. § 1109(a), which provides that "[a]ny person who is a
fiduciary with respect to a plan who breaches any of the
responsibilities, obligations, or duties imposed upon fiduciaries
. . . shall be personally liable to make good to such plan any
losses to the plan resulting from such breach. . . ." In other
words, the right of action contained in section 502(a)(2) permits
an individual participant to sue a plan fiduciary for breach of
fiduciary duty on behalf of the relevant plan itself for losses
the plan has suffered. See Mass. Mut. Life Ins. Co. v.
Russell, 473 U.S. 134, 144, 105 S. Ct. 3085, 87 L. Ed. 2d 96
(1985) (explaining that "the entire text of § 409 persuades us
that Congress did not intend that section to authorize any relief except for the plan itself.") Section 502(a)(2) does not
provide individual plan participants a personal right of
recovery. See id.
The second statutory provision pursuant to which plaintiffs
bring their claims is ERISA section 502(a)(3). That section does
create a personal right to sue, but only for an injunction
against a violation of ERISA or the terms of the plan, on the one
hand, or for "other appropriate equitable relief (i) to redress
such violations or (ii) to enforce any provisions of [ERISA] or
the terms of the plan[,]" on the other. 29 U.S.C. § 1132(a)(3).
Section 502(a)(3) does not refer to section 409, and it is
therefore not limited to circumstances in which claims are
brought on behalf of the relevant plan itself. See Milofsky v.
Am. Airlines, Inc., 404 F.3d 338, 346 (5th Cir. 2005). Section
502(a)(3) may only be invoked, however, to bring suit for
traditional equitable remedies See Great-West Life & Annuity
Ins. Co. v. Knudson, 534 U.S. 204, 122 S. Ct. 708,
151 L. Ed. 2d 635 (2002).
Plaintiffs' motion to certify the proposed class is addressed
below first to the extent their claims are purportedly brought on
behalf of the Plan pursuant to ERISA section 502(a)(2) and second
to the extent their claims are brought in their personal
capacities pursuant to ERISA section 502(a)(3).
IV. Claims Brought Pursuant to ERISA Section 502(a)(2)
As discussed above, ERISA section 502(a)(2) does not provide
for the recovery of damages to individuals. Rather, participants
in a plan possess standing to sue pursuant to section 502(a)(2)
only insofar as they assert a cause of action on behalf of the
plan itself. See Russell, 473 U.S. at 144. Here, defendants
urge that plaintiffs lack standing to bring their claims on
behalf of the Plan, because plaintiffs are a subset of Plan
participants i.e, those who included units of the JP Morgan
Chase Stock Fund in their Plan investments who seek recovery
for individualized injuries. Plaintiffs do not dispute that they
seek damages to individuals, but they insist that section
502(a)(2) is available to them nonetheless, because the damages they seek
will flow through the Plan to them on an individual basis.
Because the damages flow through the Plan, plaintiffs argue, they
meet the standing requirements of section 502(a)(2).
The Supreme Court has made plain that liability pursuant to
ERISA section 502(a)(2) is meant to allow for recovery to "the
benefit of the plan as a whole." Russell, 473 U.S. at 140; see
also Lee v. Burkhart, 991 F.2d 1004, 1009 (2d Cir. 1993)
(Russell . . . bars plaintiffs from suing under § 502(a)(2)
because plaintiffs are seeking damages on their own behalf, not
on behalf of the Plan."). This Court will not contravene that
interpretation by accepting plaintiffs' contention that when
damages formalistically pass through a plan on their way to
individual plan participants, they transmute individual
recoveries into a recovery on behalf of the plan as a whole.
See Milofsky, 404 F.3d at 343-44. The Court declines to adopt
that strained position, particularly in light of the Second
Circuit's admonition that the Supreme Court "has repeated its
belief that ERISA's express remedies, as the product of long and
careful study and compromise, should remain exclusive." Gerosa
v. Savasta & Co., 329 F.3d 317, 322 (2d Cir. 2003) (citing Rush
Prudential HMO, Inc. v. Moran, 536 U.S. 355, 375-76,
122 S. Ct. 2151, 153 L. Ed. 2d 375 (2002), and Great-West,
534 U.S. at 209).
Because plaintiffs seek recovery on behalf of a "specific
subclass of participants" and not on behalf of the Plan itself,
they may not invoke the right of action contained in section
502(a)(2). Milofsky, 404 F.3d at 347; see also Lee v.
Burkhart, 991 F.2d 1004, 1009 (2d Cir. 1993); Nechis v. Oxford
Health Plans, Inc., 328 F. Supp. 2d 469, 477 (S.D.N.Y. 2004);
In re Schering-Plough Corp. ERISA Litig., No. Civ. A. 03-1204,
2004 WL 1774760, at *8 (D.N.J. June 28, 2004); Ramsey v.
Formica, No. 1:04-CV-149, 2004 U.S. Dist. LEXIS 9558, at *9-10
(S.D. Ohio Apr. 6, 2004); Bona v. Barasch, No. 01 Civ. 2289,
2003 U.S. Dist. LEXIS 4186, at *27-28 (S.D.N.Y. March 30, 2003); Kishter v. Principal Life Ins. Co., 186 F.Supp.2d 438, 442
(S.D.N.Y. 2002); Gruby v. Brady, 838 F.Supp. 820, 827 (S.D.N.Y.
Plaintiffs are not suing to recoup plan assets, but rather "to
recover benefits to which the class members believe they are
individually entitled." Nechis, 328 F.Supp. 2d at 477. The
injuries of which plaintiffs complain "can only be redressed by
awarding relief to those individual plaintiffs who have
suffered. . . ." Id. As plaintiffs seek to recover for
personalized injuries, they lack standing, "because this case in
essence is about an alleged particularized harm targeting a
specific subset of plan beneficiaries . . . only, and not the
plan generally." Milofsky, 404 F.3d at 347; see also Bona,
2003 U.S. Dist. LEXIS 4186, at *28 ("Section 502(a)(2) . . .
gives Individual Plaintiffs standing to seek monetary relief on
behalf of the respective Employee Benefit Funds, but not on their
own behalf."); Kulesza v. New York Univ. Med. Ctr.,
129 F.Supp.2d 267, 271 (S.D.N.Y. 2001) ("[A] beneficiary suing in his or her
individual capacity lacks standing to seek damages for breach of
fiduciary duty under ERISA.").
Without standing to pursue their claims pursuant to section
502(a)(2), plaintiffs cannot achieve certification of the
proposed class pursuant to Fed.R.Civ.P. 23. Indeed, in light of
the absence of standing, plaintiffs' claims must be dismissed to
the extent they are purportedly brought pursuant to the right of
action contained in ERISA section 502(a)(2). See Fed.R.Civ.P.
12(h)(3); Lerner v. Fleet Bank, N.A., 318 F.3d 113, 127 (2d
V. Claims Brought Pursuant to ERISA Section 502(a)(3)
Section 502(a)(3) of ERISA, on the other hand, does provide
individual participants a personal right of action to bring
claims to enjoin practices that violate ERISA or the relevant
plan, or to "obtain other appropriate equitable relief. . . ."
29 U.S.C. § 1132(a)(3). The Supreme Court has interpreted section
502(a)(3) to contemplate only the type of relief "typically
available in equity (such as injunction, mandamus, and
restitution, but not compensatory damages)." Mertens v. Hewitt
Assocs., 508 U.S. 248, 256, 113 S. Ct. 2063, 124 L.Ed. 2d 161
(1993) (emphasis in original); see also Great-West Life &
Annuity Ins. Co. v. Knudsen, 534 U.S. 204, 210, 122 S. Ct. 708,
115 L.Ed. 2d 635 (2002). Compensatory damages historically
legal, not equitable, relief are unavailable pursuant to
section 502(a)(3). See Great-West, 534 U.S. at 210; Gerosa
v. Savasta & Co., Inc., 329 F.3d 317, 321 (2d Cir. 2003)
("Classic compensatory and punitive damages are never included
within `other appropriate equitable relief.'") (quoting
29 U.S.C. § 1132(a)(3)); Caffey v. Unum Life Ins. Co., 302 F.3d 576, 583
(6th Cir. 2002); Lee v. Burkhart, 991 F.2d 1004, 1011 (2d Cir.
1993). According to the Supreme Court, plaintiffs may invoke
section 502(a)(3) "not to impose personal liability on the
defendant, but to restore to the plaintiff particular funds or
property in the defendant's possession." Great-West,
534 U.S. at 216.
Insofar as plaintiffs' claims are brought for traditional
equitable remedies pursuant to the right of action contained in
section 502(a)(3), the court must now determine whether
plaintiffs have satisfied the four prerequisites set forth in
A. Fed.R.Civ.P. 23(a) Factors
To merit certification as a class, the proposed class must
comply with Fed. R Civ. P. 23. Both the proposed class and its
representatives must meet all the requirements included in
Fed.R.Civ.P. 23(a), and the action must fit into at least one of
the categories set forth in Fed.R.Civ.P. 23(b). Fed.R. Civ.
P. 23(a)'s four requirements are usually given the shorthand
titles of numerosity, commonality, typicality and adequacy of
1. Fed.R.Civ.P. 23(a)(1): Numerosity Fed.R.Civ.P. 23(a)(1) mandates that a class may only be
certified when it is "so numerous that joinder of all members is
impracticable." Plaintiffs need not show that joinder is
impossible, see Robidoux v. Celani, 987 F.2d 931, 935 (2d
Cir. 1993), nor need they know the exact number of class members,
see Banyai v. Mazur, 205 F.R.D. 160, 163 (S.D.N.Y. 2002).
Rather, numerosity depends upon "examination of the specific
facts of each case and imposes no absolute limitations." Gen.
Tel. Co. of the N.W., Inc. v. E.E.O.C., 446 U.S. 318, 330,
100 S. Ct. 1698, 64 L. Ed. 2d 319 (1980). Certification is
appropriate when the number of class members is sufficiently
large such that joinder of all members would make litigation
needlessly complicated and inefficient. See Banyai,
205 F.R.D. at 163.
2. Fed.R.Civ.P. 23(a)(2): Commonality
The second prerequisite for certification pursuant to
Fed.R.Civ.P. 23(a) is that there be "questions of law or fact common
to the class." Commonality is established if the plaintiffs' and
proposed class members' grievances share a common question of law
or fact. See Marisol A. v. Giuliani, 126 F.3d 372, 376 (2d
Cir. 1997). Commonality is essential, because the class action
device is meant to conserve resources by allowing for efficient
adjudication of common disputes. See Gen. Tel. Co. of the S.W.
v. Falcon, 457 U.S. 147, 155, 102 S. Ct. 2364, 72 L. Ed. 2d 740
3. Fed.R.Civ.P. 23(a)(3): Typicality
The third precondition to certification is that "the claims or
defenses of the representative parties are typical of the claims
or defenses of the class." Fed.R.Civ.P. 23(a)(3). Plaintiffs
are typical of the class when "`each class member's claim arises
from the same course of events, and each class member makes
similar legal arguments to prove the defendant's liability.'"
Marisol A., 126 F.3d at 376 (quoting In re The Drexel Burnham
Lambert Group, Inc., 960 F.2d 285, 291 (2d Cir. 1992)). It is axiomatic that the "class representative must
be part of the class and possess the same interest and suffer the
same injury as the class members." Falcon, 457 U.S. at 156
(quotation marks and citations omitted).
4. Fed.R.Civ.P.23(a)(4): Adequacy of Representation
The fourth prerequisite to class certification contained in
Fed.R.Civ.P. 23(a) is that representative parties "will fairly
and adequately protect the interests of the class." Adequacy of
representation entails a two-pronged inquiry: (1) class counsel
must be "qualified, experienced, and generally able to conduct
the litigation" and (2) class members must not have interests
antagonistic to those of other class members. Drexel Burnham,
960 F.2d at 291 (quotation marks and citations omitted).
B. Application of the Fed.R.Civ.P. 23(a) Factors
Plaintiffs have demonstrated that the proposed class is "so
numerous that joinder of all members is impracticable."
Fed.R.Civ.P. 23(a)(1). They have represented that the proposed class
includes "at least thousands, and more likely tens of thousands
of members" (Pl.'s Mem. in Supp. of Mot. for Class Certification
at 9), and defendants have not disputed that assertion. The Court
concludes that the proposed class is sufficiently numerous to
satisfy the requirement of Fed.R.Civ.P. 23(a)(1).
Plaintiffs have failed, however, to make a proper showing of
commonality, typicality or adequacy of representation. The Court
cannot gauge the degree to which plaintiffs are similarly
situated to the members of the proposed class and able to
represent them adequately vis-à-vis any right to obtain
traditional equitable relief, because plaintiffs' complaint
sounds entirely in recovery of compensatory damages to
individuals for alleged breaches of fiduciary duty. Plaintiffs
simply state that they "seek? equitable relief" (Am. Compl. ¶ 2)
and "the Court should award equitable relief" (Am. Compl. ¶¶ 74, 84; see also Prayer for Relief ¶¶ C,
D, E, J), but they have not alleged any facts that set forth a
theory of entitlement to that relief. In spite of the vague
requests, "neither plaintiff[s'] nor the court's own ingenuity
suggest a form of . . . equitable relief that would be
appropriate." Kishter v. Principal Life Ins. Co.,
186 F. Supp. 2d 438, 446 (S.D.N.Y. 2002). Plaintiffs have failed to cure that
deficiency in their motion for class certification.
Although the Court should not engage in an evaluation of the
merits of the action when determining whether to certify a class,
see Spann v. AOL Time Warner, Inc., 219 F.R.D. 307, 315
(S.D.N.Y. 2003), plaintiffs cannot evade their obligation to
demonstrate that the requirements of Fed.R.Civ.P. 23(a) have
been met by failing to support their claims with any substantive
allegations. See Thomas v. Aris Corp. of America,
219 F.R.D. 338, 340 (M.D. Pa. 2003) ("[W]ithout reasonable specificity the
court cannot . . . determine whether the representation is
adequate. . . .") (citations and quotation marks omitted); see
also 2 Newberg on Class Actions § 6:21 (4th ed.) ("If the
pleadings are vague or conclusory, or if they are so generally
drawn that they fail to demonstrate typicality, of if they show
no relation between the interests of the plaintiff and of the
class, then class certification will be denied."). Plaintiffs'
vague, conclusory requests for equitable relief coupled with
their contention that the circumstances justifying equitable
relief will become evident as the litigation progresses (see
Pls.' Supplemental Submission in Supp. of Mot. for Class Cert. at
7-8) do not satisfy plaintiffs' burden to show that certification
of the proposed class is warranted. See Rossini v. Ogilvy &
Mather, Inc., 798 F.2d 590, 597-98 (2d Cir. 1986). There may be
highly specific, individualized fact issues relating to whether
or not each plaintiff is entitled to the vaguely requested
equitable relief. See Liberty Lincoln Mercury, Inc. v. Ford
Mktg. Corp., 149 F.R.D. 65 (D.N.J. 1993). Accordingly,
plaintiffs have failed to discharge their burden to establish commonality, typicality and adequacy of representation. See
Fed.R.Civ.P. 23(a); Cruz v. Coach Stores, Inc.,
202 F.3d 560, 573 (2d Cir. 2000).
C. Fed.R.Civ.P. 23(b) Factors
Plaintiffs have not only failed to meet their burden with
respect to the Fed.R.Civ.P. 23(a) factors, but have also
failed to make an adequate showing that this action fits into one
of the categories set forth in Fed.R.Civ.P. 23(b). Plaintiffs
contend that each of the Rule 23(b) categories is applicable to
this action, but have failed to substantiate that contention with
respect to any of the Rule 23(b) categories.
Fed.R.Civ.P. 23(b)(1) permits a class to be certified when
the prosecution of separate actions by class members would create
the risk of either inconsistent adjudications or obligations on
the party opposing the class on the one hand, see Fed.R. Civ.
P. 23(b)(1)(A), or "adjudications with respect to individual
members of the class which would as a practical matter be
dispositive of the interests of the other members not parties to
the adjudications or substantially impair or impede their ability
to protect their interests[,]" on the other hand, see
Fed.R.Civ.P. 23(b)(1)(B). Fed.R.Civ.P. 23(b)(2) allows for
certification when "the party opposing the class has acted or
refused to act on grounds generally applicable to the class,
thereby making appropriate final injunctive relief or
corresponding declaratory relief with respect to the class as a
whole[.]" Fed.R.Civ.P. 23(b)(3) provides for certification
the court finds that questions of law or fact common
to the members of the class predominate over any
questions affecting only individual members, and that
a class action is superior to other available methods
for the fair and efficient adjudication of the
controversy. The matters pertinent to the findings
include: (A) the interest of the members of the class
in individually controlling the prosecution or
defense of separate actions; (B) the extent and
nature of any litigation concerning the controversy
already commenced by or against members of the class;
(C) the desirability or undesirability of
concentrating the litigation of the claims in the
particular forum; (D) the difficulties likely to be
encountered in management of a class action. As plaintiffs' theory of entitlement to traditional equitable
remedies is wholly unclear, the Court cannot assess whether the
maintenance of separate actions by class members would create the
possibility of "inconsistent or varying adjudications[.]" See
Fed.R.Civ.P. 23(b)(1)(A); see also Spann,
219 F.R.D. at 321. Moreover, it cannot be determined how adjudications
respecting the interests of proposed certain class members will
impact the interests of other proposed class members. See
Fed.R.Civ.P. 23(b)(1)(B). Cf. Banyai, 205 F.R.D. at 165.
Similarly, the Court cannot ascertain whether defendants have
acted or failed to act on grounds generally applicable to the
class in a manner that would warrant final injunctive relief with
respect to the class as a whole. See Fed.R.Civ.P. 23(b)(2);
see also Robinson v. Metro-North Commuter R.R. Co.,
267 F.3d 147, 162 (2d Cir. 2001). Lastly, plaintiffs have failed to
establish that common issues will likely predominate over
individualized issues. See Fed.R.Civ.P. 23(b)(3); see also
Moore v. PaineWebber, Inc., 306 F.3d 1247, 1252 (2d Cir. 2002)
(citing Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623,
117 S. Ct. 2231, 138 L. Ed. 2d 689 (1997)). Indeed, to the extent
that participants are entitled to traditional equitable remedies,
it seems likely that individualized issues such as for example
the tracing of specific, identifiable sums of money for equitable
restitution purposes will predominate.
Plaintiffs have failed to demonstrate that any of the
Fed.R.Civ.P. 23(b) categories applies to the claims in this action
insofar as they are brought for traditional equitable remedies
pursuant to ERISA section 502(a)(3).
To the extent plaintiffs purport to bring their claims pursuant
to ERISA section 502(a)(2), they lack standing, and their claims
must be dismissed. To the extent plaintiffs assert their claims pursuant to ERISA section 502(a)(3), they have failed to satisfy
their burden to show compliance with the requirements of
Fed.R.Civ.P. 23. Accordingly, plaintiffs' motion for class
certification pursuant to Fed.R.Civ.P. 23 is denied.
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