Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Bruce Laboy, Individually, On Behalf of A Class of All Others v. Board of Trustees of Building Service 32 Bj Srsp

August 7, 2012

BRUCE LABOY, INDIVIDUALLY, ON BEHALF OF A CLASS OF ALL OTHERS SIMILARLY SITUATED, AND ON BEHALF OF THE BUILDING
SERVICE 32 BJ SRSP FUND, PLAINTIFF,
v.
BOARD OF TRUSTEES OF BUILDING SERVICE 32 BJ SRSP, HOWARD I. ROTHSCHILD, JOHN SANTORA, CHARLES DOREGO, FRED WARD, MICHAEL P. FISHMAN, KEVIN J. DOYLE, HECTOR J. FIGUEROA, BRIAN LAMBERT AND LARRY ENGLESTEIN, DEFENDANTS.



The opinion of the court was delivered by: Hon. Harold Baer, Jr., District Judge:

OPINION AND ORDER

Before the Court is a motion to dismiss the Second Amended Complaint ("SAC") brought by the Board of Trustees of Building Service 32BJ Supplemental Retirement Savings Plan ("SRSP" or the "Plan"), Howard I. Rothschild, John Santora, Charles Dorego, Fred Ward, Michael P. Fishman, Kevin J. Doyle, Hector J. Figueroa, Brian Lambert, and Larry Englestein (collectively, "Defendants"). Plaintiff Bruce Laboy ("Laboy"), a participant in the Building Service 32BJ SRSP, brought a putative Class Action Complaint that alleged claims against the Trustees for breach of fiduciary duty under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). For the reasons set forth below, the motion to dismiss the SAC is GRANTED.

BACKGROUND

The background of this case is available in my earlier opinion, in which I granted Defendants' motion to dismiss the First Amended Complaint ("FAC"), but granted Laboy leave to replead. See Laboy v. Board of Trustees of Building Service 32 BJ SRSP, No. 11 Civ. 5127, 2012 WL 701397 (S.D.N.Y. Mar. 6, 2012). I summarize it again here. Local 32BJ is a union with more than 120,000 members within the Service Employees International Union. SAC ¶ 20. The Plan against which this wrongdoing is alleged is a defined-contribution 401(k) plan that helps covered members save for retirement. Id. at ¶ 21. Defendants selected Putnam Investments to provide investment services to Plan participants from January 1, 2001 until June 2011. Id. at ¶ 28. Plan participants had the option of self-directing investments among fourteen alternative funds (the "Alternative Funds") or allowing their funds to be invested in the default fund, Putnam Asset Allocation: Conservative Portfolio (the "Default Fund"). Id. at ¶¶ 30, 34, 42.

DISCUSSION

A. Legal Standard

According to the Supreme Court's most recent pronouncements, "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556). The requirement that the court accept all factual allegations as true does not apply to "mere conclusory statements." Id. The court's determination of whether a complaint states a "plausible claim for relief" is a "context-specific task" that requires application of "judicial experience and common sense." Id. at 679.

In the ERISA context, the Court may consider the Plan, where it is "directly referenced in the complaint and is the basis of [the] action." Faber v. Metro. Life Ins. Co., No. 08 Civ. 10588, 2009 WL 3415369, at *1 n.1 (S.D.N.Y. Oct. 23, 2009), aff'd, 648 F.3d 98 (2d Cir. 2011).

B. The SAC Fails to State a Claim

The FAC asserted two claims, the first was for breach of fiduciary duty for "selecting and continuing to offer an inappropriate and poorly performing menu of investment choices to plan participants," and the second for "causing and allowing the plan to pay unreasonable fees and expenses." FAC ¶¶ 89-101.*fn1 The sole claim in the SAC alleges breach of fiduciary duties to the SRSP by "failing to prudently manage the plan," SAC ¶¶ 106-115, due to Defendants' (1) failure to implement a prudent procedure to evaluate, monitor and maintain the Default Fund, id. at ¶ 110, and (2) poor and inappropriate investment selection of the Alternative Funds. Id. at ¶ 111. By their motion, Defendants seek dismissal of the SAC with prejudice.

To state a claim for breach of fiduciary duty, a plaintiff must allege that (1) the defendant was the fiduciary of the plan, (2) the defendant's acts or omissions constituted a breach of duty; and (3) the breach caused harm. Pegram v. Herdrich, 530 U.S. 211, 225-26 (2000). Defendants do not dispute that they are plan fiduciaries.

1. Default Fund

The SAC alleges that Defendants breached their fiduciary duties by their failure to implement a prudent procedure to evaluate and monitor the Default Fund. Further, Plaintiff contends that Defendants breached their fiduciary duties by their maintenance of the Default Fund as the Plan's default despite the fact that it was inferior to alternatives, and that Defendants failed to inform themselves and monitor the fees and expenses of the Default Fund or the performance and volatility of the Default Fund compared to alternatives. SAC ¶ 110. In support of this claim, the SAC-like the FAC-alleges that eight comparable funds outperformed the Default Fund over the five-year period beginning October 19, 2006, by amounts between 6.6 percent and 21.8 percent. SAC ¶ 68; FAC ¶¶ 61-70.*fn2 However, "the ultimate outcome of an investment is not proof of imprudence or breach of fiduciary duties." Flanigan v. Gen. Elec. Co., 93 F. Supp. 2d 236, 254 (D. Conn. 2000); see also In re Citigroup ERISA Litig., 662 F.3d 128, 140 (2d Cir. 2011) ("We cannot rely, after the fact, on the magnitude of the decrease. . . rather, we must consider the extent to which plan fiduciaries at a given point in time reasonably could have predicted the outcome that followed.").*fn3

Instead of a separate claim for breach of fiduciary duty due to "unreasonable fees and expenses," FAC ¶¶ 89-101, the SAC supplements its failure to monitor claim with assertions that these eight comparable funds had the same or lower expense ratios. SAC ¶ 68.*fn4 Laboy's decision to move the excessive fee and expense allegations from their own independent claim in the FAC and use them to supplement the claim for imprudence due to failure to monitor in the SAC amounts to little more than cutting and pasting. For ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.