U.S. Magistrate Judge Nathanael M. Cousins of the U.S. District Court for the Northern District of California found plaintiffs in a 401(k) excessive fee case against Fujitsu Technology and Business of America adequately pled the causes of action for breach of fiduciary duty under the Employee Retirement Income Security Act (ERISA).
As a result, Cousins denied motions to dismiss the case. Fujitsu argued that the statute of limitations under ERISA in this circumstance should be interpreted to run three years, not six. The company suggested plaintiffs lacked standing to allege claims regarding investment options they did not choose, and that plaintiffs failed to plausibly allege claims for breach of fiduciary duty and failure to monitor.
Cousins declined to take “judicial notice” of the extensive plan documentation both parties provided, and limited his review to whether the facts alleged in the complaint, when taken as true, survive the plausibility standard on a motion to dismiss.
As for the statute of limitations motion, Cousins noted that the “inquiry into plaintiffs’ actual knowledge is entirely factual, requiring examination of the record.” He said at this stage in the proceedings, he must take all facts alleged in the complaint as true. He declined to make the factual finding that plaintiffs must or could have known of the transaction at issue on the date of the issuance of the relevant Form 5500 to which the defendants point as evidence of the plaintiffs’ actual knowledge. “Plaintiffs may proceed with the claims under the six-year statute of limitations,” Cousins wrote in his order.
Regarding the challenge to plaintiffs’ standing on investment options in which they did not invest, Cousins said this will be resolved at the class certification stage of the proceedings.
In their lawsuit, the plaintiffs called the Fujitsu plan one of the most expensive in the country and specifically called out the design and implementation of the plan’s custom target-date funds (TDFs).
Cousins was not persuaded by defendants’ arguments that plaintiffs’ allegations must fail as a matter of law. “The Court has reviewed the case law and arguments and concludes that plaintiffs’ allegations are within the realm of plausible allegations,” he wrote.