Matula v. Wells Fargo & Company

Background

Thomas O. Matula, Jr., a former Wells Fargo employee and participant in the Wells Fargo & Company 401(k) Plan, brought this action under the Employee Retirement Income Security Act (ERISA), individually and on behalf of a proposed class of plan participants and beneficiaries. He alleged that Wells Fargo, the Human Resources Committee of the Board of Directors of Wells Fargo, and the Wells Fargo Employee Benefit Review Committee improperly used forfeited, nonvested plan funds to reduce future employer matching contributions rather than allocating those funds for participants’ benefit.

The plan allowed forfeited funds to be used as a credit against employer contributions, to pay plan expenses, or to make corrective adjustments to accounts, as determined by the plan administrator. Matula alleged that about $2,020,000 in employer contributions were offset in 2022. He asserted claims for breach of fiduciary duty, violation of ERISA’s anti-inurement provision, violation of ERISA’s prohibited-transactions provision, and failure to monitor fiduciaries. He sought damages for the alleged misuse of the funds.

Motion to Dismiss and Standing

Wells Fargo moved to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Rule 12(b)(1) addresses the court’s subject-matter jurisdiction, including whether a plaintiff has standing to sue. Rule 12(b)(6) addresses whether a complaint states a legally sufficient claim. The court addressed standing first.

To establish Article III standing, a plaintiff must show a concrete and particularized injury, a connection between that injury and the defendant’s conduct, and a likelihood that a court decision would remedy the injury. Matula asserted two theories of injury.

First, Matula argued that Wells Fargo should have used forfeited funds to pay optional participant services, operating expenses, and other plan expenses. The court interpreted the plan to authorize forfeited funds for necessary administrative expenses, such as recordkeeping, accounting, legal, and trustee services. It concluded that the plan did not authorize using those funds for optional participant services or operating expenses charged based on investment decisions. Because the plan did not require Wells Fargo to use forfeited funds for those purposes, Matula was not injured by Wells Fargo’s failure to do so.

Second, Matula argued that Wells Fargo should have used forfeited funds to make additional payments to his individual account through corrective adjustments. The court interpreted the plan’s corrective-adjustment provision as allowing corrections for mathematical or accounting errors, not arbitrary extra payments to participants. Matula did not allege that he had been denied an adjustment needed to correct an error in his account. The court therefore concluded that he also lacked standing under this theory.

Ruling

The court held that Matula had not alleged an injury in fact and therefore lacked Article III standing. Without standing, the court lacked subject-matter jurisdiction. Because the standing issue resolved the case, the court did not analyze whether Matula had released his claims or whether he had stated a claim for each cause of action.

Judge John R. Tunheim granted the defendants’ motion to dismiss. The court dismissed the complaint with prejudice and directed that judgment be entered.