Batt v. 3M Company

Case

Batt v. 3M Company, File No. 25-cv-3149 (ECT/DTS)

Judge

Eric C. Tostrud

Date

March 10, 2026

Background and Parties Plaintiffs Jennifer Batt, Madhu Chandnani, Karen Davison, and Willard Jenkins are current or former employees of 3M Company who participated in either the 3M Voluntary Investment Plan and Employee Stock Ownership Plan ('VIP Plan') or the 3M Savings Plan (collectively, 'the Plans'). The Plans are participant-directed defined-contribution plans — meaning each participant has an individual account and investment results depend on investment choices made. In 2023, the Plans had approximately 58,127 participants and about $12.4 billion in assets. About $3.78 billion (roughly 30%) was invested in the '3M TDF Series,' a suite of custom target-date funds modeled after BlackRock LifePath TDFs and the only target-date option available in the Plans.

Defendants are 3M Company (plan sponsor, named fiduciary, and administrator), the Board of Directors of 3M, the 3M Benefits Fund Investment Committee (responsible for designating investment options), and 3M Investment Management Corporation (a wholly owned subsidiary providing investment advice to plan participants).

Legal Framework Plaintiffs sued under ERISA, 29 U.S.C. § 1001 et seq., which imposes a 'duty of prudence' on plan fiduciaries requiring them to act 'with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use.' 29 U.S.C. § 1104(a)(1)(B). Eighth Circuit precedent (Matousek v. MidAmerican Energy Co., 51 F.4th 274 (8th Cir. 2022)) focuses on the fiduciary's decision-making process, not outcomes, and requires a plaintiff at the pleading stage to allege a 'sound basis for comparison — a meaningful benchmark' to nudge an inference of imprudence from possible to plausible.

Claims - Count I: Breach of duty of prudence by retaining the 3M TDF Series as plan investment options (29 U.S.C. § 1104). - Count II: Failure to monitor those owing fiduciary duties to the Plans (derivative of Count I; both parties agreed it could not survive without a plausible Count I).

Alleged Benchmarks and Underperformance Plaintiffs offered two benchmark sets: (1) the S&P Target Date Indices, with each 3M TDF vintage paired against the corresponding S&P index (e.g., 3M 2025 TDF vs. S&P 2025 Target Date Index); and (2) corresponding target-date fund series from T. Rowe Price, Fidelity, Vanguard, and American Funds for each of seven vintages (2025 through 2055). Plaintiffs alleged that from 2014 to 2023, the 3M TDF Series underperformed both benchmark sets on annual and trailing 3-, 5-, and 10-year bases. Trailing 10-year underperformance versus the comparator TDFs ranged from approximately -9.98 to -12.98 percentage points. Trailing 10-year underperformance versus the S&P Indices ranged from approximately -3.69 to -5.03 percentage points.

Court's Analysis — S&P Indices The court found the S&P Indices were not plausibly meaningful benchmarks. First, the allegation that 51% of TDFs use the S&P Indices as their primary benchmark was unhelpful — it equally shows that roughly half of TDFs do not use them. Second, the allegation that the S&P Indices 'cover a wide range' of TDF strategies was effectively just saying the indices cover all TDFs, which does not establish that these specific funds share like composition. Third, unlike in Braden v. Wal-Mart Stores, Inc., 588 F.3d 585 (8th Cir. 2009), there was no allegation that the 3M TDF Series were designed to track the S&P Indices. The court distinguished cases plaintiffs cited (Snyder, Parker-Hannifin, etc.) on grounds including that Snyder predated Matousek's stricter standard, Kistler and Brown-Davis applied a more lenient pleading standard than the Eighth Circuit requires, and Parker-Hannifin involved stronger allegations that the funds mimicked index-based strategies. The court also found the S&P underperformance figures (roughly 3.7–5.0 percentage points over 10 years, with considerable overperformance in recent years) did not plausibly state a claim even if the benchmark were valid.

Court's Analysis — Comparator TDFs The court found the comparator TDF suites were also not plausibly meaningful benchmarks. The allegation that all TDFs rebalance toward conservative holdings over time is too generic — the Eighth Circuit in Meiners v. Wells Fargo & Co., 898 F.3d 820 (8th Cir. 2018), found a Vanguard TDF was not a meaningful benchmark for Wells Fargo TDFs because they used different investment strategies. The allegation that the funds share 'size, category, and risk ratio' was too conclusory — shared 'category' meant only that they are all TDFs; shared 'risk ratio' was unsubstantiated by any identified specific metric. The available prospectuses and fact sheets (covering only 2 of 7 3M TDF vintages and 3 of 28 comparator TDFs) showed material differences: the 3M funds use 'to' retirement glide paths (reaching most conservative composition at retirement and staying static), while American Funds and Vanguard comparators use 'through' retirement glide paths (continuing to shift after retirement). Asset allocations also differed materially — for example, the 3M 2040 TDF had roughly 1% bonds and 45% non-U.S. stocks from 50 to 40 years before retirement, while the Vanguard 2040 TDF held about 10% bonds and 35% non-U.S. stocks. Asset class terminology across prospectuses was also incompatible, making direct comparison unreliable. The allegation that 3M would have replaced its TDFs with one of the four comparator series because the 'TDF market is top heavy' was deemed speculative. Shared Morningstar category designation, while considered by some courts, was found insufficient under Matousek's stricter standard without more.

Hypothetical — If Benchmark Were Plausible The court noted that the trailing 10-year underperformance figures versus the comparator TDFs (-9.98 to -12.98 percentage points) would likely have been sufficient to state a claim had a meaningful benchmark been established, citing Snyder and Patterson v. Morgan Stanley. The court found occasional overperformance did not undermine that showing. By contrast, the S&P underperformance figures were more moderate and inconsistent, and the court concluded they would not have plausibly stated a claim even with a valid benchmark.

Disposition Judge Tostrud granted Defendants' Rule 12(b)(6) motion to dismiss (a motion arguing the complaint fails to state a legally sufficient claim on its face) and dismissed the complaint without prejudice. Dismissal without prejudice means plaintiffs may refile. The court declined 3M's request for dismissal with prejudice, finding that plaintiffs could conceivably replead facts establishing a meaningful benchmark. Plaintiffs were ordered to file any amended complaint by March 31, 2026; failure to do so will result in automatic conversion to a with-prejudice dismissal barring refiling.