Anderson v. Advance Publications, Inc.

Background

Jermaine Anderson, individually and as a representative of a proposed class, sued Advance Publications, Inc. on behalf of the Advance 401(k) Plan. Anderson alleged that Advance breached fiduciary duties imposed by the Employee Retirement Income Security Act, a federal law governing employee-benefit plans. The amended complaint alleged violations of duties of loyalty, prudence, and compliance with Plan documents, as well as failure to monitor fiduciaries, co-fiduciary breaches, and knowing breach of trust.

The Plan is a participant-directed 401(k) plan that offered BlackRock LifePath Index target-date funds. Anderson alleged that those funds performed worse than various alternatives and that Advance acted imprudently by retaining them. Advance moved to dismiss the amended complaint under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not state a legally sufficient claim.

Court’s analysis

The court dismissed the duty-of-loyalty claim because Anderson did not contest Advance’s argument that the claim lacked supporting facts. The court also concluded that the amended complaint did not sufficiently allege a breach of the duty of prudence. In the court’s view, allegations that the BlackRock funds underperformed, without facts supporting an inference of an unreasonable investment or monitoring process, were insufficient. The court did not need to decide Advance’s separate argument that the alleged comparison funds and performance indexes were improper benchmarks.

The court dismissed the claim that Advance failed to act according to the Plan documents for the same reasons it dismissed the loyalty claim. It also dismissed the failure-to-monitor, co-fiduciary-breach, and knowing-breach-of-trust claims because those claims were derivative of the underlying fiduciary-breach claims.

Rulings

Advance’s motion to dismiss the amended complaint with prejudice was granted in part and denied in part. Specifically, the court granted the motion to dismiss each asserted cause of action for failure to state a claim. The court denied Advance’s request to dismiss the amended complaint with prejudice because the identified deficiencies might be cured by amendment. It granted Anderson leave to amend and stated that he could file a second amended complaint by June 27, 2023.

The court dismissed the amended complaint without prejudice. It also denied Anderson’s pending motion for class certification and related motion to seal without prejudice to renewal. Judge Analisa Torres adjourned the scheduled case-management conference indefinitely and directed the Clerk of Court to terminate the listed motions.