Haddock v. Nationwide Financial Services Inc.
Standardized terms in contracts that govern the relationship between an alleged ERISA fiduciary and ERISA plans can provide evidence of a uniform investment process and help the plaintiffs prove, by a preponderance of the evidence, that questions of law or fact common to class members predominate over questions that affect individuals. The plaintiff trustees of ERISA pension plans that held group or individualized annuity contracts with Nationwide alleged breach of fiduciary duty, in violation of the Employee Retirement Income Security Act. The plaintiffs alleged that Nationwide received profits from revenue sharing payments that belonged to the ERISA plans. To prevail, the plaintiffs must prove: 1.) Nationwide was a fiduciary to the ERISA plans; and 2.) Nationwide's acceptance of revenue sharing payments breached its fiduciary duty. Nationwide is a fiduciary to the extent it exercises authority or control respecting management of plan assets. In November 2009, the District Court granted class-action certification. Nationwide appealed. The 2nd Circuit vacated in part the District Court's 2009 decision on class-action certification and remanded, in light of the U.S. Supreme Court's decision in Wal-Mart Stores Inc. v. Dukes. Wal-Mart narrowed Rule 23(b)(2)'s reach over class-action complaints for individual claims for money relief in addition to injunctive or declaratory relief. The District Court's earlier conclusions pursuant to Federal Rule of Civil Procedure 23(a) remain valid. The District Court rejected Nationwide's attempt to persuade the court to consider de novo the issues of whether the putative class meets requirements for numerosity, commonality, typicality and adequacy of representation. On remand, the District Court considered the plaintiffs' renewed motion for class certification under Rule 23(b). Because the plaintiffs' legal theories rely on Nationwide's contracts with ERISA plans, which allegedly are identical across the class, a class action is appropriate. Standardized terms in contracts that govern the relationship between Nationwide and ERISA plans provide evidence of Nationwide's uniform investment process. Questions of law or fact common to class members predominate over questions affecting only individuals. A class action provides an appropriate method to fairly and efficiently resolve the dispute. The District Court granted the plaintiffs' renewed motion for class-action certification.