24-1279-cv Boyette v. Montefiore Medical Ctr.
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 8th day of January, two thousand twenty-five.
PRESENT: AMALYA L. KEARSE, REENA RAGGI, RAYMOND J. LOHIER, JR., Circuit Judges. ------------------------------------------------------------------ SHEILA A. BOYETTE, individually and on behalf of all others similarly situated, TIFFANY JIMINEZ, individually and on behalf of all others similarly situated,
Plaintiffs-Appellants,
v. No. 24-1279-cv
MONTEFIORE MEDICAL CENTER, THE BOARD OF TRUSTEES OF MONTEFIORE MEDICAL CENTER, THE TDA PLAN COMMITTEE, DR. MICHAEL STOCKER,
Defendants-Appellees. *
------------------------------------------------------------------
FOR APPELLANTS: MARK K. GYANDOH, Capozzi Adler, P.C., Merion Station, PA
FOR APPELLEES: MICHAEL B. KIMBERLY, McDermott Will & Emery LLP, Washington, DC (Charles Seidell, McDermott Will & Emery LLP, Washington, DC, John J. Calandra, McDermott Will & Emery LLP, New York, NY, on the brief)
Appeal from a judgment of the United States District Court for the
Southern District of New York (John G. Koeltl, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of the District Court is AFFIRMED.
Appellants Sheila Boyette and Tiffany Jiminez appeal from an April 5, 2024
judgment of the United States District Court for the Southern District of New
York (Koeltl, J.) denying as futile their motion for leave to file a third amended
complaint and dismissing the case. Appellants are former Montefiore Medical
* The Clerk of Court is directed to amend the caption as set forth above.
2 Center employees who participate in Montefiore’s 403(b) retirement plan (“the
Plan”). They contend that Appellees, who are responsible for the Plan’s
administration, breached their fiduciary duties under the Employee Retirement
Income Security Act (ERISA), 29 U.S.C. §§ 1002(21)(A), 1104(a), 1105(a), 1109(a),
1132(a), by failing to monitor and control the Plan’s recordkeeping fees. We
assume the parties’ familiarity with the underlying facts and the record of prior
proceedings, to which we refer only as necessary to explain our decision to
affirm.
I. Duty of Prudence
We first consider Appellants’ claim that Appellees managed the Plan
imprudently, resulting in what they allege were the Plan’s unreasonably
excessive recordkeeping fees. The Plan paid for recordkeeping services through
a combination of asset-based fees and revenue sharing, with costs calculated as a
percentage of each participant’s account balance. This resulted in annual per-
participant fees ranging from $34 to $63. 1 The third amended complaint alleges
that a reasonable per-participant fee range is $25 to $30 annually based on
comparisons to other retirement plans.
1 Appellant Jiminez paid at least $31 annually in recordkeeping fees, while Boyette paid “minimal” fees due to her low account balance. App’x 264. 3 “[W]hen denial of leave to file a revised pleading is based on a legal
interpretation, such as futility, a reviewing court conducts a de novo review.”
Balintulo v. Ford Motor Co., 796 F.3d 160, 164 (2d Cir. 2015). A proposed
amendment is futile if it “could not withstand a motion to dismiss pursuant to
[Federal Rule of Civil Procedure] 12(b)(6).” In re IBM Arb. Agreement Litig., 76
F.4th 74, 87 (2d Cir. 2023) (quotation marks omitted). To state a claim for relief,
the complaint in this case must adequately allege a violation of ERISA’s
requirement that fiduciaries 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 in the conduct of an
enterprise of a like character and with like aims.” 29 U.S.C. § 1104(a)(1)(B).
Because ERISA fiduciaries face “difficult tradeoffs,” we “give due regard to the
range of reasonable judgments [they] may make based on [their] experience and
expertise.” Hughes v. Northwestern Univ., 595 U.S. 170, 177 (2022).
Keeping in mind these principles, and in light of our recent decision in
Singh v. Deloitte LLP, 123 F.4th 88 (2d Cir. 2024), which involves substantially the
same claims as here, we affirm.
4 First, although Appellants identify multiple comparator plans with lower
recordkeeping fees to support their claim that the Plan’s fees were excessive, they
fail to show that the Plan’s fees were excessive “relative to the services rendered.”
Id. at 96 (quotation marks omitted) (emphasis added). In Singh, we explained
that a plaintiff alleging excessive recordkeeping fees must provide “meaningful
benchmark[s]” and cannot rely on bare allegations that other plans paid less. Id.
at 95–96. Here, although the third amended complaint identifies several plans
with lower per-participant fees, it fails to establish that these plans are suitable
“apple-to-apple” comparators in terms of services provided and other relevant
characteristics, id. at 95 (quotation marks omitted), especially since plans have
flexibility to customize service packages based on their participants’ needs.
Appellants also assert that recordkeeping services are “fungible” across
providers, making detailed comparisons unnecessary. App’x 277. This
argument fails for two reasons. First, the variation in fees among Appellants’
own comparator plans contradicts their assertion that such services are
standardized and “bel[ies] the implication that the allegation of a cost disparity
alone, without some consideration of the surrounding context, categorically
suggests imprudence.” Singh, 123 F.4th at 95. Second, even if the ranges of
5 services were similar across plans, the complaint fails to sufficiently allege “what
level of service the Plan provided [or] whether less expensive comparator plans
provided a similar quality of service.” Id. at 94 (quotation marks omitted)
(emphasis added).
Nor do Appellants’ remaining allegations move their prudence claim
“from possibility to plausibility.” Id. at 96 (quotation marks omitted).
Appellants allege that Appellees failed to actively manage the Plan’s fees. The
complaint, however, also indicates that Appellees renegotiated the asset-based
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24-1279-cv Boyette v. Montefiore Medical Ctr.
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 8th day of January, two thousand twenty-five.
PRESENT: AMALYA L. KEARSE, REENA RAGGI, RAYMOND J. LOHIER, JR., Circuit Judges. ------------------------------------------------------------------ SHEILA A. BOYETTE, individually and on behalf of all others similarly situated, TIFFANY JIMINEZ, individually and on behalf of all others similarly situated,
Plaintiffs-Appellants,
v. No. 24-1279-cv
MONTEFIORE MEDICAL CENTER, THE BOARD OF TRUSTEES OF MONTEFIORE MEDICAL CENTER, THE TDA PLAN COMMITTEE, DR. MICHAEL STOCKER,
Defendants-Appellees. *
------------------------------------------------------------------
FOR APPELLANTS: MARK K. GYANDOH, Capozzi Adler, P.C., Merion Station, PA
FOR APPELLEES: MICHAEL B. KIMBERLY, McDermott Will & Emery LLP, Washington, DC (Charles Seidell, McDermott Will & Emery LLP, Washington, DC, John J. Calandra, McDermott Will & Emery LLP, New York, NY, on the brief)
Appeal from a judgment of the United States District Court for the
Southern District of New York (John G. Koeltl, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of the District Court is AFFIRMED.
Appellants Sheila Boyette and Tiffany Jiminez appeal from an April 5, 2024
judgment of the United States District Court for the Southern District of New
York (Koeltl, J.) denying as futile their motion for leave to file a third amended
complaint and dismissing the case. Appellants are former Montefiore Medical
* The Clerk of Court is directed to amend the caption as set forth above.
2 Center employees who participate in Montefiore’s 403(b) retirement plan (“the
Plan”). They contend that Appellees, who are responsible for the Plan’s
administration, breached their fiduciary duties under the Employee Retirement
Income Security Act (ERISA), 29 U.S.C. §§ 1002(21)(A), 1104(a), 1105(a), 1109(a),
1132(a), by failing to monitor and control the Plan’s recordkeeping fees. We
assume the parties’ familiarity with the underlying facts and the record of prior
proceedings, to which we refer only as necessary to explain our decision to
affirm.
I. Duty of Prudence
We first consider Appellants’ claim that Appellees managed the Plan
imprudently, resulting in what they allege were the Plan’s unreasonably
excessive recordkeeping fees. The Plan paid for recordkeeping services through
a combination of asset-based fees and revenue sharing, with costs calculated as a
percentage of each participant’s account balance. This resulted in annual per-
participant fees ranging from $34 to $63. 1 The third amended complaint alleges
that a reasonable per-participant fee range is $25 to $30 annually based on
comparisons to other retirement plans.
1 Appellant Jiminez paid at least $31 annually in recordkeeping fees, while Boyette paid “minimal” fees due to her low account balance. App’x 264. 3 “[W]hen denial of leave to file a revised pleading is based on a legal
interpretation, such as futility, a reviewing court conducts a de novo review.”
Balintulo v. Ford Motor Co., 796 F.3d 160, 164 (2d Cir. 2015). A proposed
amendment is futile if it “could not withstand a motion to dismiss pursuant to
[Federal Rule of Civil Procedure] 12(b)(6).” In re IBM Arb. Agreement Litig., 76
F.4th 74, 87 (2d Cir. 2023) (quotation marks omitted). To state a claim for relief,
the complaint in this case must adequately allege a violation of ERISA’s
requirement that fiduciaries 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 in the conduct of an
enterprise of a like character and with like aims.” 29 U.S.C. § 1104(a)(1)(B).
Because ERISA fiduciaries face “difficult tradeoffs,” we “give due regard to the
range of reasonable judgments [they] may make based on [their] experience and
expertise.” Hughes v. Northwestern Univ., 595 U.S. 170, 177 (2022).
Keeping in mind these principles, and in light of our recent decision in
Singh v. Deloitte LLP, 123 F.4th 88 (2d Cir. 2024), which involves substantially the
same claims as here, we affirm.
4 First, although Appellants identify multiple comparator plans with lower
recordkeeping fees to support their claim that the Plan’s fees were excessive, they
fail to show that the Plan’s fees were excessive “relative to the services rendered.”
Id. at 96 (quotation marks omitted) (emphasis added). In Singh, we explained
that a plaintiff alleging excessive recordkeeping fees must provide “meaningful
benchmark[s]” and cannot rely on bare allegations that other plans paid less. Id.
at 95–96. Here, although the third amended complaint identifies several plans
with lower per-participant fees, it fails to establish that these plans are suitable
“apple-to-apple” comparators in terms of services provided and other relevant
characteristics, id. at 95 (quotation marks omitted), especially since plans have
flexibility to customize service packages based on their participants’ needs.
Appellants also assert that recordkeeping services are “fungible” across
providers, making detailed comparisons unnecessary. App’x 277. This
argument fails for two reasons. First, the variation in fees among Appellants’
own comparator plans contradicts their assertion that such services are
standardized and “bel[ies] the implication that the allegation of a cost disparity
alone, without some consideration of the surrounding context, categorically
suggests imprudence.” Singh, 123 F.4th at 95. Second, even if the ranges of
5 services were similar across plans, the complaint fails to sufficiently allege “what
level of service the Plan provided [or] whether less expensive comparator plans
provided a similar quality of service.” Id. at 94 (quotation marks omitted)
(emphasis added).
Nor do Appellants’ remaining allegations move their prudence claim
“from possibility to plausibility.” Id. at 96 (quotation marks omitted).
Appellants allege that Appellees failed to actively manage the Plan’s fees. The
complaint, however, also indicates that Appellees renegotiated the asset-based
fee rate downward — from 0.00073 percent to 0.00037 percent, and later to
0.00029 percent. Such active fee management is at odds with a claim of
imprudence. See, e.g., Matney v. Barrick Gold of N. Am., 80 F.4th 1136, 1156 (10th
Cir. 2023) (finding assertions about imprudent recordkeeping fee management
implausible where, among other factors, “the allegations show [defendants]
‘regularly re-negotiated their fee arrangement . . . resulting in lower costs for
participants’”). And although Appellants also challenge the Plan’s asset-based
fee structure with revenue sharing as imprudent, such arrangements do not
categorically violate ERISA. The general allegations in the complaint do not
suggest that using this structure itself was imprudent.
6 Finally, Appellants rely on a stipulation from Fidelity in an unrelated case
to assert that the value of recordkeeping services provided by Fidelity to the plan
in that litigation ranged from $14 to $21 per participant. We are not persuaded
that the Fidelity plan, which had twice as many participants with five times the
assets as the Plan here, is a relevant comparator. See Singh, 123 F.4th at 96.
II. Failure to Monitor
Because we conclude that Appellants’ underlying duty of prudence claim
fails, their derivative duty to monitor claim fails as well. See Coulter v. Morgan
Stanley & Co. Inc., 753 F.3d 361, 368 (2d Cir. 2014).
We have considered Appellants’ remaining arguments and conclude that
they are without merit. For the foregoing reasons, the judgment of the District
Court is AFFIRMED.
FOR THE COURT: Catherine O’Hagan Wolfe, Clerk of Court