Kanawi v. Bechtel Corp.

254 F.R.D. 102, 2008 U.S. Dist. LEXIS 85196, 2008 WL 4571947
CourtDistrict Court, N.D. California
DecidedOctober 10, 2008
DocketNo. C 06-05566 CRB
StatusPublished
Cited by36 cases

This text of 254 F.R.D. 102 (Kanawi v. Bechtel Corp.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kanawi v. Bechtel Corp., 254 F.R.D. 102, 2008 U.S. Dist. LEXIS 85196, 2008 WL 4571947 (N.D. Cal. 2008).

Opinion

ORDER

CHARLES R. BREYER, District Judge.

Presently before the Court is Plaintiffs’ Renewed Motion for Class Certification. Plaintiffs, Beverly Kanawi and Salvador Aquino, brought this action under ERISA on behalf of all current and former employees of Bechtel Corporation who are participants in the company’s 401(k) retirement plan. Plaintiffs advance claims for breaches of fiduciary duty against: (1) the Bechtel Corporation, which established the plan on behalf of its employees; (2) Peggi Knox, who works as Vice President of Retirement Plans at Bechtel; (3) a corporate committee appointed by Bechtel that administers the Plan (“the Committee”); and (4) Fremont Investment Advis-ors (“FIA”), a corporation that served as the primary advisor and service provider to Bechtel’s Plan.

BACKGROUND

Bechtel offers a 401 (k) retirement plan for its employees, pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”). Third Am. Compl. K1 (hereinafter “TAC”). The Committee, which comprises several Bechtel officers and employees appointed by the company, administers the Plan. Id. 1110. FIA originated from an in-house investment advisory and management [106]*106division of Bechtel. Id. 1t 12. It became an independent corporation in 1986. Id.

The Bechtel Plan is a defined contribution plan in which separate accounts are maintained for each participant, and the retirement benefits each participant will receive are based on the amount of contributions to the participant’s account and the investment performance of those contributions. See 29 U.S.C. § 1002(34); TAC H 24. Plan participants have many investment options and exercise control over their individual accounts. See Knox Decl. H 3, Ex. B at 6-7.

The Plan operates under the auspices of a Master Trust. See TAC 1126. The Master Trust is a legal device that allows multiple ERISA plans to operate together under one corporate umbrella, thereby allowing plan participants to pool their resources and share the costs of running a retirement plan. See id. 111125-27. Here, the Master Trust administers both Bechtel’s Plan and a smaller plan related to another company (“the Becon Plan”), though Bechtel’s Plan constitutes the lion’s share of the assets managed under the Master Trust. Id. lit 26-27.

Plaintiffs’ complaint rests on the theory that Defendants breached their fiduciary duties under ERISA by causing plan participants to incur unnecessary and improper fees in connection with the Plan. Id. tt 33-48. Plaintiffs allege that Defendants engaged in prohibited transactions with FIA. Id. tt 49-52. Plaintiffs further allege that Defendants concealed the true nature of the fees and expenses incurred by the Plan by failing to disclose the details of certain revenue sharing agreements with other related parties who provided services to the Plan. See generally id. tt 77-84. In addition, Plaintiffs allege that Defendants included improper investment options in the Plan. See id. tt 57-70.

Plaintiff Beverly Kanawi worked for Bechtel from 1979 through 1984 and contributed to the Plan during her employment. See Kanawi Dep. at 15:11, 32:12-15. Plaintiff Salvador Aquino was employed by Bechtel from 1979 through 1993, from 2002 through 2005, and again from February 2008 to present. See Aquino Dep. at 21:13-16, 149:24-150:5. Aquino enrolled in the Plan during each period of employment. See id. at 21:9-22:9. Both Plaintiffs became involved in this litigation after reading a newspaper advertisement posted by the Schlichter law firm. See Kanawi Dep. at 38:19-40:2; Aquino Dep. at 25:12-26:5, 36:11-12.

On August 27, 2007, the Court denied without prejudice Plaintiffs’ motion for class certification, indicating that Plaintiffs could renew their motion when they had ample opportunity for discovery. See Aug. 27, 2007 Order. Presently before the Court is Plaintiffs’ Renewed Motion for Class Certification, which is hereby GRANTED.

DISCUSSION

I. Legal Background

Plaintiffs primarily seek relief under ERISA § 502(a)(2), 29 U.S.C. § 1132(a)(2). That section permits a plan participant to bring an action for relief under 29 U.S.C. § 1109(a). Section 1109 provides that a plan fiduciary who breaches his duty shall be personally liable to “make good to such plan any losses to the plan resulting from each such breach____”29 U.S.C. § 1109(a). In the alternative, Plaintiffs seek injunctive relief under ERISA § 502(a)(3).

Suits brought under ERISA § 502(a)(2) have historically been brought in a representative capacity on behalf of a plan. See Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985). In Russell, the Supreme Court emphasized that the text of § 409(a) characterizes the relevant fiduciary relationship as one “with respect to a plan,” and repeatedly identifies the “plan” as the victim of any fiduciary breach. See id. at 140, 105 S.Ct. 3085. The Court concluded, “A fair contextual reading of the statute makes it abundantly clear that its draftsmen were primarily concerned with the possible misuse of plan assets, and with remedies that would protect the entire plan, rather than with the rights of an individual beneficiary.” Id. at 142, 105 S.Ct. 3085. In LaRue v. DeWolff Boberg & Associates, Inc., — U.S. -, 128 S.Ct. 1020, 169 L.Ed.2d 847 (2008), the Supreme Court recognized that, in the defined contribution plan context, a plaintiff may also recover for an injury to [107]*107his individual plan under § 502(a)(2). The present action is alleging breach of fiduciary duties that affected all Plan participants, not just a single individual account.

Plaintiffs contend that they qualify for class certification because they aim to recover assets on behalf of the Plan. They seek certification of the following class:

All persons, excluding the Defendants and/or other individuals who are or may be liable for the conduct described in this Complaint, who are or were participants or beneficiaries of the Plan and who are, were or may have been affected by the conduct set forth in this Complaint, as well as those who will become participants or beneficiaries of either Plan in the future.

A motion for class certification involves a two-part analysis. First, the movant must demonstrate that the proposed class satisfies the requirements of Rule 23(a): (1) the members of the proposed class must be so numerous that joinder of all claims would be impracticable; (2) there must be questions of law and fact common to the class; (3) the claims or defenses of the representative parties must be typical of the claims or defenses of absent class members; and (4) the representative parties must fairly and adequately protect the interests of the class. Fed. R.Civ.P. 23(a).

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254 F.R.D. 102, 2008 U.S. Dist. LEXIS 85196, 2008 WL 4571947, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kanawi-v-bechtel-corp-cand-2008.