Barbara J. Fuller v. SunTrust Banks, Inc. , 744 F.3d 685 ( 2014 )

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 12-16217
________________________
D.C. Docket No. 1:11-cv-00784-ODE
BARBARA J. FULLER,
and all others similarly situated,
Plaintiff-Appellant,
SELETHIA PRUITT, et al.,
Plaintiffs,
versus
SUNTRUST BANKS, INC.,
THE SUNTRUST BANKS, INC. BENEFITS PLAN COMMITTEE,
JORGE ARRIETA,
HAROLD BITLER,
MIMI BREEDEN, et al.,
Defendants-Appellees,
TRUSCO CAPITAL MANAGEMENT, INC., et al.,
Defendants.
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________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(February 26, 2014)
Before HULL and HILL, Circuit Judges, and MOTZ, * District Judge.
HULL, Circuit Judge:
Plaintiff Barbara Fuller (“Fuller”) appeals the Rule 12(b)(1) dismissal of her
putative class action complaint brought pursuant to the Employee Retirement
Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq.
After careful review and with the benefit of oral argument, we affirm the
district court’s dismissal of Fuller’s complaint. 1
I. BACKGROUND
A. Fuller’s Employment with SunTrust
For 38 years, from 1967 to 2005, Plaintiff Fuller worked in various clerical
positions for the Defendant SunTrust Banks, Inc. (“SunTrust”), a large commercial
bank, which provides deposit, credit, trust, and investment services.
*
Honorable J. Frederick Motz, United States District Judge for the District of Maryland,
sitting by designation.
1
We review de novo the district court’s grant of a motion to dismiss under Federal Rule
of Civil Procedure 12(b)(6) for failure to state a claim, accepting the allegations in the complaint
as true and construing them in the light most favorable to the plaintiff. Lanfear v. Home Depot,
Inc., 679 F.3d 1267, 1275 (11th Cir. 2012) (ERISA case).
2
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At some point, SunTrust established a defined contribution employee benefit
401(k) Plan (“the Plan”) in which Fuller participated. SunTrust was the sponsor of
the Plan and one of the Plan’s named fiduciaries. 2 Each Plan participant, like
Fuller, had her own account and could contribute eligible wages to that account on
a pre-tax basis.
The Plan offered a variety of investment vehicles in which each participant,
like Fuller, could choose to invest her 401(k) account’s assets. A participant
selected her own investments and thereby directed how her contributions were
invested. The Plan participants bore the risk of poor performance of the Plan’s
investments or investment losses.
In late 2005, Fuller ended her employment, and on October 12, 2005, Fuller
was distributed the entire investment in her 401(k) account.
B. Amended Complaint
More than five years later, on March 11, 2011, Plaintiff Fuller filed a
putative class-action complaint alleging various ERISA violations by the following
Defendant fiduciaries: (1) SunTrust; (2) SunTrust’s Benefits Plan Committee;
2
Under ERISA, every employee benefit plan must provide for one or more named
fiduciaries that jointly or severally possess the authority to control and manage the operation and
administration of the plan. ERISA § 3(a)(1), 29 U.S.C. § 1102(a)(1).
3
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(3) previous Plan Committee members; 3 and (4) previous Chairs of SunTrust’s
Compensation Committee4 (collectively “Defendants”). On June 6, 2011, Fuller
amended her complaint (the “complaint”).
Fuller’s lawsuit involves her claims that Defendant SunTrust and related co-
defendants breached their ERISA-imposed fiduciary duties of loyalty and prudence
to the Plan participants. According to the complaint, Defendant SunTrust and the
co-defendants breached these duties by selecting and adding these investment
options in the Plan menu—specifically proprietary mutual funds of SunTrust that
performed poorly and had high fees benefiting SunTrust, rather than the Plan
participants.
While SunTrust was the Plan sponsor, SunTrust’s Benefits Plan Committee
(“Plan Committee”) was the Plan administrator and a named fiduciary of the Plan.
The Plan Committee had the “authority, discretion, and responsibility to select,
monitor, and remove or replace” the Plan’s investment funds. Plan Committee
members met four or more times a year and reviewed the performance of the
Plan’s investment funds. The Chair of SunTrust’s Compensation Committee was
3
The previous Benefits Plan Committee members named as Defendants are (1) Jorge
Arrieta, (2) Harold Bitler, (3) Mimi Breeden, (4) Mark Chancy, (5) David Dierker, (6) Ted
Hoepner, (7) Ken Houghton, (8) Thomas Kuntz, (9) Donna Lange, (10) Jerome Lienhard,
(11) Gregory Miller, (12) William O’Halloran, (13) Thomas Panther, (14) William H. Rogers,
Jr., (15) Christopher Shults, (16) John Spiegel, and (17) Mary Steele.
4
The previous Chairs of the Compensation Committee named as Defendants are
(1) Joseph L. Lanier, Jr., (2) Larry L. Prince, and (3) Alston D. Corell.
4
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also a named fiduciary of the Plan and was responsible for appointing and
monitoring the Plan Committee members.
Beginning in 1997, the Plan Committee began to add proprietary mutual
funds to the Plan’s investment options. These proprietary mutual funds were funds
that SunTrust’s subsidiaries offered and managed, and SunTrust’s subsidiaries
received as revenue all of the funds’ management fees. Effective July 1, 1997,
Plan Committee members added these proprietary mutual funds as investment
options: (1) the STI Classic Capital Appreciation Fund; (2) the STI Classic
Investment Grade Bond Fund; (3) the STI Classic Short-Term Bond Fund; and (4)
the STI Classic Prime Quality Money Market Fund. Effective 1999, Plan
Committee members added (5) the STI Classic Small Cap Growth Fund and (6) the
STI Classic Growth and Income Fund.
Effective 2002, Plan Committee members added (7) the STI Classic Mid-
Cap Equity Fund. Effective 2005, they added (8) the STI Classic International
Equity Index Fund (“the STI International Fund”). We refer to these eight
proprietary mutual funds collectively as the “STI Classic Funds.” 5 The Plan did
not include any non-proprietary mutual funds as investment options until 2005.
5
Effective March 31, 2008, the STI Classic Funds were renamed the “RidgeWorth
Funds,” but we refer to these funds as the STI Classic Funds.
5
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As to these proprietary mutual funds, the complaint alleges that Trusco
Capital Management, Inc. (“Trusco”),6 a SunTrust subsidiary and investment
advisor, provided advisory services to the STI Classic Funds and received as
revenue all of the investment management fees generated by the investment of
assets into the STI Classic Funds. Trusco also served as an investment advisor to
the Plan and attended Plan Committee Meetings.
Fuller invested in these three proprietary mutual funds in the Plan’s menu of
investment options: (1) the STI Classic Short-Term Bond Fund; (2) the STI Classic
Prime Quality Money Market Fund; and (3) the STI Classic Growth and Income
Fund. Fuller’s complaint does not allege when she first contributed to her 401(k)
Plan or when she first invested in these proprietary mutual funds.
Fuller’s complaint does allege that she brings this ERISA action on behalf of
the Plan participants and all similarly situated Plan participants (and their
beneficiaries) who had a balance in their Plan accounts in any of the STI Classic
Funds at any time from April 25, 2002 to December 31, 2010 (the “Class Period”).
Fuller’s complaint alleges “corporate self-dealing” at the expense of
SunTrust’s Plan participants. Fuller alleges that Defendants acted in their financial
6
In Fuller’s initial complaint, she also named Trusco and Trusco’s predecessor
RidgeWorth Capital Management (“Ridgeworth”) as defendants. Her amended complaint,
however, did not name Trusco and RidgeWorth as defendants. Unless otherwise noted, and
consistent with Fuller’s complaint, we use “Trusco” to refer to the entity that engaged in both (1)
the activities of Trusco prior to RidgeWorth’s creation and (2) the activities of RidgeWorth after
its creation.
6
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interests, and not in the interest of the Plan’s participants, by selecting for the Plan
the proprietary STI Classic Funds and then repeatedly failing to remove or replace
them. Fuller alleges that the STI Classic Funds, affiliated with SunTrust entities,
offered poor performance and high fees as compared to unaffiliated investment
vehicles. Fuller alleges that the STI Classic Funds had poor performance and
higher fees as compared to mutual funds offered by the Vanguard Group, Inc. and
other “separately managed accounts and collective trusts managed by [non-
affiliated] investment advisors.”
Fuller’s Count 1 focuses on prohibited transactions. Count 1 claims that the
Plan Committee and its members (collectively “Committee Defendants”) engaged
in prohibited transactions involving the STI Classic Funds, in violation of ERISA
§ 406, 29 U.S.C. § 1106. Count 1 contends that the Committee Defendants caused
the Plan “to pay, directly or indirectly, investment management and other fees” in
connection with the Funds and should have known that this exchange of property
between the Plan and the parties in interest was prohibited.
Count 2 involves the Committee Defendants’ alleged breaches of their
statutory duties of prudence and loyalty. Count 2 first incorporates by reference
the initial 93 separate paragraphs of the complaint, which set out the relationship
and self-dealing between the Defendants and related entities, the nature of the
proprietary mutual funds, the low performance and high fees of the proprietary
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mutual funds as compared with other funds, and why selection of those funds as
investment options breached Defendants’ duties of prudence and loyalty. Count 2
alleges that the Committee Defendants “knew or should have known that the
Affiliated [STI Classic] Funds had not been prudently selected to begin with” and
that the Committee Defendants at each meeting “had cause to remove the
Affiliated Funds based on poor performance and high fees, but failed to do so.”
Count 2 claims that “Committee Defendants, by their actions and omissions in
repeatedly failing to remove or replace the [STI Classic] Funds, which offered poor
performance and high fees, as investment options in the Plan during the Class
Period breached their duties of prudence and loyalty” under ERISA § 404, 29
U.S.C. § 1104. The concentration of the Plan’s assets in the STI Classic Funds
“reflect[ed] a failure to consider and obtain less expensive and better performing
alternative, unaffiliated funds and services at the expense and to the detriment of
the Plan and to the benefit of SunTrust subsidiaries and affiliates.”
Count 3 involves the selection of the STI International Fund, which became
effective in 2005. As to that selection, Count 3 claims that Committee Defendants
violated the fiduciary duties of prudence and loyalty by selecting the STI
International Fund as an investment vehicle for the Plan. According to the
complaint, Committee Defendants breached their fiduciary duties under ERISA
“because they gave no or inadequate consideration as to whether [the fund] was a
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prudent or appropriate choice for the 401(k) Plan, and selected the fund because of
its affiliation with SunTrust and selecting it would bring millions of dollars in
additional revenue to SunTrust affiliates.”
The claims in Counts 4 and 5 are derivative of the claims in Count 2. Count
4 alleges, inter alia, that Defendant SunTrust, by participating in and abetting the
fiduciary breaches described in Count 2, caused the Plan to invest in the STI
Classic Funds. Defendant SunTrust, as a party in interest, was liable under ERISA
§ 502, 29 U.S.C. § 1132.
Count 5 claims that the three Defendant Chairmen of the Compensation
Committee had appointed Plan Committee members to serve on the Plan
Committee and violated their fiduciary duties under ERISA by failing to remove
and prudently monitor Committee Defendants. 7
C. Defendants’ First Motion to Dismiss
On June 20, 2011, Defendants moved to dismiss Fuller’s complaint.
Defendants argued that: (1) Fuller lacked standing to bring any claim as to the STI
International Fund because she never invested in that fund; (2) ERISA’s six-year
limitations period, which runs from “the date of the last action which constituted a
7
Count 6 of Fuller’s complaint claims that previous Chairs of the Compensation
Committee are liable as co-fiduciaries for the Committee Defendants’ breaches of fiduciary
duties and prohibited transactions. Count 7 alleges that Committee Defendants violated their
fiduciary duties under ERISA with respect to their approval of the National Commerce Financial
Corporation (“NCFC”) 401(k) Plan’s investments being transferred into the investment options
in the SunTrust 401(k) Plan. In 2004, SunTrust acquired NCFC. Counts 6 and 7 are not relevant
to this appeal, and we do not discuss them further.
9
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part of the breach or violation,” barred Fuller’s remaining claims in Counts 1, 2, 4,
and 5; and (3) in addition to the six-year bar, ERISA’s shorter three-year
limitations period, which runs from the “earliest date on which the plaintiff had
actual knowledge of the breach or violation,” also applied because Fuller had
“actual knowledge of the breach” of the duty of prudence when she first learned of
the STI Classic Funds’ excessive fees and poor performance. See ERISA § 413,
29 U.S.C. § 1113.
The exhibits, attached to Defendants’ motion to dismiss, included copies of
these documents: (1) the “SunTrust Banks, Inc. 401(k) Plan,” which was
“Amended and Restated Effective January 1, 2006”; (2) the 2006 Summary Plan
Description (“SPD”); 8 (3) the Quarterly Investment Performance (“QIP”) Booklet
current as of December 31, 2005; and (4) the “Plan Prospectus” for 2005 dated
August 1, 2005. These documents provided Plan participants with detailed
descriptions of each available fund. Specifically, the documents stated the
composition of a fund, the general philosophy and goals of the fund, risks of the
fund, who managed the fund, fees associated with the fund, the fund’s assets, and
the fund’s past performance.
8
The SunTrust Banks, Inc. 401(k) Plan stated that SunTrust had “caused this amendment
and restatement of the SunTrust Banks, Inc. 401(k) Plan to be executed by its duly authorized
officer” on March 15, 2006, to be effective as of January 1, 2006, except as otherwise provided
in the Plan’s amendment. The Senior Vice President of Corporate Benefits signed this statement
and the Vice President of Human Resources attested to it.
10
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There was no evidence showing Fuller ever had received these documents or
any one of them. There was also no evidence that any Defendant had sent Fuller
these documents or that Fuller was ever provided with instructions as to how to
access copies of the documents. Further, no authenticating affidavit accompanied
these documents, and the documents themselves do not indicate that they were
publicly filed. 9 Notably, too, Fuller cashed out her 401(k) Plan on October 12,
2005, and these documents, for the most part, are dated after that date.
D. Order Granting in Part and Denying in Part Defendants’ First Motion
to Dismiss
On March 20, 2012, the district court granted in part and denied in part
Defendants’ motion to dismiss.
As to Count 1, the district court concluded that: (1) the selections of the
funds (except for the STI International Fund) occurred in 1997 to 2002, well
outside of the six-year limitations period, and thus, Fuller’s prohibited-transaction
claims as to those funds were time-barred; (2) Fuller lacked standing to assert her
claim that the selection of the STI International Fund constituted a prohibited
transaction under ERISA because she never invested in that fund; and (3) failing to
remove the STI Classic Funds from the Plan options was not a “prohibited
transaction” for the purposes of § 1106(a)(1)(D) because the statutory term refers
9
The SPD did state that it “constitute[d] part of a prospectus covering securities that have
been registered under the Securities Act of 1933.” But there is no indication that the SPD alone
was publicly filed.
11
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only to “commercial bargains,” including a sale, exchange, lease, or loan, but not a
failure to sell stock in a retirement plan. On appeal, Fuller does not challenge the
district court’s dismissal of her Count 1 claims.
Based on its prior finding that Fuller lacked standing as to the STI
International Fund, the district court also dismissed Count 3’s sole claim that
Committee Defendants violated their fiduciary duties in selecting the STI
International Fund.
As to Count 2, the district court determined that the six-year limitations
period did not bar all of Fuller’s claims and that her claims were timely to the
extent she could show that, after April 9, 2004, Committee Defendants breached
their ongoing fiduciary duties of monitoring and removing imprudent
investments. 10 The district court reasoned that Fuller might be able to prove that,
after that date, “an investor acting prudently would have divested the plan of the
funds at issue.”
However, the district court also determined that: (1) based on the exhibit
documents, Fuller had “actual knowledge” of the essential facts of her Count 2
10
The district court derived this April 9, 2004 date by first subtracting the six-year
limitations period from March 11, 2011 (the date Fuller filed her original complaint), which
equaled March 11, 2005. At this Rule 12(b)(6) juncture, Plaintiff Fuller alleged 336 days of
tolling while administrative remedies were being exhausted. Subtracting 336 days from the
March 11, 2005 date produced the April 9, 2004 date.
Applying a six-year limitations period meant Fuller’s Count 2 claims were timely as to
Defendants’ alleged failure to remove the STI Classic Funds during the time period from April 9,
2004 through March 11, 2011.
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claims as early as 2005; (2) ERISA’s three-year limitations period applied to her
Count 2 claims; and (3) her Count 2 claims were thus timely only to the extent that
she could show that the Committee Defendants violated their fiduciary duties by
retaining (and not removing) the STI Classic Funds after April 10, 2007. 11 Thus,
the district court denied Defendants’ motion to dismiss as to Count 2. The district
court did not discuss Fuller’s standing to bring any of the claims in Count 2
relating to the STI Classic Funds in which she never invested.
The district court determined that, because Fuller’s fiduciary duty claims in
Count 2 survived, the derivative claims alleged in Counts 4 and 5 survived as well.
Thus, the district court denied Defendants’ motion to dismiss as to Counts 2, 4, and
5, but granted it as to all other claims in Fuller’s complaint.
E. Defendants’ Second Motion to Dismiss and Nonparties’ Motion to
Intervene
In light of the district court’s first ruling, Defendants moved to dismiss
Fuller’s remaining claims in Counts 2, 4, and 5, pointing out that Fuller took a full
distribution of her 401(k) account’s balance on October 12, 2005. Given the
district court’s ruling that Fuller could sue only for Defendants’ conduct after
11
The district court calculated this April 10, 2007 date by subtracting 3 years and 336
days from the date of the lawsuit’s filing as opposed to counting forward from the date Fuller
obtained actual knowledge. On appeal, the parties do not challenge this method of applying
ERISA’s three-year limitations period. At the end of the day, we conclude Defendants did not
show Fuller’s actual knowledge, so we need not resolve whether this calculation is correct.
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April 10, 2007, and the fact that Fuller cashed out her account in 2005,
Defendants argued that all of Fuller’s claims were time-barred.
Defendants attached to their motion a supporting affidavit of Clint Efird,
“Vice President, 401(k) Plan Manager” for SunTrust. Efird attested that Fuller was
distributed her entire 401(k) investment on October 12, 2005.
On September 26, 2012, Sandra Stargel and Selethia Pruitt, represented by
the same counsel as Fuller, moved to intervene, pursuant to Federal Rule of Civil
Procedure 24. Stargel and Pruitt alleged that, unlike Fuller, they had maintained
investments in the Plan after April 10, 2007. The district court denied Stargel and
Pruitt’s motion to intervene.
F. Order Granting Defendants’ Second Motion to Dismiss and Denying
Nonparties’ Motion to Intervene
On October 30, 2012, the district court granted Defendants’ motion to
dismiss Fuller’s remaining claims (Counts 2, 4, and 5). The district court
explained that, in its previous order, it had determined that, based on a three-year
limitations period, only those claims that “accrued” after April 10, 2007 were
timely. Because no one disputed that Fuller ceased to hold any investment in the
Plan after October 12, 2005, she lacked standing in the case. 12
12
On appeal, Fuller does not dispute that she would lack standing if the three-year
limitations period applied due to her actual knowledge; rather, she argues that Defendants did not
show her actual knowledge and, therefore, the three-year limitations period did not apply.
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Fuller filed a timely notice of appeal to this Court. On appeal, she
challenges only the district court’s determination that ERISA’s three-year
limitations period applies and bars her claims in Counts 2, 4, and 5. Defendants
respond that the district court did not err as to the three-year limitations period, and
in any event, Fuller’s claims are barred by the six-year limitations period.
II. STARGEL v. SUNTRUST BANKS, INC.
Before discussing Fuller’s appeal, we must review what happened in the
related case of Stargel v. SunTrust Banks, Inc., __ F. Supp. 2d __, 2013 WL
4775918 (N.D. Ga. 2013), where the district court (that dismissed Fuller’s
complaint) faced similar statute-of-limitations issues, but with different Plan
participant plaintiffs. In Stargel, the district court acknowledged its earlier
conclusion in Fuller, but upon further study, determined that it must reach different
conclusions with respect to the three-year and six-year limitations periods raised in
SunTrust’s motion to dismiss Pruitt’s complaint. 13
13
Although Stargel and Pruitt filed their initial complaint on October 31, 2012,
Defendants, in the district court, conceded that the operative date of Stargel and Pruitt’s
complaint was March 11, 2011, the same date as the filing of Fuller’s complaint. See Stargel, __
F. Supp. 2d at __, 2013 WL 4775918, at *1 n.1. The district court determined that Stargel’s
claims were not actionable because she had executed a Confidential Settlement Agreement,
which released the Stargel Defendants from certain claims Stargel had. Thus, in deciding
whether to dismiss the amended complaint, the district court addressed only Pruitt’s claims.
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Plaintiff Pruitt sued essentially the same Defendants named in Fuller’s
amended complaint.14 Pruitt alleged failure-to-remove claims (in her Count 1),
which were identical in all relevant respects to the failure-to-remove claims in
Count 2 of Fuller’s amended complaint.
The district court stated that it was reversing course from its Fuller decision
based on the intervening decisions of other circuits in David v. Alphin, 704 F.3d
327 (4th Cir. 2013), and Tibble v. Edison International, 729 F.3d 1110 (9th Cir.
2013), petition for cert. filed, (U.S. Oct. 30, 2013) (No. 13-550). Stargel, __ F.
Supp. 2d at __, 2013 WL 4775918, at *9-10.
In light of these intervening decisions, the district court determined that
ERISA’s six-year limitations period barred Pruitt’s failure-to-remove claims in
Count 1. Id. at *11. The district court found that Count 1 alleged, “in substance,”
that: (1) “the initial selection of the STI Classic Funds was imprudent”; (2) “the
Funds offered poor performance and high fees but were selected in order to benefit
the Funds’ advisor, a SunTrust subsidiary”; and (3) “the Committee Defendants
continually failed to remove the Funds from the menu of investment options
14
The district court’s Stargel decision was based on Stargel and Pruitt’s amended
complaint filed on February 19, 2013. The only Defendants in Fuller not sued in Stargel were
Harold Bitler and William O’Halloran, two individuals who served on the Plan Committee prior
to June 2002. The two additional Defendants in Stargel, not sued in Fuller, were (1) the Chief
Financial Officer of SunTrust since April 2011 and (2) Ridgeworth.
16
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despite their continuing poor performance and high fees.” Id. at *7 (emphasis
added).
The district court observed that Pruitt failed to allege that anything changed
after the initial selection of the STI Classic Funds as investment options. The court
emphasized that there was “no allegation which assert[ed] a drop in performance
or a rise in advisory fees during the [six-year limitations period].” Id. at *8.
Further, Pruitt “recite[d] no facts which, if proven, would establish a new,
independent breach of fiduciary duty which [was] different from the original
[selection, which was] time-barred.” Id. Since Defendants selected the STI
Classic Funds (with the exception of the STI International Fund) prior to 2002,
Pruitt’s claims were barred by the six-year limitations period. 15 Id. at *8, 11.
The district court also reversed course from Fuller as to its three-year
limitations ruling, which had relied on actual knowledge. Id. at *13. The Stargel
Defendants filed the same exhibits to those filed in Fuller.16 This time, the district
court found that the documents did not show that Pruitt had “actual knowledge”
because the complaint and the documents did not state “that they were provided to
Pruitt, or that she obtained knowledge of the facts from another source.” Id. The
15
The district court concluded that Pruitt lacked standing to bring any claim involving the
STI International Fund because she never invested in the fund and did not assert how the offering
of the fund could have injured her. Stargel, __ F. Supp. 2d at __, 2013 WL 4775918, at *13.
16
Except for the QIP booklet, the district court found that the Stargel Defendants’ exhibits
were all authenticated. Stargel, __ F. Supp. 2d at __, 2013 WL 4775918, at *12-13.
17
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district court concluded “[t]hat the documents (or the relevant facts in the
documents) were provided to Pruitt is a necessary predicate to establishing the
three-year bar,” and thus, ERISA’s three-year limitations period was not triggered.
Id.With this background, we now set forth Defendants’ statutory duties of
loyalty and prudence under ERISA. We then review and apply ERISA’s
limitations periods to Counts 2, 4, and 5 of Fuller’s complaint.
III. ERISA
A. Statutory Duties of Loyalty and Prudence
“ERISA is a comprehensive statute designed to promote the interests of
employees and their beneficiaries in employee benefit plans.” Ingersoll-Rand Co.
v. McClendon, 498 U.S. 133, 137, 111 S. Ct. 478, 482 (1990) (internal quotation
marks omitted). To protect participants in employee benefit plans and their
beneficiaries, ERISA “‘establish[es] standards of conduct, responsibility, and
obligation for fiduciaries of employee benefit plans.’” Pilot Life Ins. Co. v.
Dedeaux, 481 U.S. 41, 44, 107 S. Ct. 1549, 1551 (1987).
ERISA’s fiduciary duties are the “highest known to law.” ITPE Pension
Fund v. Hall, 334 F.3d 1011, 1013 (11th Cir. 2003). Under ERISA, a fiduciary
must “discharge his duties with respect to a plan solely in the interest of the
participants and beneficiaries” and “for the exclusive purpose of: (i) providing
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benefits to participants and their beneficiaries; and (ii) defraying reasonable
expenses of administering the plan.” ERISA § 404(a)(1)(A), 29 U.S.C.
§1104(a)(1)(A). Further, a fiduciary must discharge his duties “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 a like character and with like aims.” ERISA § 404(a)(1)(B); 29 U.S.C.
§ 1104(a)(1)(B). We have summarized the duties of loyalty and prudence under 29
U.S.C. § 1104(a)(1)(A)-(B) as follows: “[a] fiduciary must act exclusively for the
fund’s benefit . . . and must exercise the care of a prudent person.” Brock v. Nellis,
809 F.2d 753, 754 n.1 (11th Cir. 1987).
ERISA authorizes a plan participant to bring a civil suit against plan
fiduciaries for breaches of the fiduciaries’ duties of loyalty and prudence. See
ERISA § 502(a)(2), 29 U.S.C. § 1132(a)(2). However, the plan participant cannot
seek to recover personal damages for misconduct, but must instead seek recovery
that “inures to the benefit of the plan as a whole.” Mass. Mut. Life Ins. Co. v.
Russell, 473 U.S. 134, 140, 105 S. Ct. 3085, 3089 (1985). Here, Fuller’s suit is
brought on behalf of the Plan itself pursuant to § 1132(a)(2).
B. Statute of Limitations
For claims of fiduciary breaches under § 1104(a)(1), ERISA provides that no
action may be commenced “after the earlier of”:
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(1) six years after (A) the date of the last action which constituted a
part of the breach or violation, or (B) in the case of an omission the
latest date on which the fiduciary could have cured the breach or
violation, or
(2) three years after the earliest date on which the plaintiff had actual
knowledge of the breach or violation . . . .
ERISA § 413, 29 U.S.C. § 1113. 17 “Although the legislative history of ERISA’s
statute of limitations is scant, nothing in its language or goals indicates that courts
are to read into it anything more than its plain meaning.” Nellis, 809 F.2d at 755.
The first issue is whether Fuller’s Count 2 claims are barred by ERISA’s
three-year limitations period in § 1113(2).
IV. ERISA’S THREE-YEAR LIMITATIONS PERIOD
The district court’s ruling as to the three-year limitations period relied on the
Plan, the SPD, the QIP Booklet, and the Plan Prospectus, all of which were
attached to Defendants’ motion to dismiss.
In general, we “do not consider anything beyond the face of the complaint
and documents attached thereto when analyzing a motion to dismiss [under Rule
12(b)(6)].” Fin. Sec. Assurance, Inc. v. Stephens, Inc., 500 F.3d 1276, 1284 (11th
Cir. 2007). “This [C]ourt recognizes an exception, however, in cases in which
[1] a plaintiff refers to a document in its complaint, [2] the document is central to
17
Section 1113 contains an exception, which provides that “in the case of fraud or
concealment, such action may be commenced not later than six years after the date of discovery
of such breach or violation.” ERISA § 413, 29 U.S.C. § 1113. Fuller makes no claim of fraud or
concealment so we need not consider this part of § 1113.
20
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[her] claim, [3] its contents are not in dispute, and [4] the defendant attaches the
document to its motion to dismiss.” Id.
A document is considered “undisputed” when the “authenticity of the
document is not challenged.” Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir.
2005). “To satisfy the requirement of authenticating . . . an item of evidence, the
proponent must produce evidence sufficient to support a finding that the item is
what the proponent claims it is.” Fed. R. Evid. 901(a). The Federal Rules of
Evidence provide a non-exhaustive list of ways to satisfy the authentication
requirement. Fed. R. Evid. 901(b). One example of how to authenticate a
document is to provide evidence that “a document was recorded or filed in a public
office as authorized by law.” Fed. R. Evid. 901(b)(7).
Plaintiff Fuller contends that the district court erred in considering the four
documents for many reasons including: (1) only the QIP Booklet and the Plan
Prospectus contained information about the STI Classic Funds’ performance and
fees, but Fuller’s complaint never explicitly mentioned that Booklet and
Prospectus; (2) although the SPD mentioned the QIP Booklet in a section of the
SPD entitled “Documents Incorporated by Reference,” the SPD did not actually
incorporate the QIP Booklet by reference in that section; (3) the SPD did not
mention the Plan Prospectus at all; (4) Fuller challenged the authenticity of the QIP
Booklet and the Plan Prospectus, and Defendants never authenticated those
21
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documents; and (5) Defendants have not cited any statute or regulation providing
that the QIP Booklet and the Plan Prospectus had to be filed with any government
agency, much less actually presented evidence showing that those documents
actually were so filed.
Thus, Plaintiff Fuller makes a strong argument that the QIP Booklet and the
Plan Prospectus are not authenticated, and the district court should not have
considered those documents at all at the Rule 12(b)(6) stage. We need not resolve
that issue, however. Even assuming that the documents could be considered, the
district court erred in finding that Fuller had actual knowledge of Defendants’
alleged breaches underlying her Count 2 claims.
In Nellis, we addressed the question of what constituted “actual knowledge
of the breach or violation” under ERISA § 413, 29 U.S.C. § 1113, such that
ERISA’s shorter, three-year limitations period was triggered. See Nellis, 809 F.2d
at 754-55. In that case, the Secretary of Labor brought suit against two attorneys
who formerly represented a union pension fund. Id. at 753. The Secretary
contended that the attorneys breached their fiduciary duties under ERISA by
counseling the fund’s trustees to purchase property through a mortgage foreclosure
sale at an exaggerated price. Id. at 753-54. We held that, for an individual to have
“actual knowledge of an ERISA violation, it is not enough that he had notice that
something was awry; he must have had specific knowledge of the actual breach of
22
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duty upon which he sues.” Id. at 755 (emphasis added). Thus, we concluded that,
although the Secretary may have known that the Fund paid an exaggerated price
for the property, he did not learn that the defendants participated in the decision to
pay the inflated price. Id. at 754. Thus, the Secretary’s knowledge did not
constitute “actual knowledge,” but rather constituted “constructive knowledge,”
which was insufficient to trigger the three-year limitations period in § 1113. Id. at
754-55. Specifically, although the Secretary had knowledge of facts sufficient to
prompt an inquiry, which, if properly carried out, would have revealed the
attorneys’ actions, the Secretary did not have actual knowledge of the attorneys’
involvement in the transgression, which was necessary to trigger the three-year
limitations period. Id.
In addition to this Nellis precedent, we observe that § 1113(2) expressly uses
the term “actual” knowledge and not “knowledge” alone or “constructive
knowledge.” Based on our precedent and the language of the statute itself, we
conclude Defendants had to show Fuller had actual knowledge of the breaches.
Here, we agree with the district court’s decision in Stargel and conclude that
the documents attached to Defendants’ motion to dismiss did not show that Fuller
had actual knowledge of the breach because Defendants did not show that the
documents “were provided to [Fuller], or that she obtained knowledge of the facts
[in the documents] from another source. . . . That the documents (or the relevant
23
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facts in the documents) were provided to [Fuller] is a necessary predicate to
establishing the three-year bar.” See Stargel, __ F. Supp. 2d at __, 2013 WL
4775918, at *13. The documents are not addressed to Fuller, and there is no
evidence that any Defendant gave or sent the documents to Fuller or that Fuller
received them. Moreover, the exhibits, with the exception of the Plan Prospectus,
were all dated after Fuller was distributed her entire investment in the Plan on
October 12, 2005. Further, it is unclear whether the Plan Prospectus, which was
dated August 1, 2005, was actually available to Fuller before October 12, 2005.
Like the district court in Stargel, we decline to address what other facts, if any,
Defendants would need to prove to show that Fuller had actual knowledge. 18 In
sum, we conclude that, based on the record to date and at this Rule 12(b)(6)
juncture, the district court erred in finding that the three-year limitations period
applied to Fuller’s claims in Count 2.
V. ERISA’S SIX-YEAR LIMITATIONS PERIOD
The final issue is whether Fuller’s Count 2 claims are barred by ERISA’s
six-year limitations period in § 1113(1). As the district court noted in Stargel, two
circuits recently addressed ERISA’s six-year limitations period in the context of
claims that the defendant-fiduciaries imprudently selected and failed to remove
18
For example, even if Defendants later show that Fuller received certain documents, we
have no occasion to address what knowledge Fuller must possess to have actual knowledge of
the Count 2 breaches, much less what knowledge the documents necessarily gave to her.
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certain investment options from 401(k) Plan menus. We outline those decisions
and then analyze Fuller’s claims.
A. The Fourth Circuit’s David v. Alphin
In David v. Alphin, the Fourth Circuit considered the plaintiffs’ claim that
the defendants “breached their fiduciary duties of prudence and loyalty by failing
to remove or replace the [bank-]affiliated funds as investment vehicles [in the
bank’s 401(k) Plan] despite poor performance and higher fees in comparison to
other available alternatives during the relevant time period.” 704 F.3d at 341. The
plaintiffs’ complaint “allege[d] that the affiliated funds ‘offered poor performance
and high fees,’ and that at each Committee meeting during the [relevant time
period], [the defendants] ‘had cause to remove the Affiliated Funds based on their
poor performance and high fees, but failed to do so.’” Id.
In addressing the plaintiffs’ claim, the district court determined that “‘while
ERISA fiduciaries are in fact obliged to monitor funds contained in the Plan lineup
for material changes, the court can find no continuing obligation to remove, revisit,
or reconsider funds based on allegedly improper initial selection.’” Id. (alterations
adopted) (emphasis added). The district court concluded that the defendants’
initial selection of the bank-affiliated funds for inclusion in the bank’s 401(k) plan
triggered the limitations clock, such that the claims should be dismissed as
untimely. Id.
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On appeal to the Fourth Circuit, the plaintiffs argued that “the district court
erred in suggesting that [their claim was] an ‘improper monitoring’ claim.” Id.
The plaintiffs further asserted that their claim was based solely on “a violation of
the well-settled duty to remove imprudent investments, not the duty to monitor.”
Id. (internal quotation marks omitted).
After reviewing the complaint, the Fourth Circuit determined that the
plaintiffs were not claiming that the bank-affiliated funds “became imprudent,
based on fund performance or increased fees, during the limitations period.” Id.
Rather, the complaint “ma[de] clear” that the plaintiffs’ claim was “based on
attributes of the funds that existed at the time of their initial selection—their
alleged poor performance and high fees relative to alternative available fund
options.” Id. Therefore, the Fourth Circuit concluded that the plaintiffs’ claim was
“not truly one of a failure to remove an imprudent investment.” Id. Instead, the
plaintiffs’ claim was, “at its core, simply another challenge to the initial selection
of the funds to begin with.” Id. Accordingly, the Fourth Circuit affirmed the
dismissal of the plaintiffs’ claim as untimely. Id.
Because it did not need to reach the issue, the Fourth Circuit expressly
declined to “decide whether ERISA fiduciaries have an ongoing duty to remove
imprudent investment options in the absence of a material change in
circumstances.” Id.
26
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It is also worth mentioning the Fourth Circuit’s earlier decision in DiFelice
v. U.S. Airways, Inc., 497 F.3d 410 (4th Cir. 2007), which was quoted, but not
analyzed in David, 704 F.3d at 332. In DiFelice, the Fourth Circuit considered a
pension plan which included an employer-stock fund as a plan investment option.
The plaintiffs claimed that the plan fiduciary, U.S. Airways, breached its ERISA
duties of prudence and loyalty by retaining the company stock following the
attacks on September 11, 2001 and the decline in the airline industry. 497 F.3d at
415, 420-21. Material changes in circumstances occurred regarding the investment
option (U.S. Airways stock) in DiFelice, which were U.S. Airways’ deteriorating
financial condition and economic peril during the post-September 11, 2001 class
period. See id. at 415-16. As a result, the DiFelice plaintiffs claimed the fiduciary
insufficiently monitored the plan and imprudently failed to remove the stock as an
investment option during that class period. Id. at 419-20. After a bench trial, the
district court entered a judgment for the defendant-fiduciary, which the Fourth
Circuit affirmed. Id. at 413-14. While the issues on appeal were different than
those in this case, the DiFelice decision remains noteworthy because it factually
involved materially changed circumstances following September 11, 2001 that
apparently triggered the claim of failure to remove U.S. Airway’s stock as an
investment option in the pension plan. See id. at 415, 420-21.19
19
Ultimately, the district court concluded that U.S. Airways acted in a procedurally
27
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B. The Ninth Circuit’s Tibble v. Edison International
Another noteworthy circuit decision involving investment options in an
ERISA plan is the Ninth Circuit’s decision in Tibble v. Edison International, 729
F.3d 1110. The Tibble plaintiffs alleged “imprudence in plan design from when
the decision to include those investments in the Plan was initially made.” 729 F.3d
at 1119. The allegedly imprudent investment options were added to the Plan more
than six years before the plaintiffs filed suit. 20 Id. at 1118. The Tibble plaintiffs
produced no evidence of any significant change in condition to the plan’s
investments after the investments were selected. Nevertheless, the Tibble plaintiffs
argued that, because ERISA’s fiduciary duties are ongoing and ERISA’s six-year
limitations period is triggered by the “last action” constituting the breach, their
claims were “timely for as long as the underlying investments remain[ed] in the
plan.” Id. at 1119.
prudent manner and properly monitored the company airline stock following September 11,
2001, and the Fourth Circuit affirmed the district court’s ultimate conclusion. DiFelice, 497 F.3d
at 421, 424-25.
20
The challenged investment options in the plan menu were an array of mutual fund-type
investments that had higher administrative fees and that introduced a practice known as revenue
sharing. Tibble, 729 F.3d at 1118. Under this revenue-sharing practice, “certain mutual funds
collected fees out of fund assets and disbursed the fees to the Plan’s service provider” and the
defendant employer, “in turn, received a credit in its invoices from that provider.” Id. The
plaintiffs claimed that the inclusion of these mutual funds was imprudent and that the revenue
sharing violated the plan document and a conflict-of-interest provision. Id.
28
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Relying on its earlier precedent, 21 the Ninth Circuit in Tibble held that “the
act of designating an investment for inclusion [in the plan] starts the six-year
[limitations] period . . . for claims asserting imprudence in the design of the plan
menu.” Id. According to the Tibble Court, “[c]haracterizing the mere continued
offering of a plan option, without more, as a subsequent breach would render
[ERISA’s six-year limitations period] meaningless and could even expose present
Plan fiduciaries to liability for decisions made by their predecessors—decisions
which may have been made decades before and as to which institutional memory
may no longer exist.” Id. at 1120 (alterations adopted) (emphasis added) (internal
quotation marks omitted). The Ninth Circuit in Tibble explained that the plaintiffs’
“logic confuse[d] the failure to remedy the alleged breach of an obligation, with
the commission of an alleged second breach, which, as an overt act of its own
21
The earlier precedent is Phillips v. Alaska Hotel and Restaurant Employees Pension
Fund, 944 F.2d 509 (9th Cir. 1991), applying ERISA’s three-year limitations period. Tibble, 729
F.3d at 1119. The Ninth Circuit in Phillips declined to read the “actual-knowledge provision as
permitting the maintenance of the status-quo, absent a new breach, to restart the limitations
period under the banner of a ‘continuing violation.’” Id. (citing Phillips, 944 F.2d at 520). The
plaintiffs in Phillips claimed that the pension-plan trustees repeatedly failed to relax restrictive
vesting rules, but the Phillips Court determined that ERISA’s three-year limitations period barred
claims based on “a continuous series of breaches” that “are of the same kind and nature” if the
“plaintiff had actual knowledge of one of them more than three years before commencing suit.”
Phillips, 944 F.2d at 520-21. The Phillips Court explained that the “earliest date on which a
plaintiff became aware of any breach” initiated the three-year limitations period because “[o]nce
a plaintiff knew of one breach [based on the failure to amend the vesting rules], an awareness of
later breaches would impart nothing materially new.” Id. at 520.
29
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recommences the [six-year] limitations period.”22 Id. (second emphasis added)
(internal quotation marks omitted). Thus, the Tibble Court held that the selection
of the challenged investments started the running of the six-year limitations period
as to the plaintiffs’ claim regarding imprudence in the plan’s design. Id. at 1119.
The Ninth Circuit in Tibble was unpersuaded that its ruling would “give
ERISA fiduciaries carte blanche to leave imprudent plan menus in place.” Id. at
1120. Instead, a new six-year limitations period under ERISA would begin where
a plaintiff could “establish changed circumstances engendering a new breach.” Id.
(emphasis added). The Tibble Court explained that “changed circumstances”
could be shown where “significant changes in conditions occurred within the
limitations period that should have prompted ‘a full due diligence review of the
funds, equivalent to the diligence review [fiduciaries] conduct when adding new
funds to the Plan.’” Id. Thus, the “potential for future beneficiaries to succeed in
making that showing illustrates why [the Ninth Circuit’s] interpretation of
[ERISA’s six-year limitations period] will not alter the duty of fiduciaries to
exercise prudence on an ongoing basis.” Id.
22
The Tibble Court also observed that “in the case of omissions the statute already
embodies what the beneficiaries urge for the last action,” as ERISA § 413(1)(B), 29 U.S.C.
§ 1113(1)(B) “ties the [six-year] limitations period to ‘the latest date on which the fiduciary
could have cured the breach of violation.’” 729 F.3d at 1119. Thus, the Tibble Court declined to
import the concept of subsection (1)(B) into subsection (1)(A), as that would render subsection
(1)(B) surplusage. Id.
30
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The Tibble Court recognized that its ruling could result in injustices “[a]s
with the application of any statute of limitations.” Id. Nevertheless, the Ninth
Circuit determined that ERISA’s six-year limitations period evinced “a judgment
by Congress that when six years has passed after a breach or violation, and no
fraud or concealment occurs, the value of repose will trump other interests, such as
a plaintiff’s right to seek a remedy.” Id. (internal quotation marks omitted).
C. Fuller’s Claims
The gravamen of Fuller’s claims in Count 2 is that the Committee
Defendants breached their fiduciary duties of prudence and loyalty by failing to
remove the proprietary STI Classic Funds as investment options due to their high
fees and poor performance. Fuller also alleges in Count 2 that the proprietary STI
Classic Funds were not prudently selected as investment options.
Here, the relevant limitations period is “six years after . . . the date of the last
action which constituted a part of the breach or violation.” See ERISA § 413(1),
29 U.S.C. § 1113(1). It is clear that any claim that the Committee Defendants
breached their fiduciary duties by selecting the STI Classic Funds (with the
exception of the STI International Fund 23) is barred by ERISA’s six-year
limitations period. The selection of the funds all occurred prior to April 9, 2004,
23
We note that the STI International Fund was selected in 2005, and thus, Fuller’s claim
in Count 3 concerning that fund’s selection is timely under ERISA’s six-year limitations period.
However, the district court determined that Fuller lacked standing as to that claim, and Fuller has
not appealed that ruling.
31
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which is the earliest date a breach could occur and not be barred under ERISA’s
statute of limitations. The closer question is whether the alleged failure to remove
the funds in subsequent years constitutes a cognizable breach separate from the
alleged improper selection of the STI Classic Funds so that the six-year limitations
period does not bar the claims.
Fuller’s allegations concerning the imprudent acts that allegedly occurred at
the time the STI Classic Funds were selected and those that occurred thereafter are
strikingly similar. Fuller alleges that the STI Classic Funds were imprudently
selected because: (1) there was no or insufficient review of the funds’ performance
and fees at the time of selection; (2) there was a failure to consider other non-
affiliated investment vehicles for inclusion in the Plan’s menu at the time of
selection; and (3) the funds were selected only to benefit SunTrust subsidiaries.
Fuller claims that the Committee Defendants acted imprudently by failing to
remove the STI Classic Funds as investment vehicles because: (1) they did not
heed or obtain information about the funds’ low performance and high fees; (2)
they failed to consider and select for the Plan less expensive and better performing
alternative, unaffiliated investment vehicles; and (3) they failed to remove the STI
Classic Funds only because the funds’ retention benefited SunTrust subsidiaries.
Because the allegations concerning the Committee Defendants’ failure to
remove the STI Classic Funds are in all relevant respects identical to the
32
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allegations concerning the selection process, we conclude that Fuller’s complaint
contains no factual allegation that would allow us to distinguish between the
alleged imprudent acts occurring at selection from the alleged imprudent acts
occurring thereafter. Cf. Martin v. Consultants & Adm’rs., 966 F.2d 1078, 1087-
88 (7th Cir. 1992) (concluding that the Secretary of Labor’s 1984 bidding claim
was barred by ERISA’s statute of limitations, but the Secretary’s 1987 bidding
claim survived because the separate 1987 bidding activity was “more accurately
characterized factually as a distinct transaction” that “involved a new and separate
contract,” such that the 1987 bidding activity was “a repeated, rather than a
continued, violation”). Thus, as was the case in David, we find that Fuller’s claims
in Count 2 are, at their core, a challenge to the initial selection of the STI Classic
Funds. See David, 704 F.3d at 341. Relying on the persuasive reasoning of David
and Tibble, we therefore reject Fuller’s argument that the continued failure to heed
warnings of the funds’ low performance and high fees or to seek out such
information constitutes a distinct, cognizable breach separate from the alleged
breach that occurred at selection. See id.; Tibble, 729 F.3d at 1119-20. Rather, we
conclude that the Committee Defendants’ failure to remove the STI Classic Funds
was simply a failure to remedy the initial breach. See Tibble, 729 F.3d at 1120.
Unlike the Fourth Circuit’s decision in DiFelice, 497 F.3d 410, this is not a
case of changed circumstances following the selection of the STI Classic Funds.
33
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Importantly, Fuller does not allege that, after the STI Classic Funds’ selection, the
funds’ performance declined, the funds’ advisory fees increased, or a new conflict
of interest arose. 24 Thus, like the Fourth Circuit in David, we decline to decide
whether the Committee Defendants had an ongoing duty to remove imprudent
investment options from the Plan in the absence of a material change in
circumstances. See David, 704 F.3d at 341.
We add that categorizing the Committee Defendants’ continued failures to
remove the STI Classic Funds as investment options as separate violations without
changed circumstances would allow Fuller to recover under a continuing violation
theory. However, as the Ninth Circuit observed in Tibble, this would thwart the
purpose of ERISA’s six-year limitations period, and Fuller has disclaimed any
reliance on such a theory. See Tibble, 729 F.3d at 1120.
We, therefore, conclude that, as alleged in Fuller’s complaint, “the date of
the last action which constituted a part of the breach” alleged in Count 2 was when
the Committee Defendants selected the STI Classic Funds. See ERISA § 413(1),
29 U.S.C. § 1113(1). To hold otherwise would recast Fuller’s time-barred
24
We acknowledge that Fuller does not allege in her complaint that the STI Classic Funds
had low performance and high fees upon selection, and thus, it is possible that the funds’
performance and fees changed after the funds’ selection. However, without any allegations
showing changed circumstances, we decline to speculate that such circumstances exist. See
Lanfear v. Home Depot, Inc., 679 F.3d 1267, 1275 (11th Cir. 2012) (providing that, to survive
the motion-to-dismiss stage, the allegations in the complaint “‘must be enough to raise a right to
relief above the speculative level’”).
34
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selection claims as failure-to-remove claims, despite the absence of any allegations
that would distinguish the two types of claims. Accordingly, Fuller’s claims in
Count 2 are time-barred by ERISA’s six-year period of limitations.
VI. CONCLUSION
For the reasons stated, we affirm the dismissal of Fuller’s complaint.
AFFIRMED.
35
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MOTZ, District Judge, concurring:
I concur in Judge Hull’s opinion. However, because I am concerned that the
opinion might be interpreted as insulating an ERISA fiduciary who violated its
fiduciary duty in making an initial selection of an investment from ever being held
liable for continuing that investment in a Plan’s portfolio, I write separately to say
that a non-removal claim might be stated by a beneficiary who was not invested in
the Plan when the initial selection was made. In my judgment, financial
institutions should not be permitted to invest in captive ERISA plans for their
employees that are imprudently managed and charge excessive fees. That might
not have been evident when ERISA was first enacted; it should be now.
36