Davis v. Magna Int'l of Am., Inc.

MELVIN DAVIS, et al., Plaintiffs, v. MAGNA INTERNATIONAL OF AMERICA, INC., et al. Defendants.

No. 20-11060

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

March 31, 2021

Honorable Nancy G. Edmunds

OPINION AND ORDER DENYING DEFENDANTS' MOTION TO DISMISS THE COMPLAINT AND STRIKING JURY DEMAND [14]

This matter is before the Court on Defendants' motion to dismiss complaint and strike jury demand. (ECF No. 14.) Plaintiffs filed a response, Defendants filed a reply, and the parties thereafter filed a series of "notices of supplemental authority" and "responses in opposition to notice of supplemental authority." (ECF Nos. 17, 18 and 19-27.) Having reviewed and considered the parties' briefs and supporting evidence, the Court has determined that the allegations, facts, evidence and legal arguments are presented adequately in the written submissions so that oral argument would not significantly aid the Court's decision. For these reasons, the Court will decide the matter without a hearing pursuant to Eastern District of Michigan Local Rule 7.1(f)(2). For the reasons set forth below, Defendants' motion to dismiss is denied.

I. Facts and Background

The four named plaintiffs in this action are individuals who invested in a 401k plan called the Magna Group of Companies Retirement Savings Plan (the "Plan") during their employment with Magna International of America, Inc. ("Magna"). (Compl. ¶¶ 1, 13-16, 36, ECF No. 1.) The plaintiffs are Melvin Davis, Wayne Anderson, Shawnetta Jordan and Dakota King ("Plaintiffs"). (Compl. ¶¶ 13-17, 19, 20.) Magna is incorporated in Delaware with its principal place of business in Troy, Michigan. (Compl. ¶ 19; Defs.' Memo. 2, ECF No. 14.) It is a subsidiary of Magna International Inc., a global automotive supplier that specializes in mobility technology. (Compl. ¶¶ 19-20; Defs.' Memo. 2.)

This class action is brought pursuant to sections 409 and 502 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1109 and 1132. (Compl. ¶ 1.) Plaintiffs bring this action against the Plan's fiduciaries: Magna International of America, Inc. ("Magna" or the "Company"), the Board of Directors of Magna (the "Board") and its members during the class period, the Magna International of America, Inc. Investment Committee ("Investment Committee") and its members during the class period, and the United States Pension and Retirement Savings Committee and its members during the class period (the "Committee"). (Compl. ¶ 1.) Plaintiffs define the class period as April 30, 2014 through the date of judgment in this action (the "Class Period"). (Compl. ¶ 4.)

The Plan is a defined contribution retirement plan. (Compl. ¶ 2.) In such a plan, the participants have individual accounts and the Plan provides for benefits based upon the amount contributed, and any income, gains and losses, expenses, and any forfeitures which may be allocated to the participant's account. (Compl. ¶ 37.) At all times during the Class Period the Plan had more than one billion dollars in assets under management. (Compl. ¶ 5.) As of December 31, 2018, the Plan had $1.6 billion in assets under management for all funds. (Compl. ¶¶ 5, 49, 52.)

Plaintiffs allege that during the Class Period, Defendants as fiduciaries of the Plan breached the duties they owed to the Plan, to Plaintiffs and to other participants in the Plan by

(1) failing to objectively and adequately review the Plan's investment portfolio with due care to ensure that each investment option was prudent, in terms of cost; and (2) maintaining certain funds in the Plan despite the availability of identical or similar investment options with lower costs and/or better performance histories as required by the Plan's investment policy.

(Compl. ¶ 6.) Plaintiffs' claims are breach of the fiduciary duties of loyalty and prudence, brought against the Investment Committee Defendant and its members (First Claim), and failure to adequately monitor fiduciaries, brought against Magna, the Board and the Committee Defendants (Second Claim). (Compl. ¶¶ 9, 128-34, 135-41.) Defendants move to dismiss these claims under Federal Rules of Civil Procedure 12(b)(1) (lack of standing) and 12(b)(6) (failure to state a claim). (Defs.' Mot. Dismiss, ECF No. 14.)

II. Legal Standard

Defendants bring this motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6), alleging the Plaintiffs lack constitutional standing and alleging the "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(1), 12(b)(6).

The Sixth Circuit noted that under the United States Supreme Court's heightened pleading standard laid out in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), "a complaint only survives a motion to dismiss if it contains sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Estate of Barney v. PNC Bank, Nat'l Ass'n, 714 F.3d 920, 924 (6th Cir. 2013) (internal quotations and citations omitted). The court in Estate of Barney goes on to state that under Iqbal, "[a] claim is plausible when the plaintiff pleads factual contentthat allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (internal quotations and citations omitted). When considering a motion to dismiss under Rule 12(b)(6), the court takes the factual allegations of the complaint as true and draws all reasonable inferences in favor of the plaintiff. See Crugher v. Prelesnik, 761 F.3d 610, 614 (6th Cir. 2014).

Furthermore, while the "plausibility standard is not akin to a 'probability requirement,' . . . it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not 'show[n]'—'that the pleader is entitled to relief.'" Estate of Barney, 714 F.3d at 924 (citing Iqbal, 556 U.S. at 679 (quoting Fed. R. Civ. P. 8(a)(2)). If the plaintiffs do "not nudge[ ] their claims across the line from conceivable to plausible, their complaint must be dismissed." Twombly, 550 U.S. at 570. Finally, the Court must keep in mind that "on a motion to dismiss, courts are not bound to accept as true a legal conclusion couched as a factual allegation." Id. at 555 (quotation and citation omitted).

"[D]ocuments attached to the pleadings become part of the pleadings and may be considered on a motion to dismiss." Commercial Money Ctr., Inc. v. Ill. Union Ins. Co., 508 F.3d 327, 335 (6th Cir. 2007) (citing Fed. R. Civ. P. 10(c)). "A court may consider matters of public record in deciding a motion to dismiss without converting the motion to one for summary judgment." Id. at 336. "In addition, when a document is referred to in the pleadings and is integral to the claims, it may be considered without converting a motion to dismiss into one for summary judgment." Id. at 335-36; see also Greenberg v. Life Ins. Co. of Va., 177 F.3d 507, 514 (6th Cir.1999) (documents not attached to thepleadings may still be considered part of the pleadings when the "document is referred to in the complaint and is central to the plaintiff's claim") (internal quotation marks and citations omitted). Defendants have submitted several exhibits with their motion to dismiss, including excerpts from publicly available annual Department of Labor Form 5500 reports for the years 2016 through 2018; excerpts from the 401k Averages Book, the 1998 Department of Labor Study (and an underlying article), and the ICI Study cited in Plaintiffs' complaint; and the Schedule of Investment for the Principal U.S. Property Separate Account publicly available from Principal's website. (ECF Nos. 14-1 through 14-11.) They also submitted a declaration from Jose Bustamante, Senior Program Manager of the Retirement Program at Magna. (ECF No. 14-12.) Plaintiffs have not objected to these exhibits and the Court finds that they can be considered in this motion to dismiss.

III. Analysis

A. Whether Plaintiffs Have Standing

[B]efore a federal court can consider the merits of a legal claim, the person seeking to invoke the jurisdiction of the court must establish the requisite standing to sue. Article III [of the United States Constitution], of course, gives the federal courts jurisdiction over only 'cases and controversies,' and the doctrine of standing serves to identify those disputes which are appropriately resolved through the judicial process.

Whitmore v. Arkansas, 495 U.S. 149, 154-55 (1990). "A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the . . . constitutional power to adjudicate it." In re UBS Erisa Litigation, 2014 WL 4812387 (S.D.N.Y. Sept. 29, 2014) (citation omitted), aff'd sub nom. Tavernas v. UBS AG, 612 F.App'x 27 (2d Cir. 2015). "In considering a Rule 12(b)(1) motion to dismiss for lack of jurisdiction, a district court may consider factual matters outside the pleadings and resolve factual disputes." Anestis v. United States, 749 F.3d 520, 524 (6th Cir. 2014) (citing OhioNat'l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990)). Three elements must be satisfied for standing to exist: injury in fact, causation and redressability. See Lujan v. Defenders Of Wildlife, 504 U.S. 555, 560-61 (1992). Such standing must be established "for each claim." DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 352 (2006).

Defendants argue that Plaintiffs invested in only two of the Plan's fund options that they challenged, and therefore have not alleged an "injury in fact" that is "concrete and particularized" as to all of the challenged options. (Defs.' Mot. 16, ECF No. 14.) Plaintiffs King and Jordan invested in the Principal LifeTime Hybrid 2050 collective investment trust ("CIT"), and Plaintiffs Davis and Anderson invested in the Principal LifeTime...