10th Circuit’s ‘Meaningful Benchmark’ Ruling Will Not Stymie Lawsuits, Experts Says

The U.S. 10th Circuit Court of Appeals has weighed in on an ongoing court battle over the “meaningful benchmark” pleading standard for 401(k) participants bringing lawsuits alleging excessive investment management or recordkeeping fees, but it may not slow lawsuits against plan sponsors, according to legal experts.

On September 9, an appellate opinion in Matney v. Barrick Gold of North America sided with four other circuit courts around the country by agreeing with a lower federal district court’s ruling that adopted the “meaningful benchmark” pleading standard that plaintiffs must satisfy in order to survive defendants’ motion to dismiss. The court joined decisions from the 3rd, 6th, 7th and 8th circuits, among the country’s 13 circuits courts, which include 11 numbered courts, the District of Columbia Circuit and the Federal Circuit.

Lawsuits Likely to Continue

The 10th Circuit’s decision represented a clean sweep for the defendants. Even so, the ruling is unlikely to slow the pace of retirement plan fiduciary breach litigation brought by plaintiffs under the Employee Retirement Income Security Act, says Russell Hirschhorn, co-head of the ERISA litigation group at Proskauer Rose LLP, which was not involved in the litigation.  

“I don’t know that any one particular case is going to stop the plaintiffs’ bar in their tracks, [because] they’ve been going at this for well over a decade in this space,” he explains. “They’ve survived a lot of motions to dismiss, and they have been defeated on a lot of motions to dismiss. I am hopeful that other courts will adhere to or take guidance from what the 10th Circuit has said here. But whether this slows the plaintiffs’ bar down or not? I do not think so.”

Jerry Schlichter, founder and managing partner in Schlichter, Bogard & Denton, which also was not involved in the litigation, agreed the ruling is context-specific and unlikely to have a major effect on ERISA lawsuits.

“I do not see it as breaking new ground,” Schlichter says. “I would not take it out of context.”

Matney was brought in 2020 by retirement plan participants before the U.S. District Court for the District of Utah.

The appellate opinion requires participants to do more than “come in [to court] and say, ‘There is some other fund that performs better’ or ‘There’s some other fund that was cheaper,’ survive a motion to dismiss and then be able to engage in class action discovery,” says Hirschhorn.

Barrick Gold’s Dismissal Upheld

In the lawsuit, the plaintiffs alleged that fiduciaries of the Barrick Retirement Plan charged participants excessive fees for plan investments and recordkeeping services. The plaintiffs claimed that the defendants breached their fiduciary duty of prudence by offering to plan participants high-cost funds and charging high fees.

While ERISA requires retirement plan fiduciaries to exercise the duty of prudence in operating and managing retirement plans on behalf of participants, the plaintiffs did not satisfy the standard to overcome the defendants’ motions to dismiss, according to the 10th Circuit’s three-judge panel of U.S. Circuit Judges Timothy M. Tymkovich, Nancy L. Moritz and Veronica S. Rossman in affirming the district court’s dismissal.

“Our colleagues in the Third, Sixth, Seventh, and Eighth circuits confirm, there is no doubt a claim for breach of ERISA’s duty of prudence can be based on allegations that the fees associated with the defined-contribution plan are too high compared to available, cheaper options,” the judges wrote. “But to raise an inference of imprudence through price disparity, a plaintiff has the burden to allege a ‘meaningful benchmark.’ We thus adopt the approach to an ERISA plaintiff’s pleading burden articulated by the Eighth Circuit in Meiners [v. Wells Fargo].”

Barrick Gold Corp. has gold and copper mining operations and projects in 13 countries. The firm and the board of directors of Barrick Gold of North America were accused of failing to monitor the Barrick U.S. Subsidiaries Benefits Committee’s actions, according to the complaint.

The federal district court in Utah dismissed the case with prejudice in 2022, concluding an amended complaint did not plausibly allege any breach of fiduciary duty under ERISA.

A request for comment to representatives for Barrick Gold was not returned. The Barrick Retirement Plan plan had $1.3 billion in assets and 8,238 participants as of 2021, according to its Form 5500 regulatory filing.

“This is the first time that a circuit court has rolled up its’ sleeves in this way. … It’s a breath of fresh air that the court was willing to engage in this, shall we say, context-specific analysis,” adds Hirschhorn.