Federal Judge Nixes Interlocutory Appeal to Clarify Pleading Standards for ERISA Excessive Fee Claims

On July 20, 2023, a federal judge in Massachusetts rejected defendants’ request to certify an interlocutory appeal to the First Circuit to clarify the proper pleading standard for ERISA breach-of-duty claims. See Monteiro v. The Children’s Hospital Corp., 1:22-cv-10069-AK, ECF 66 (D. Mass).

In this case, the plaintiffs filed a putative class action against Boston-based Children’s Hospital Corporation, claiming that fiduciaries of the company’s 403(b) plan (the “Plan”) breached ERISA duties by saddling the Plan with “excessive” investment and recordkeeper fees. The defendants moved to dismiss, arguing (among other things) that the plaintiffs failed to plausibly allege that the Plan’s fees were excessive or suggested fiduciary imprudence. The district court denied the motion to dismiss in full, relying on case law from the Eighth and Ninth Circuits and district court decisions.

There is typically no right to immediately appeal a denial of a motion to dismiss. However, in an unusual twist, the defendants asked the court to certify an interlocutory appeal to the First Circuit under 28 U.S.C. § 1292(b), which allows for such appeals involving a “controlling question of law as to which there is substantial ground for difference of opinion.” The defendants argued there was such a “controlling question of law”—namely, “the proper pleading standard applying to ERISA fiduciary-duty claims.” According to the defendants, the First Circuit, unlike many of its sister circuits, “has not definitively resolved this pleading-standard issue.”

The district court, however, declined to certify the interlocutory appeal. The court concluded that “it is clear that Defendants’ true issue is this Court’s application of the pleading standard to the particular facts of this case”—an “insufficient basis for certifying interlocutory appeal.” (emphasis in original)

ERISA practitioners will have to wait a bit longer for the First Circuit to weigh in on the pleading standard for ERISA excessive fee claims.

Nick Bullard

Nick is a trial partner in Dorsey’s office in Minneapolis. His practice focuses on complex and high-stakes commercial litigation at the trial and appellate levels. He has particular expertise in defending clients in ERISA class actions involving both retirement and health and welfare plans. In his ERISA practice, Nick has represented some of the largest companies in the world in industries ranging from banking to healthcare.

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