Narrative Opinion Summary
In this case, plaintiffs initiated a class action against defendants, alleging violations of the Employee Retirement Income Security Act (ERISA) relating to fiduciary duties and prohibited transactions within BlackRock's retirement savings plan. The plaintiffs comprise two classes, one involving participants in the BlackRock Retirement Savings Plan and another involving accounts in BlackRock proprietary collective trust investment funds (CTIs), claiming excessive fees and preferential compensation practices. Key issues revolved around the reasonableness of fees, with plaintiffs arguing that CTIs were charged higher fees for securities lending compared to mutual funds and ETFs, due to a lack of independent fiduciaries. The court examined discovery requests to obtain documents pertinent to fee structures, finding them relevant to claims of fiduciary breaches. Defendants' arguments regarding structural differences and the irrelevance of profitability in fee determination were dismissed by the court. Additionally, the court addressed attorney-client privilege, upholding defendants' withholding of certain documents under the fiduciary exception. The court also deliberated on the settlor functions, reaffirming that such decisions do not invoke ERISA fiduciary duties. Ultimately, the court ordered the production of specific documents while emphasizing the need for proportional discovery and rejecting overly broad requests.
Legal Issues Addressed
Comparison of Fee Structuressubscribe to see similar legal issues
Application: The court allows discovery to explore discrepancies in fees charged to CTIs versus mutual funds and ETFs, noting the lack of structural differences to justify higher fees for CTIs.
Reasoning: The Court rejects Defendants' argument regarding structural differences justifying higher fees, finding no adequate explanation for why CTIs would charge more for the same securities lending services compared to mutual funds and ETFs.
Discovery Under Rule 26subscribe to see similar legal issues
Application: The court considers the scope and relevance of discovery requests related to securities lending fees, emphasizing the need for discovery to be proportional and relevant to the claims.
Reasoning: Under Rule 26, parties may obtain discovery relevant to claims or defenses, considering factors such as the importance of the issues and the proportionality of the discovery.
ERISA Fiduciary Duties and Prohibited Transactionssubscribe to see similar legal issues
Application: The court examines whether BlackRock's management of its 401(k) plan violated fiduciary duties by implementing an investment menu primarily consisting of proprietary funds and imposing excessive fees.
Reasoning: Plaintiffs filed a class action against Defendants on April 5, 2017, alleging violations of ERISA related to fiduciary duties and prohibited transactions.
Fiduciary Exception to Attorney-Client Privilegesubscribe to see similar legal issues
Application: The court evaluates whether certain documents can be withheld under the fiduciary exception, determining that entries concerning fiduciary risk are protected from disclosure.
Reasoning: The Ninth Circuit has established that while this exception applies to plan administration advice, it does not extend to advice intended to protect fiduciaries from personal liability.
Reasonableness of Fees Under ERISAsubscribe to see similar legal issues
Application: The court examines whether market competitiveness and service costs should be considered in determining the reasonableness of fees charged by fiduciaries under ERISA.
Reasoning: The Court concludes that while profitability is not explicitly listed in the Best Interest Contract Exemption, the factors provided are not exhaustive, and relevant considerations like service costs must be evaluated to determine fee reasonableness.
Settlor Functions and Fiduciary Dutiessubscribe to see similar legal issues
Application: The court differentiates between settlor functions and fiduciary duties, ruling that decisions made in a settlor capacity do not invoke ERISA's fiduciary obligations.
Reasoning: Decisions made by a person or entity in a settlor capacity do not invoke ERISA's fiduciary duties, as established in Ronches v. Dickerson Empl. Benefits.