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.
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.
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.
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; (3) previous Plan Committee members;
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 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
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."
As to these proprietary mutual funds, the complaint alleges that Trusco Capital Management, Inc. ("Trusco"),
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 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 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
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 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 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.
On June 20, 2011, Defendants moved to dismiss Fuller's complaint. Defendants
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");
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.
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 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
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.
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 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.
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.
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 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
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.
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.
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.
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.
Plaintiff Pruitt sued essentially the same Defendants named in Fuller's amended complaint.
The district court stated that it was reversing course from its Fuller decision
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 ___, 2013 WL 4775918 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 despite their continuing poor performance and high fees." Id. at ___, 2013 WL 4775918 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 ___, 2013 WL 4775918 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.
The district court also reversed course from Fuller as to its three-year limitations ruling, which had relied on actual knowledge. Id. at ___, 2013 WL 4775918 at *13. The Stargel Defendants filed the same exhibits to those filed in Fuller.
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.
"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, 112 L.Ed.2d 474 (1990) (internal quotation marks omitted). To protect participants
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 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, 87 L.Ed.2d 96 (1985). Here, Fuller's suit is brought on behalf of the Plan itself pursuant to § 1132(a)(2).
For claims of fiduciary breaches under § 1104(a)(1), ERISA provides that no action may be commenced "after the earlier of":
ERISA § 413, 29 U.S.C. § 1113.
The first issue is whether Fuller's Count 2 claims are barred by ERISA's three-year limitations period in § 1113(2).
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
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 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 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
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 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.
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 certain investment options from 401(k) Plan menus. We outline those decisions and then analyze Fuller's claims.
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
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.
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.
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
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.
Relying on its earlier precedent,
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.
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).
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
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 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. 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.
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 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.
For the reasons stated, we affirm the dismissal of Fuller's complaint.
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.
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.
