The opinion
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
GUILLERMINA LOPEZ,
Plaintiff,
v. Case No: 6:22-cv-1580-PGB-LHP
EMBRY-RIDDLE
AERONAUTICAL UNIVERSITY,
INC.,
Defendant.
/
ORDER
This cause is before the Court on Plaintiff Guillermina Lopez’s (“Lopez”)
Motion for Class Certification. (Doc. 43 (the “Motion”)). Defendant Embry-
Riddle Aeronautical University, Inc. (“Embry”) submitted a Response in
Opposition (Doc. 53), and the Plaintiff filed a Reply. (Doc. 54 (the “Reply Brief”)).
Upon due consideration, Plaintiff Lopez’s Motion is denied.
I. BACKGROUND
Defendant Embry offers a retirement plan (the “Plan”) to its employees
where eligible faculty and staff may elect to participate in the Plan. (Doc. 1, ¶ 1).
Plaintiff Lopez sued in her capacity as a member of the Plan and as a class
representative. (Id.). Lopez alleges that Embry breached its fiduciary duty by
paying excessive recordkeeping fees and expenses charged against participants’
investments and affecting all Plan participants in the same way. (Id. ¶¶ 7, 23, 90).
Lopez further claims the Plan participants were harmed, because the investment
options underperformed many prudent alternatives available to the Plan, resulting
in a loss of retirement savings. (Id. ¶¶ 25, 66–70).
Lopez argues Defendant Embry should have negotiated with the Teachers
Insurance and Annuity Association of America (“TIAA”) for an annual
recordkeeping cost assessed per participant at a rate of $25 to $30. (Doc. 43, pp.
6–7).1 Lopez claims that from 2015 through 2020, Embry allowed TIAA to charge
each Plan participant between $62.46 and $81.48 per year in direct recordkeeping
costs. (Id. at p. 7). She also contends that TIAA’s direct and indirect compensation
was at least $160 per participant annually. (Id. at p. 10). Defendant Embry objects
to certification of the class for four reasons: Lopez lacks standing, her claims are
antagonistic to and in conflict with the interests of most other putative class
members, her claims are not typical, and Lopez lacks adequate knowledge to
represent the class. (Doc. 53, pp. 10–18). Defendant Embry also contends that
mandatory class certification under Rule 23(b)(1) of the Federal Rules of Civil
Procedure is inappropriate and, if certified, class members should be permitted to
opt out of the class action. (Id. at p. 19).
II. STANDARD OF REVIEW
To certify a class action, the moving party must satisfy several prerequisites.
First, the named plaintiff must demonstrate standing. Vega v. T-Mobile USA, Inc.,
1 (See also Doc. 1, ¶ 97).
564 F.3d 1256, 1265 (11th Cir. 2009). Second, the putative class must meet all four
requirements set forth in Rule 23(a):
(1) the class is so numerous that joinder of all members is
impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of
the claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the
interests of the class.
FED. R. CIV. P. 23(a). Third, the putative class must fit into at least one of the three
class types defined by Rule 23(b). FED. R. CIV. P. 23(b). The party moving to certify
any class bears the burden of proving that all prerequisites are met. See Brown v.
Electrolux Home Prods., Inc., 817 F.3d 1225, 1233–34 (11th Cir. 2016).
Class certification is not automatic, and the court must conduct a rigorous
analysis of the propriety of class certification. In re HealthSouth Corp. Secs. Litig.,
257 F.R.D. 260, 271 (N.D. Ala. 2009). The court’s inquiry may include “a possible
‘probe behind the pleadings before coming to rest on the certification question.’”
Id. (internal citation and quotation marks omitted). Thus, the Court should
consider the merits of the case as necessary to determine whether the Plaintiff has
met the requirements of Rule 23. Id. That said, the Court should avoid turning the
class-certification proceeding into a trial on the merits. Id. at 271–272.
III. DISCUSSION
A. Standing
“A plaintiff’s standing to bring and maintain her lawsuit is a fundamental
component of a federal court’s subject matter jurisdiction.” Huang v. TriNet HR
III, Inc., No. 8:20-cv-2293-VMC-TGW, 2022 WL 13631836, at *3 (M.D. Fla. Oct.
21, 2022) (quoting Baez v. LTD Fin. Servs., L.P., No. 6:15-cv-1043-PGB-DCI, 2016
WL 3189133, at *2 (M.D. Fla. June 8, 2016))2. To establish standing, “[t]he plaintiff
must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged
conduct of the defendant, and (3) that is likely to be redressed by a favorable
judicial decision.” Id. at *3. And an injury in fact is “‘an invasion of a legally
protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent,
not conjectural or hypothetical.’” Id. (citation omitted).
Plaintiff Lopez asserts in her motion for class certification that TIAA charged
excessive recordkeeping fees to the Plan’s participants. (Doc. 43, p. 7). Lopez cites
her Complaint as evidence that TIAA was paid “nearly double the amount of
reasonable compensation.” (Id.). Similarly, Lopez claims without citing an
evidentiary basis that TIAA was paid millions in excessive indirect compensation.3
2 Plaintiff Lopez urges the Court to follow Judge Covington’s reasoning in Huang even though
Judge Covington held a potential ERISA class representative must establish his individual
standing before he can represent putative class members of other plans to which he does not
belong. (Doc. 43, pp. 4–5); Huang, 2022 WL 1363186, at *4.
3 Plaintiff Lopez does cite a declaration by her attorney, Michael McKay (“Mr. McKay”), for
the proposition that TIAA received millions of dollars in indirect compensation. (Doc. 43, p.
9 (citing Doc. 43-1 (the “McKay Declaration”)). However, Lopez’s reliance on the McKay
Declaration is misplaced. At best, Mr. McKay states in the McKay Declaration that Embry’s
2017 through 2021 Annual Form 5500 Department of Labor Disclosures “contain[] no
(Id. at p. 8). And Lopez’s assertion that TIAA’s direct and indirect compensation
was at least $160 per participant annually is supported only by reference to her
Complaint. (Id. at p. 10).
In response to Lopez’s claim that excessive recordkeeping fees were charged
by TIAA, Defendant Embry offers the declaration of Mr. Brandon Young (“Mr.
Young”), the Vice-President and Chief Human Resources Officer of Embry-Riddle
Aeronautical University. (Doc. 53-1). Mr. Young attests that the Plaintiff’s
summary of direct annual recordkeeping fees charged per participant between
2015 and 2020 as stated in her Complaint is false. (Id. ¶ 29). First, Mr. Young notes
that, contrary to Lopez’s assertion, the Variable Annuity Life Insurance Company
(“VALIC”) was never a recordkeeper for the Plan and never received
compensation, and, secondly, the Plan does not pay recordkeeping fees on a “per-
participant” basis and instead prefers an asset-based recordkeeping fee. (Id. ¶¶
30–31). Defendant Embry also offers the expert report of Dr. Steven Grenadier
(“Dr. Grenadier”), who calculates that “Ms. Lopez paid no more than $18 in
recordkeeping fees each year during the Proposed Class Period.”4 (Doc. 53-2, p. 4).
As a result, Ms. Lopez was not economically harmed by the Plan’s asset-based fee
information about indirect compensation the Plan’s recordkeeper receives via float,” except
for the 2018 Form, which included service code 62, indicating TIAA receives compensation
via float. (Id. ¶¶ 12-17).
4 Dr. Grenadier also concludes that based on his review of the data “the majority of the Proposed
Class members were economically better off under the Plan’s asset-based recordkeeping fee
arrangement . . . relative to a proposed flat $30 per-participant fee.” (Doc. 53-2, p. 19). This is
because “Plan participants with lower balances generally paid less recordkeeping fees under
the asset-based arrangement (while others with higher balances generally paid more
recordkeeping fees).” (Id.).
arrangement. (Id. at pp. 4–5). Moreover, Lopez only invested in the Plan’s
Vanguard Target Retirement Date Fund and never invested in any of the
challenged actively managed funds. (Doc. 53-1, ¶ 33; Doc. 53-2, p. 6). Since Lopez
never invested in the challenged funds, she was not harmed by the alleged
imprudent investment decisions relating to the actively managed funds.
Two points are worth noting here. First, Plaintiff Lopez fails to articulate in
her Motion any injury in fact that she sustained. And second, Lopez ignores the
testimony of Mr. Young and Dr. Grenadier in her Reply Brief. (See Doc. 54). The
Plaintiff argues, even if unconvincingly, that in the absence of an individual injury,
she still has standing to represent a class to which she does not belong simply
because she is “only seeking equitable remedies on behalf of the entire Plan.” (Id.
at p. 7). A close reading of Huang reveals why the Plaintiff is wrong. See 2022 WL
13631836, at *2, *4.
Two retirement plans were at issue in Huang: TriNet 401(k) (“TriNet III”)
and TriNet Select 401(k) (“TriNet IV”). Id. at *2. As here, the plaintiffs sued the
defendants for breaching their fiduciary duties by failing to ensure each investment
option was prudent and failing to control the plans’ recordkeeping fees. See id. The
defendants argued that no plaintiff had standing to pursue claims related to TriNet
III, because only plaintiff Patterson invested in that plan, but she did not invest in
one of the funds challenged by the plaintiffs. Id. at *4. Additionally, Ms. Patterson
paid lower annual recordkeeping fees than her expert considered reasonable. Id.
And so, Judge Virginia M. Hernandez Covington (“Judge Covington”) found
that “Ms. Patterson has not demonstrated an injury in fact, and, therefore, lacks
standing.” Id. Judge Covington dismissed plaintiffs’ claims as to Ms. Patterson and
held she would not be appointed as a representative for the class. Id.
Fortunately for the plaintiffs, several potential class representatives were
named as plaintiffs in Huang. Id. The court found the TriNet IV plaintiffs had
standing to pursue their claims related to both the TriNet III and TriNet IV plans.
Id. Judge Covington rejected the defendants’ argument that TriNet IV plaintiffs
lacked standing to pursue claims on behalf of members invested in TriNet III’s
challenged funds. Id. Judge Covington correctly ruled that the defendants were
confusing constitutional standing (case or controversy) with the Rule 23(a)
typicality requirement. Id. That is, “once a potential ERISA class representative
establishes his individual standing to sue his own ERISA governed plan, there is
no additional constitutional standing requirement related to his suitability to
represent the putative class of members of other plans to which he does not
belong.” Id. (emphasis added) (quoting Fallick v. Nationwide Mut. Ins. Co., 162
F.3d 410, 424 (6th Cir. 1998). This assumes, of course, that the claims asserted by
the plaintiff with standing are typical of the claims asserted by the members of the
other plans.
Here, Plaintiff Lopez lacks individual standing, so she may not pursue claims
on her behalf much less on behalf of a Plan to which she never belonged. To rule
otherwise would allow any disinterested party to serve as a class representative
under cover of pursuing equitable relief for the Plan.5 Accordingly, Lopez lacks
standing to bring claims on behalf of the putative class, and she may not serve as a
class representative.
B. Plaintiff Lopez’s Claims are Antagonistic
Even though the matter of class certification is resolved against the Plaintiff
based on her lack of standing, the Court will address a separate basis for finding
class certification to be inappropriate. Lopez alleges the Defendant “should have
been able to negotiate a recordkeeping cost with TIAA anywhere from $25 per
participant to $30 from the beginning of the Class Period to the present.” (Doc.
43, p. 7 (emphasis added) (quoting Doc. 1, ¶ 97)). As discussed above, Embry,
acting via the Committee, rejected the “per-participant” basis for assessing
recordkeeping fees and opted for an “asset-based” approach. (Doc. 53-1, ¶ 31). Dr.
Grenadier notes that since participants with smaller account balances pay annual
recordkeeping fees below Plaintiff’s proposed rate of $25 to $30, “members of the
Proposed Class have a conflicting economic interest with other members of the
Proposed Class who paid more than $25–$30 per year under the asset-based fee
arrangement used by the Plan.” (Doc. 53-2, pp. 4, 16–20). On this basis alone, class
certification is improper.
And finally, as Dr. Grenadier explains in detail in his expert report, “Ms.
Lopez’s claim about actively managed funds and the economic harm they caused
5 The deadline for adding parties is governed by the Case Management and Scheduling Order.
The deadline to add parties or amend pleadings in the instant case expired nearly one year
ago, on March 6, 2023. (Doc. 32).
cannot be assessed on a collective (class-wide) basis.” (Doc. 53-2, p. 5). This is
because “the performances of the Plan’s actively managed funds during the
Proposed Class Period varied between funds and over time but generally compared
favorably to their benchmarks identified in disclosures to Plan participants.” (Id.).
As such, the Plaintiff’s generalized claim that better performing funds may have
been available “fail[s] to consider the individualized nature of investments in
‘frozen’ individual annuity contracts.” (Id. at pp. 6, 20–33). This is because, one
must consider “1) the specific funds being compared; 2) the time horizon over
which the comparison is being made; and 3) aggregate market and economic
conditions at the time of comparison.” (Id. at p. 22). Simply put, common
questions of fact do not predominate when considering the selection of investment
funds and their performance here.6 The Court sees no need to address the balance
of the reasons why class certification is improper.
IV. CONCLUSION
For these reasons, the Plaintiff’s Motion for Class Certification (Doc. 43) is
DENIED.
DONE AND ORDERED in Orlando, Florida on February 26, 2024.
6 For these reasons, a mandatory class under Rule 23(b)(1) of the Federal Rules of Civil
Procedure would be a disservice to Plan participants who have benefited under the current
regime.
Gree
PAUL G.
UNITED STATESM@ISTRICT JUDGE
Copies furnished to:
Counsel of Record
Unrepresented Parties