Wachala v. Astellas US LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

MICHAEL WACHALA, PATRICIA WALSH, )

MARY BETH PREUSS, SADE ADENEYE, )

MIKE BICKLE, and JACQUELINE GOUGH, )

individually and as representatives of classes of )

participants and beneficiaries on behalf of the )

Astellas US Retirement and Savings Plan, )

)

Plaintiffs, )

) No. 20 C 3882

v. )

) Judge Ronald A. Guzmán

ASTELLAS US LLC, THE BOARD OF )

DIRECTORS OF ASTELLAS US LLC, )

THE ASTELLAS RETIREMENT PLAN )

ADMINISTRATIVE COMMITTEE, )

AON HEWITT INVESTMENT )

CONSULTING, INC. (n/k/a AON )

INVESTMENTS USA, INC.), and )

JOHN DOES 1-14, )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

For the reasons explained below, plaintiffs’ motion for class certification is granted, and

Aon Hewitt Investment Consulting Inc.’s motion for leave to file certain materials under seal is

granted in part and denied in part.

BACKGROUND

This is a putative class action under ERISA § 502(a)(2) brought by several participants in

the retirement plan (the “Plan” or the “Astellas Plan”) of Astellas US LLC (“Astellas”) against

Astellas; its Retirement Plan Administrative Committee (“the “Committee”); its Board of

Directors (the “Board”); and the Plan’s investment manager, Aon Hewitt Investment Consulting,

Inc., now known as Aon Investments USA, Inc. (“Aon”).1 Plaintiffs allege in their remaining

claims that Aon violated its fiduciary duties by investing in and retaining five Aon collective

investment trusts (“CITs”); that the Astellas Defendants violated their fiduciary duties by failing

1 Where appropriate, the Court will refer to Astellas, the Committee, and the Board

collectively as the “Astellas Defendants.”

to properly monitor the fiduciaries; and that the defendants engaged in prohibited transactions.2

Plaintiffs assert that the defendants’ conduct caused Plan participants to suffer millions of dollars

of losses in their retirement savings. The primary allegations of the complaint are summarized in

the Court’s Memorandum Opinion and Order of April 13, 2021, (ECF No. 99), and will not be

repeated here. Plaintiffs now move for class certification. Aon moves for leave to file certain

materials under seal.

DISCUSSION

A. Aon’s Motion for Leave to File Documents Under Seal

Along with its response to plaintiffs’ motion for class certification, Aon filed an

unopposed motion for leave to file or maintain3 several items under seal. The first items are

portions of defendants’ memorandum in opposition to plaintiffs’ motion and portions of the

Declaration of John Chalmers, Ph.D., Aon’s expert (the “Chalmers Declaration”). Aon has

redacted the memorandum and the Chalmers Declaration to omit references to how plaintiffs’

counsel instructed their expert, Edward S. O’Neal, Ph.D., to calculate losses; arguments about

the experts’ calculations; and, for the most part, references to certain named plaintiffs’ and

certain anonymized Plan participants’ particular gains and losses on Plan investments. Citing

Federal Rule of Civil Procedure 5.2, Aon submits that there is good cause for these proposed

redactions because they “contain confidential personal information of plan participants.” (ECF

No. 149, Aon’s Mot. Seal at 6.)

In the Seventh Circuit, documents that are placed in the court record “that influence or

underpin the judicial decision are open to public inspection unless they meet the definition of

trade secrets or other categories of bona fide long-term confidentiality.” Baxter Int’l, Inc. v.

Abbott Lab’ys, 297 F.3d 544, 545 (7th Cir. 2002). Under Rule 5.2, certain personal identifying

information, such as social-security numbers (“SSNs”), taxpayer-identification numbers,

financial-account numbers, birth dates, and minors’ names, receives privacy protection. Fed. R.

Civ. P. 5.2. Courts have also found good cause to redact other personal identifying information

such as addresses and telephone numbers. See, e.g., Smith v. Portwood, No. 19 C 5329, 2021

WL 4318076, at *4 (N.D. Ill. Sept. 23, 2021). Neither defendants’ memorandum nor the

Chalmers Declaration, however, contains such personal identifying information. References to

the methods by which experts performed calculations or the data upon which the calculations are

based are not entitled to be kept secret. The references in these materials to putative class

members’ gains or losses do not merit protection because they are anonymized and thus contain

2 Plaintiffs also assert a claim in Count II of the complaint that the Astellas Defendants

breached their fiduciary duties by causing the Plan to pay unreasonably high investment

management fees. Although Count II survived the Astellas Defendants’ motion to dismiss,

plaintiffs now state in a footnote in their memorandum in support of class certification that,

based on information they received in discovery, they “will not further pursue Count II.” (ECF

No. 142, Pls.’ Mem. Supp. Mot. Class Certification at 5 n.3.) Plaintiffs are directed to promptly

file a motion to dismiss that count.

3 Some of the items were previously provisionally filed under seal.

no personal identifying information. And there is no good cause to redact the named plaintiffs’

names, because they are not proceeding anonymously; their identities are, properly, public

information. It is also public information that the named plaintiffs allege that they suffered

losses in their retirement savings as a result of defendants’ conduct; the Court therefore sees no

reason why references to particular losses or gains experienced by the named plaintiffs in certain

investments (or their investment histories, insofar as they relate to the allegations in this action)

are entitled to secrecy. Aon’s motion is denied as to the proposed redactions to defendants’

memorandum and the Chalmers Declaration.

Next, Aon contends that there is good cause to file under seal the entirety of Exhibits A,

B, and C to the Declaration of William D. Pollak (one of Aon’s attorneys). Exhibits A and B are

PDF versions of the first tab of certain Excel spreadsheets. Exhibit A is a spreadsheet titled

“Astellas Damages,” which was created by O’Neal and produced by plaintiffs in discovery.

(ECF No. 147-2, Pollak Decl. ¶ 3.) It lists the Plan participants, the dates of their first and last

investments, and what plaintiffs calculate to be their losses in certain investments. Pollak states

that Aon has “hidden the column containing Plan participants’ social security numbers in order

to protect their personal information.” (Id.) In other words, even the version of Exhibit A that

has been provisionally filed under seal does not contain SSNs. The only personal identifying

information it contains are the Plan participants’ (the putative class members’) first and last

names. There is no cause to seal the entirety of Exhibit A; with respect to the putative class

members, the name columns can simply be redacted or removed in a publicly filed version of the

document. In contrast with the named plaintiffs, the putative class members did not individually

bring this action, and they did not put their personal investment losses and histories at issue for

purposes of the instant motion for class certification. But any information about the named

plaintiffs’ investments is not properly maintained as confidential and must appear in the publicly

filed version of Exhibit A. Aon’s motion to seal Exhibit A to the Pollak Declaration thus will be

granted as to the removal of the putative class members’ names but denied as to the removal of

the named plaintiffs’ names and the remainder of the information in the spreadsheet. As for

Exhibit B, it is an anonymized version of Exhibit A wherein the Plan participants’ names have

been replaced with a unique Participant Number. Exhibit B contains no personal identifying

information whatsoever, and Aon’s motion to seal is denied as to this document.

Exhibit C is the transcript from O’Neal’s deposition. Instead of redacting the transcript,

Aon proposes to seal it in its entirety. Aon says that O’Neal “testified regarding his calculations

of purported damages for a number of specific Plan participants and his testimony includes

detailed information regarding the amounts of these participants’ investments, their allocation

across investments, and the returns that they received during the purported class period.” (Aon’s

Mot. Seal at 5.) Aon asserts that the testimony therefore contains “confidential personal

information” of Plan participants, but simply deeming something “confidential” is insufficient to

warrant keeping it from the public eye. See, e.g., Union Oil Co. of Cal. v. Leavell, 220 F.3d 562,

567 (7th Cir. 2000). The Court has reviewed the transcript; the only portions that warrant sealing

are the names of the putative class members, about six or seven of which are mentioned therein.

If their names are redacted, the particulars of their investment histories that were discussed

during the deposition cannot be connected to them, so the remainder of the discussion need not

be redacted. Aon’s motion to seal is therefore granted as to the redaction of the putative class

members’ names but denied as to the remainder of the transcript and as to the discussions

pertaining to the named plaintiffs.

The next batch of exhibits Aon seeks to seal are five exhibits to the Declaration of Sean

Soyars (one of plaintiffs’ attorneys). Plaintiffs filed these exhibits with their memorandum in

support of class certification. Aon seeks to file them almost entirely under seal. The first,

Exhibit 17, is a copy of a slide presentation given to Aon’s “Delegated Portfolio Oversight

Committee (‘DPOC’) seeking approval of proposed changes to certain [Aon]-sponsored equity

funds.” (Aon’s Mot. Seal at 6.) Aon argues that the document contains “detailed analysis”

regarding Aon’s “proprietary investment strategies,” including the incorporation of “active

factors,” as well as “strategic information, capital market assumptions, and sensitive proprietary

analyses,” and that the approach and ideas discussed in the presentation ultimately were not

adopted and “remain confidential, and unavailable” to Aon’s clients, competitors, and third

parties in the marketplace. (Id. at 6-7.) Exhibit 18 to the Soyars Declaration consists of the

minutes of the November 18, 2020 meeting of the Board of Directors of Aon Trust Company

LLC (“Aon Trust”), the trustee of the Aon CITs. Aon seeks to file nearly the entire document

under seal, except for the opening and closing sections indicating basic facts about the meeting

such as when it began, when it ended, and who was present, and a brief section (cited by

plaintiffs) discussing the effect of an influx of assets into, and changes to, the CITs. According

to Aon, the remaining portion of the minutes contains material that is irrelevant to this litigation

that pertains to Aon Trust’s other clients and potential clients, as well as information on general

revenue, working capital, and accounts receivable. Exhibits 19 and 20 to the Soyars Declaration

are, respectively, the July 20, 2020 and June 2, 2020 materials packets for the meetings of Aon’s

U.S. Investment Management Committee, which Aon describes as one of its “most senior

committees tasked with developing Aon’s business strategies and thought leadership on a variety

of topics.” (Id. at 9.) The materials contain the draft minutes from the previous meeting and

slide presentations for discussion. Aon says that the materials “contain confidential internal

analyses, proprietary information regarding the construction of investments, and [Aon’s] sales

strategies.” (Id. at 10.) Exhibit 21 to the Soyars Declaration consists of the minutes of the June

27, 2016 DPOC meeting, which Aon says “document the DPOC’s confidential discussions

regarding a number of other Aon clients and their investment plan lineups,” “reflect[]

information regarding Aon’s confidential investment strategies,” and “reflect the preferences and

investment strategies of Aon’s clients.” (Id. at 11.)

Plaintiffs use Exhibits 17, 18, 19, 20, and 21 in an extremely limited fashion in

conjunction with their motion for class certification. The exhibits are cited only in the

background section of plaintiffs’ memorandum and only for narrow factual propositions that

plaintiffs say support their chosen ending date for the class period because they reflect Aon’s

views and decision-making about makeup and oversight of the Aon Funds. It was unnecessary

for plaintiffs to have filed these exhibits in their entirety, especially considering that the

documents contain a great deal of irrelevant information and financial information that pertains

to third parties. The Court has not relied on the information that Aon proposes to redact in these

five exhibits, and, in the Court’s view, plaintiffs should not have submitted the extraneous

material in the first place. Aon’s motion to seal is therefore granted as to Exhibits 17, 18, 19, 20,

and 21 to the Soyars Declaration.

The provisional seal is hereby removed as to the items that plaintiffs were previously

granted leave to provisionally file under seal and that defendants have not sought to permanently

seal. Plaintiffs are directed to publicly file an unredacted memorandum in support of their

motion for class certification, and defendants are directed to publicly file an unredacted

memorandum in opposition to the motion. As to the remaining exhibits, the parties are directed

to confer to determine exactly which exhibits are no longer properly sealed or as to which the

proposed redactions must be modified and whether plaintiffs or defendants will be responsible

for filing these exhibits on the public docket. Those filings should be completed by February 25,

2022.

B. Plaintiffs’ Motion for Class Certification

Plaintiffs allege in Count I that Aon violated its fiduciary duties of prudence and loyalty

by selecting and retaining the Aon CITs as investment options for the Plan; in Counts I and IV

that the Astellas Defendants violated its fiduciary duties by failing to properly monitor Aon; and

in Count III that defendants engaged in prohibited transactions, namely, that Aon selected its

own CITs as investment options for the Plan and the Astellas Defendants caused the Plan to pay

Plan assets to Aon.

Plaintiffs seek to represent and certify as to Counts I, III, and IV three classes, defined as

follows:

Investment Loss Class: All participants in the Astellas US Retirement and

Savings Plan whose Plan accounts invested in any of the Plan’s five Aon

Collective Investment Trusts at any time between October 3, 2016 and June 30,

2020 and whose investment in at least one of the Aon Collective Investment

Trusts earned less as of June 30, 2020 than the account would have earned had it

been invested in the corresponding Legacy Investment Option(s).4

Payment of Plan Assets Class: All participants in the Astellas US Retirement

and Savings Plan whose Plan accounts invested in any of the Plan’s five Aon

Collective Investment Trusts at any time between October 3, 2016 and June 30,

2020.5

Equitable Relief Class: All participants in the Astellas US Retirement and

Savings Plan with account balances as of the date of judgment.

4 Excluded are Board and Committee members. Plaintiffs define the term “Legacy

Investment Option(s)” to comprise eight options: MFS Large Cap Value R5 (MEIKX); T. Rowe

Price Institutional Large Cap Core Growth (TPLGX); AMG TimesSquare Mid Cap Growth

Institutional (TMDIX); Touchstone Mid Cap Value Fund Institutional (TCVIX): DFA Small Cap

Fund I (DFSTX); American Funds Europacific Growth R6 (RERGX); PGIM Total Return Fund

R6 (PTRQX); and PIMCO Real Return Institutional (PRRIX). (ECF No. 140, Pls.’ Mot. Class

Certification at 1-2.) The Court will refer to those options as the “Legacy Options.”

5 Excluded are Board and Committee members.

(ECF No. 142, Pls.’ Mem. Supp. Mot. Class Certification at 6.) Plaintiffs ask the Court to

appoint named plaintiffs Michael Wachala, Patricia Walsh, Mary Beth Preuss, Mike Bickle, and

Sade Adeneye as representatives of the Investment Loss Class and the Payment of Plan Assets

Class and to appoint named plaintiffs Adeneye and Jacqueline Gough as representatives of the

Equitable Relief Class.6 Plaintiffs also ask the Court to appoint as class counsel their attorneys at

Schlichter Bogard & Denton, LLP. Defendants do not oppose certification of the Payment of

Plan Assets Class, which involves the claim in Count III against only the Astellas Defendants.

(ECF No. 154, Pls.’ Am. Reply at 1 n.1.)

To be certified, a proposed class must first satisfy all four requirements of Federal Rule

of Civil Procedure 23(a). Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 811 (7th

Cir. 2012). The Rule 23(a) requirements are numerosity, typicality, commonality, and adequacy

of representation. Id. A proposed class must also satisfy one of the Rule 23(b) requirements. Id.

Plaintiffs move under Rule 23(b)(1) and in the alternative under Rule 23(b)(3). There is also an

implicit requirement under Rule 23 that a class must be defined clearly, with objective criteria,

and in such a way that class membership does not depend on the defendant’s liability. Mullins v.

Direct Digital, LLC, 795 F.3d 654, 657 (7th Cir. 2015). Plaintiffs bear the burden of showing by

a preponderance of the evidence that their proposed class satisfies Rule 23. Messner, 669 F.3d at

811. “Rule 23 is more than ‘a mere pleading standard,’ and the court must satisfy itself with a

‘rigorous analysis’ that the prerequisites of certification are met, even if that analysis has ‘some

overlap with the merits of the plaintiff’s underlying claim.’” Dancel v. Groupon, Inc., 949 F.3d

999, 1005 (7th Cir. 2019) (quoting Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350-51

(2011)). This analysis involves a “peek at the merits” that is “limited to those aspects of the

merits that affect the decisions essential under Rule 23.” Id. (citation and internal punctuation

omitted). “The decision whether to certify a class is one that depends on a careful assessment of

the facts, of potential differences among class members, of management challenges, and of the

overall importance of the common issues of law or fact to the ultimate outcome.” Riffey v.

Rauner, 910 F.3d 314, 318 (7th Cir. 2018).

6 Plaintiffs say that Wachala, Walsh, Preuss, Bickle, and Adeneye are the proposed

representatives of the Investment Loss and Payment of Plan Assets Classes because they

“collectively” invested in all five of the Aon CITs during the class period and sustained losses

relative to the Legacy Options, and Adeneye and Gough are the proposed representatives of the

Equitable Relief Class because they have active Plan accounts and thus a “strong interest in

ensuring Defendants’ future compliance with fiduciary obligations.” (Pls.’ Mem. Supp. Mot.

Class Certification at 8-9.) In a footnote at the end of their opposition brief, defendants contend

that “it is not even clear that any of the named plaintiffs themselves will be part of th[e] proposed

Equitable Relief Class” because only Adeneye and Gough still have account balances and Gough

has “never invested in any of the Aon Trust Funds or demonstrated an intent to do so.” (ECF

No. 148, Defs.’ Mem. Opp’n Pls.’ Mot. Class Certification at 20 n.18.) But defendants do not

dispute that both Adeneye and Gough currently have active Plan accounts, and the argument

regarding Gough is off the mark because plaintiffs’ definition of the Equitable Relief Class is not

confined to participants who invested in the Aon CITs. Plaintiffs are pursuing equitable relief

for all Plan participants, and it is conceivable that one or more forms of appropriate equitable

relief could apply Plan-wide.

As an initial matter, plaintiffs’ proposed classes satisfy Rule 23’s implicit requirement of

ascertainability, and defendants do not contend otherwise. The classes are not defined vaguely

or in terms of success on the merits, nor are they based on subjective criteria.

Under Rule 23(a)’s numerosity criterion, the proposed class must be “so numerous that

joinder of all members is impracticable.” Fed. R. Civ. P. 23(a)(1). As long as it is reasonable to

believe that the class is large enough to justify a class action suit, the Court need not determine

its size precisely. Orr v. Shicker, 953 F.3d 490, 497-98 (7th Cir. 2020). A forty-member class is

often regarded as sufficient. Id. at 498. Numerosity is satisfied here. According to plaintiffs,

2,512 participants invested in one or more of the Aon CITs from October 3, 2016 through June

30, 2020 (the “Class Period”), all of whom are members of the Payment of Plan Assets Class;

2,281 participants are members of the Investment Loss Class because they “suffered a loss from

investing in at least one Aon Trust relative to what their accounts would have earned by

investing in the corresponding Legacy Investment Option(s)”; and, as of the date of judgment,

there will be more than 4,000 participants who are members of the Equitable Relief Class. (Pls.’

Mem. Supp. Mot. Class Certification at 9.) While defendants dispute plaintiffs’ loss calculations

and consequently that the Investment Loss Class is as large as plaintiffs say, see below, they do

not contest that numerosity exists.

Next, there must be “questions of law or fact common to the class,” Fed. R. Civ. P.

23(a)(2), but “commonality as to every issue is not required,” Bell v. PNC Bank, National Ass’n,

800 F.3d 360, 381 (7th Cir. 2015). Plaintiffs contend that the commonality requirement is

satisfied for each class and claim because assertions of a breach of fiduciary duty with respect to

the selection of investment options and the selection and monitoring of Aon as a fiduciary

operate across the Plan rather than at an individual level. They further contend that other

common questions are the determination of whether the Plan suffered a loss and the proper

measure of loss; whether equitable relief is needed to remedy any fiduciary breach; and whether

defendants caused prohibited transactions in selecting the Aon Funds and causing the payment of

Plan assets to Aon. Defendants do not respond to plaintiffs’ commonality argument and thus

waive the issue. See Bonte v. U.S. Bank, N.A., 624 F.3d 461, 466 (7th Cir. 2010). In any event,

the requirement is easily satisfied. With respect to a defined-contribution plan like Astellas’s,

“fund participants operate against a common background,” and allegations that a fiduciary has

breached its duties in the selection of investment options describe a problem that operates across

the plan rather than at the individual level. See Spano v. Boeing Co., 633 F.3d 574, 585-86 (7th

Cir. 2011). Similarly, allegations of fiduciary breach in monitoring and causing prohibited

transactions under ERISA are capable of classwide resolution. Plaintiffs have demonstrated

commonality.

The crux of the class-certification dispute lies with the next two Rule 23(a) elements,

typicality and adequacy. Defendants contend that there are “intractable conflicts” among the

members of the Investment Loss and Equitable Relief Classes that “disable plaintiffs from

meeting the requirements of typicality and adequate representation.” (ECF No. 148, Defs.’

Mem. Opp’n Pls.’ Mot. Class Certification at 1.) These elements will be addressed together. See

Zollicoffer v. Gold Standard Baking, Inc., 335 F.R.D. 126, 158 (N.D. Ill. 2020) (typicality and

adequacy of class representatives are closely related inquiries). A plaintiff’s claim is typical “if

it arises from the same event or practice or course of conduct that gives rise to the claims of other

class members and . . . [is] based on the same legal theory.” Howard v. Cook Cnty. Sheriff’s

Off., 989 F.3d 587, 605 (7th Cir. 2021). The typicality requirement is meant to ensure that the

class representative’s claims have the same “essential characteristics” as those of the class at

large, in that the plaintiff’s pursuit of her own interest will necessarily also benefit the class. Id.

Adequacy tests whether the representatives will fairly and adequately protect the interests of the

class. Fed. R. Civ. P. 23(a)(4). Factors in this analysis are whether the named plaintiffs have (1)

claims that do not conflict with those of other class members; (2) sufficient interest in the

outcome of the case to ensure vigorous advocacy; and (3) competent, qualified, and experienced

counsel who are able to conduct the litigation vigorously. Dietrich v. C.H. Robinson Worldwide,

Inc., No. 18 C 4871, 2020 WL 635972, at *4 (N.D. Ill. Feb. 11, 2020).

Plaintiffs say that typicality is satisfied because their claims arise from “Aon’s single

unified decision to replace the Plan’s prior investments with the Aon Funds in October 2016 and

its conduct in monitoring the Funds on an ongoing basis after October 2016,” as well as the

Astellas Defendants’ course of conduct in allegedly causing prohibited payments of Plan assets

to Aon. (Pls.’ Mem. Supp. Mot. Class Certification at 12-13.) But defendants argue that

plaintiffs’ framing of their claims as arising from a single decision and subsequent monitoring

precludes certification for two reasons: (1) the Investment Loss Class includes 504 individuals

(about 22 percent of the proposed class) who suffered no net loss if their claimed losses in one or

more Aon CITs are offset by gains in other Aon CITs; and (2) some putative class members

might prefer to raise a different theory of breach that would “maximize their asserted losses,”

(Defs.’ Mem. Opp’n Pls.’ Mot. Class Certification at 15). The Court will discuss defendants’

arguments in turn.

In support of their assertion that the Investment Loss Class contains 2,281 participants

who “suffered a loss from investing in at least one Aon Trust relative to what their accounts

would have earned by investing in the corresponding Legacy Investment Option(s),” (Pls.’ Mem.

Supp. Mot. Class Certification at 9), plaintiffs rely on the declaration of their expert, O’Neal.

O’Neal is a principal of the Securities Litigation and Consulting Group, Inc. and a former

professor of finance. He states that the method he used to compute each participant’s losses was

comparing “the actual investment results the participant experienced while invested in the Aon

Trusts to the investment results the participant would have experienced if he or she invested in a

[Legacy Option].” (ECF No. 141-10, Decl. of Edward S. O’Neal ¶¶ 11-12.) Defendants contend

that O’Neal “inflate[d] losses” because his calculations do not “take into account any instances in

which a participant’s investment in an Aon Trust Fund provided greater returns than its

corresponding Legacy Option or Options.” (Defs.’ Mem. Opp’n Pls.’ Mot. Class Certification at

6.) In other words, O’Neal tallied losses when comparing the investment in an Aon CIT with its

corresponding Legacy Option, but he ignored any gains a participant may have had in another

Aon CIT. Defendants submit the declaration of their own expert, Chalmers, a professor of

finance. Chalmers states that O’Neal’s calculations “completely ignore” relative gains from an

investment in an Aon CIT and that “504 Proposed Class Members were not harmed” by the

alleged breaches “because they had an Overall Relative Gain when considering their investment

in all of the Aon Trust Funds.” (ECF No. 148-1, Decl. of John Chalmers, Ph.D. ¶ 19, at 8-9.)

This battle of the experts is not about esoteric principles of finance or economics, nor

does it shed much light on the propriety of class certification. The calculations themselves are

not complex; they differ simply because each expert was instructed by counsel to calculate loss

in a certain way, and the parties’ approaches differ. The loss-calculation question is a legal one.

Defendants maintain that, as a matter of law, when there is a single alleged breach of fiduciary

duty or a closely related series of them, a fiduciary is chargeable only with the resulting net loss.

In support, defendants cite the Restatement (Third) of Trusts § 101 and two out-of-circuit ERISA

decisions that relied upon the predecessor to this section of the Restatement. (Defs.’ Mem.

Opp’n Pls.’ Mot. Class Certification at 11-12 (citing Trs. of Upstate N.Y. Eng’rs Pension Fund v.

Ivy Asset Mgmt., 843 F.3d 561, 570 (2d Cir. 2016) and Taylor v. KeyCorp, 680 F.3d 609, 615

(6th Cir. 2012)).) The Restatement provides in pertinent part: “The amount of a trustee’s

liability for breach of trust may not be reduced by a profit resulting from other misconduct unless

the acts of misconduct causing the loss and the profit constitute a single breach.” Restatement

(Third) of Trusts § 101 (2012). Defendants quote the following statement in the comments to

this provision: “[I]n circumstances in which it is appropriate to treat the misconduct as a single

breach, it would be unduly harsh to hold a trustee liable for the loss without taking into account a

related profit.” Id. cmt. a. The introductory phrase, however, begs the question: when is it

appropriate to treat misconduct as a single breach? Comment c to § 101 includes a list of

“factors to be weighed to determine whether the misconduct should be considered to be a single

breach for purposes of this Section,” including whether the improper acts are the result of a

single decision and whether the trustee intended to commit a breach of trust or knew that the

misconduct was a breach of trust. Id. cmt. c. Plaintiffs raise the latter consideration in their

reply brief. They argue that Ivy and Taylor are inapposite because they involved alleged

breaches of the duty of prudence premised on negligence, not intentional self-dealing, and that

netting principles derived from the common law of trusts should not apply to ERISA claims

based on an alleged violation of the duty of loyalty.

The parties have only scratched the surface of the loss-calculation issue (a “peek” at the

merits, see Dancel, 949 F.3d at 1005), but the Court need not resolve it at this juncture. See

Abbott v. Lockheed Martin Corp., 725 F.3d 803, 810 (7th Cir. 2013) (reversing order denying

class certification on ERISA § 502(a)(2) claim challenging retirement savings plan options and

explaining that the acceptance of a class definition that includes a particular method of

measuring loss “in no way” binds a district court to use that method at the merits stage should

plaintiffs prevail). The issue is something of a red herring when it comes to class certification.

Defendants assert that it leads to irreconcilable conflict among class members, thus dooming

typicality and adequacy, because the 504 members of the Investment Loss Class who had only

net economic gains “are not properly entitled to any damages, as they suffered none,” and “if

they are herded into plaintiffs’ proposed class, they will lose their ability to pursue individualized

theories of breach limited to particular Aon Trust Funds as to which they could at least

conceivably allege personal losses.” (Defs.’ Mem. Opp’n Pls.’ Mot. Class Certification at 2.)

But plaintiffs correctly identify two flaws in defendants’ reasoning. First, despite the fact that

plaintiffs premise their claim against Aon on a single decision to overhaul the Plan and substitute

the Aon CITs for the Legacy Options, it is possible that Aon could be held liable for a breach of

fiduciary duty with respect to only one or a subset of the five Aon CITs, and the only way

plaintiffs can account for that possibility is to define the class to include all participants who

suffered a loss in at least one of the funds during the Class Period. Second, assuming for the

sake of argument that netting would be the correct method to calculate any recovery, the rule

would apply to the trustee’s liability to the Plan as a whole. See Restatement (Third) of Trusts §

101 (“The rule of this Section applies only where the trust estate has experienced a profit as well

as a loss from improper administration.”) (emphasis added and omitted); Ivy, 843 F.3d at 570

(discussing whether plaintiff’s alleged losses “exceed the profit that the Plan derived in excess of

what it would have made from a prudent alternative investment”) (emphasis added). As

plaintiffs point out, defendants’ focus on individual class members’ potential recoveries under

various theories is misplaced because it ignores their shared interest in establishing defendants’

liability.7

Defendants cite Spano, 633 F.3d at 588, for the proposition that the inclusion of putative

class members who “in the aggregate benefitted from the very conduct that plaintiffs challenge”

prevents certification of the Investment Loss Class, (Defs.’ Mem. Opp’n Pls.’ Mot. Class

Certification at 13), but in the Court’s view, Spano does not set that high a hurdle. As the

Seventh Circuit later explained in Abbott, 725 F.3d at 812-13, the class definitions in Spano were

“extraordinarily broad”—so broad that it appeared that some class members would be harmed by

the relief sought—and vague as to what investment options plaintiffs challenged. The same

cannot be said of the Investment Loss Class definition; like the definition that passed muster in

Abbott, it is “considerably narrower” than the definitions in Spano and limited to Plan

participants who suffered a loss in at least one of the Aon CITs. See 725 F.3d at 814. And, as in

Abbott, there seems to be no risk that any participant who had gains from the alleged breaches

would have his Plan assets reduced as a result of this lawsuit. See id.; Neil v. Zell, 275 F.R.D.

256, 266 (N.D. Ill. 2011) (“[T]he question is not whether some might have benefitted from parts

of the occurrence now being challenged, but whether, going forward, some members of the

Plaintiff class would be harmed by the relief being sought. . . . There are no members of the

proposed class who would, for any reason, prefer that Defendants not pay damages.”).

Defendants further contend that defining the Investment Loss Class to include

participants in all five Aon CITs creates a conflict among class members because some of them

7 Defendants’ related argument that named plaintiffs Wachala and Walsh “unquestionably”

lack Article III standing because they had “an overall gain” on their investments in the Aon CITs

relative to their investments in the Legacy Options, (Defs.’ Mem. Opp’n Pls.’ Mot. Class

Certification at 12), is similarly misplaced, for the reasons explained in Abbott. In Abbott, the

Seventh Circuit rejected the defendant’s contention that one of the named plaintiffs, Lloyd

DeMartini, lacked Article III standing because he did not appear to have suffered damages if

damages were measured exclusively by the method plaintiffs proposed and incorporated into

their class definition. 725 F.3d at 808-09. The court explained that plaintiffs’ proposal was

merely a “provisional estimate” of damages, “useful only as a mechanism to ensure that the class

meets the requirements of Rule 23,” and that “by the time all [was] said and done,” it was

possible that DeMartini would be entitled to damages under whatever measure was ultimately

used. Id. at 808. The Court also noted that the fact that a plaintiff may have difficulty proving

damages does not mean that he cannot have been harmed, and that “[t]his is just one of many

instances in which we must resist the urge to make a preliminary question depend on the final

resolution of the merits.” Id.

might prefer to assert “theories of imprudence uniquely applicable” to one or more particular

funds and thus possibly obtain a greater recovery for themselves. (Defs.’ Mem. Opp’n Pls.’ Mot.

Class Certification at 13-14.) According to defendants, plaintiffs’ “sweeping” class definition

“deprive[s] numerous participants of at least the theoretical opportunity to pursue claims of

breach on which they would have a chance of demonstrating loss.” (Id. at 14.) Again, the

participants in the class as defined have “a chance” of demonstrating loss, because it is not clear

that defendants’ position on calculation will carry the day.8 And the Seventh Circuit has rejected

similar arguments about “theoretical” opportunities. In Johnson v. Meriter Health Services

Employee Retirement Plan, 702 F.3d 364, 372 (7th Cir. 2012), the defendant retirement plan

identified two conflicts of interest it said created an issue of adequacy of representation: one, that

some plan participants would prefer benefits calculated with a fixed index rate while others

might prefer a variable rate based on the date of retirement; and two, some participants would

benefit by proving that certain plan amendments had never been formally adopted, and others

might be harmed. The Court of Appeals dismissed defendant’s concerns as “too hypothetical to

bar class certification,” noting that the contention that some class members would be hurt by

class treatment “r[ang] hollow” where the defendant knew the names of all the class members

and “could have found one—if there is one—who if informed of the class action would express

concern that it might harm him,” but “either didn’t look for such a class member, which would

be inexcusable, or it looked but didn’t find one, which would probably mean that there isn’t any

such class member.” Id. Aon took the same approach, so the Court is unpersuaded. Plaintiffs

quote the Eighth Circuit’s sensible observation that “even if there are slightly divergent theories

that maximize damages for certain members of the class, this slight divergence is greatly

outweighed by shared interests in establishing [defendant’s] liability.” Vogt v. State Farm Life

Ins. Co., 963 F.3d 753, 768 (8th Cir. 2020) (citation and internal punctuation omitted) (also

citing 1 William B. Rubenstein, Newberg on Class Actions § 3:62 (5th ed. 2019) (“Courts

generally reject the argument that an intra-class conflict exists when divergent theories of

liability would benefit different groups within the class. Courts have thus rejected challenges to

the class representatives’ adequacy that were based . . . on different class members desiring

different methods of calculating damages[.]”)), cert. denied, 141 S. Ct. 2551 (2021).

The law on loss calculation for plaintiffs’ ERISA claims appears scant; if defendants are

correct about the proper method of calculating plaintiffs’ losses, it may be that the definition of

the Investment Loss Class may have to be refashioned down the road, or subclasses created. See

Abbott, 725 F.3d at 813-14 (concluding that Spano did not impede certification of plaintiffs’

class and that if the court’s observations about the unlikelihood of substantial intra-class conflicts

“turn out to be wrong, the district court can make further adjustments to the class definition

later”); Meriter, 702 F.3d at 372 (explaining that differences in entitlements are distinct from

conflicts of interest); see also Kohen v. Pac. Inv. Mgmt. Co., 571 F.3d 672, 677 (7th Cir. 2009)

(stating that the fact that a class may include some participants who were not injured by a

8 Plaintiffs make an excellent point in this regard: if plaintiffs had proposed five separate

“single-fund” classes with distinct damages, Aon likely would have presented the same argument

for offsetting losses with gains by pointing to evidence that Aon added all five of its CITs to the

Plan on the same date; thus, “the proposed class members would end up in the same position

regardless of whether they are all members of a single five-fund class or split between five

single-fund classes.” (Pls.’ Am. Reply at 12.)

defendant’s conduct, as opposed to those who could not have been injured, does not preclude

class certification). Nonetheless, the Court concludes that plaintiffs have established typicality

and adequacy. The named plaintiffs were subject to the same course of conduct that gives rise to

the claims of other members of the Investment Loss Class, and their claims are based on the

same legal theory, that Aon breached its fiduciary duties in replacing the Plan’s Legacy Options

with Aon CITs. In addition, there is a “congruence between the investments held by the named

plaintiff and those held by members of the class he or she wishes to represent.” Spano, 633 F.3d

at 586. There is also typicality and adequacy with respect to the Payment of Plan Assets Class;

all class members were allegedly harmed by the Astellas Defendants’ conduct in causing

prohibited payment of Plan assets to Aon. Furthermore, there is no dispute that class counsel is

well qualified to conduct this litigation. See, e.g., Abbott v. Lockheed Martin Corp., No. 06-CV-

701-MJR-DGW, 2015 WL 4398475, at *1 (S.D. Ill. July 17, 2015) (describing plaintiffs’

counsel as “a pioneer and the leader in the field of retirement plan litigation”).

For the same reasons discussed above, plaintiffs’ proposed Equitable Relief Class meets

the requirements of Rule 23(a)(1). Plaintiffs suggest that appropriate equitable relief might

involve “requiring Defendants to implement an enhanced investment-review process or to obtain

an independent review by an unconflicted third party.” (Pls.’ Mem. Supp. Mot. Class

Certification at 17.) Defendants assert that another “immutable” conflict exists among the

members of the Equitable Relief Class, though, due to the June 30, 2020 end date plaintiffs chose

for the Investment Loss and Payment of Plan Assets Classes. (Defs.’ Mem. Opp’n Pls.’ Mot.

Class Certification at 20.) Plaintiffs say that this date “is when Aon finally achieved the ability

to improve the Aon Funds’ performance through a larger asset base and implemented an

enhanced, less-conflicted process for monitoring the Funds,” (Pls.’ Mem. Supp. Mot. Class

Certification at 8)), but in defendants’ view, this position “greatly undermines” the ability of the

Equitable Relief Class to obtain relief. (Defs.’ Mem. Opp’n Pls.’ Mot. Class Certification at 19.)

Defendants assert, without citation to authority, that plaintiffs’ choice of the June 2020 end date

“would presumably foreclose any claim that plaintiffs or the putative class members even have

standing to pursue [equitable] relief” in that such relief “would do nothing to redress injuries

from past allegedly violative practices that plaintiffs contend are no longer followed and whose

effects they say ended more than a year ago.” (Id.) The Court disagrees. Defendants again

conflate standing and the merits; as the Seventh Circuit advised in Abbott, using hindsight

acquired during the evolution of class-action claims “to find that there was never jurisdiction

over the case to begin with” is an “unworkable view of Article III standing.” 725 F.3d at 808-09.

That plaintiffs may have difficulty proving that they are entitled to equitable relief, or that there

may be tension between their theories of relief, does not implicate standing, nor does it prevent

certification of the Equitable Relief Class.

Having found that the prerequisites of Rule 23(a) are met, the Court turns to Rule

23(b)(1), which permits class certification when individual suits would create a risk of (1)

“inconsistent or varying adjudications with respect to individual class members that would

establish incompatible standards of conduct” for defendants or (2) “adjudications with respect to

individual class members that, as a practical matter, would be dispositive of the interests of the

other members not parties to the individual adjudications or would substantially impair or

impede their ability to protect their interests.” Fed. R. Civ. P. 23(b)(1)(A)-(B). Plaintiffs

maintain that the proposed classes satisfy subsection (A) because the issues are whether Aon

acted with loyalty and used proper methods to select and monitor the Aon CITs, whether the Aon

CITs were prudent investments, what is the proper way to measure Plan losses, whether

payments of Plan assets to Aon were reasonable or excessive, and whether equitable relief is

appropriate, and separate individual adjudications to resolve any of these issues would create

incompatible standards for defendants. Plaintiffs say that subsection (B) is also satisfied due to

the trust-like nature of a defined-contribution plan like the Astellas Plan, with fiduciary duties

owed to the plan and not particular individuals. Defendants do not dispute that both subsections

of Rule 23(b)(1) are satisfied, and the Court agrees with plaintiffs. “[NJumerous courts have

held” that claims for breach of fiduciary under ERISA § 502(a)(2) are “paradigmatic examples of

claims appropriate for certification as a Rule 23(b)(1) class,” in light of their derivative nature.

In re Schering Plough Corp. ERISA Litig., 589 F.3d 585, 604 (3d Cir. 2009) (citing cases); Neil,

275 F.R.D. at 267 (“ERISA class actions are commonly certified under either or both subsections

of 23(b)(1) because recovery for a breach of the fiduciary duty owed to an ERISA plan, as is the

predominant claim here, will inure to the plan as a whole, and because defendant-fiduciaries are

entitled to consistent rulings regarding operation of the plan. Essentially, in an ERISA action in

which relief is being sought on behalf of the plan as a whole... . , a plaintiff's victory would

necessarily settle the issue for all other prospective plaintiffs.”). In light of this conclusion, the

Court need not reach plaintiffs’ alternative argument that certification is proper under Rule

23(b)(3). Accordingly, certification of plaintiffs’ proposed classes is appropriate under Rule

23(b)(1)(A) and (B).

CONCLUSION

Plaintiffs’ motion for class certification [140] is granted. Aon Hewitt Investment

Consulting Inc.’s motion for leave to file certain materials under seal [149] is granted in part and

denied in part, and the parties are directed to publicly file documents as directed by the Court no

later than February 25, 2022. The parties should be prepared to discuss the next steps in the

litigation at the telephonic status hearing on March 3, 2022.

DATE: February 10, 2022

Aout 2.

Hon. Ronald A. Guzman

United States District Judge

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