# Wachala v. Astellas US LLC

> District Court, N.D. Illinois · February 10, 2022

URL: https://www.frixlaw.com/law-library/cases/10146212

## Case

- **Court:** District Court, N.D. Illinois
- **Decided:** February 10, 2022
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10146212

## How later opinions describe it (automated extraction)

- explaining that differences in entitlements are distinct from conflicts of interest
- 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”
- reversing order denying class certification on ERISA § 502(a)(2
- 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”

## Opinion text

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

13

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10146212. Public record. Not legal advice.