DAVIS v. OLD DOMINION FREIGHT LINE, INC.

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

HARVEY L. DAVIS, on behalf of )

The Old Dominion 401(k) Retirement )

Plan, individually, and on behalf )

Of all others similar situated, )

)

Plaintiff, )

) 1:22CV990

v. )

)

OLD DOMINION FREIGHT LINE, INC., )

)

Defendant. )

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, District Judge.

This dispute arises from alleged violations of the Employee

Retirement Income Security Act, 29 U.S.C. §§ 1001 et seq.

(“ERISA”). Before the court is a motion to dismiss pursuant to

Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) filed by

Defendant Old Dominion Freight Line, Inc. (“Old Dominion”). (Doc.

14.) Plaintiff Harvey L. Davis responded in opposition (Doc. 20),

and Old Dominion replied (Doc. 21). For the reasons set forth

below, the court will grant Old Dominion’s motion to dismiss on

the ground that Davis lacks standing.

I. BACKGROUND

Davis brought this action against Old Dominion on behalf of

the Old Dominion 401(k) Retirement Plan on November 18, 2022.

(Doc. 1.) The facts set forth below are based on the well-pleaded

allegations of the complaint, which are accepted as true for the

purposes of this motion to dismiss and viewed in the light most

favorable to Davis as the non-moving party.

Davis is a former employee of Old Dominion (see id. ¶ 16;

Doc. 15 at 2) and is among a group of eligible current and former

employees who participate in Old Dominion’s 401(k) retirement plan

(the “Plan”) (Doc. 1 ¶¶ 13, 16). The Plan is a defined contribution

plan, where individual plan participants recoup value in

proportion to the amount they individually invest. (Id. ¶¶ 3,

15.) “[A]ll of [Old Dominion’s] employees who are at least 18

years old and who complete three months of eligible employment

service” may participate. (Id. ¶ 25.) As of December 23, 2021,

“the Plan had 24,033 participants and $1,950,898,737 in assets

under management.” (Id. ¶ 32.)

ERISA regulates the management of retirement plans such as

the Plan here. Davis alleges that Old Dominion is a fiduciary of

the Plan and is thus required by ERISA to fulfill certain fiduciary

obligations, including “a continuing duty to monitor trust

investments and remove imprudent ones.” (Id. ¶ 51 (quoting Tibble

v. Edison Int’l, 575 U.S. 523, 529); see id. ¶¶ 49-50, 52-54.)

Davis alleges that Old Dominion breached its fiduciary duties to

the Plan by pursuing “high priced investments when the identical

investments were available to the Plan at a fraction of the cost.”

(Id. ¶ 9; see id. ¶¶ 44, 55-62.) These more expensive share

classes offered the Plan no “additional services or benefits” such

that there was “no good-faith explanation for selecting and

retaining the higher-priced and poorly performing share classes.”

(Id. ¶ 60.) This imprudence in investment led to a loss of $3

million to “the Plan and its participants” during “the relevant

time period.”1 (Id. ¶ 9; see id. ¶¶ 18-20 (alleging that “the Plan

suffered millions of dollars in losses caused by [Old Dominion’s]

fiduciary breaches” and that it “continues suffering economic

losses”).)

Further, Davis alleges that Old Dominion imprudently offered

“‘actively’ managed funds” rather than those “managed with [a]

‘blend’ of active [and] passive management techniques” even though

the actively managed funds charged more in fees and underperformed

the latter funds. (Id. ¶ 61.) Davis lists eleven specific share

classes he alleges Old Dominion offered as higher-priced,

actively-managed funds, comparing each with its lower-priced,

blended-management alternative. (Id. ¶ 56.) Old Dominion’s

“fail[ure] to undertake any analysis” before making its selections

led to these unwise choices and the Plan’s substantial economic

losses. (Id. ¶ 62.)

Davis likewise alleges that Old Dominion, as the “Plan

Sponsor,” breached its “obligation to monitor all other

fiduciaries for the Plan” (id. ¶ 133), causing the Plan and its

1 Davis alleges that injuries began on November 18, 2016, and extend to

the present. (Id. ¶ 33.)

participants millions of dollars in losses (id. ¶¶ 136-37).

As to his connection to these facts, Davis alleges that he

was injured by Old Dominion’s mismanagement of the Plan, “paying

excessive recordkeeping and administrative costs associated with

the Plan and investing in the imprudent investment options offered

by the Plan, which are the subject of this lawsuit.” (Id. ¶ 16.)

But he provides no factual allegation of what those costs and

investments were. Instead, on its face, the complaint contains no

factual support for the conclusory allegations that he personally

invested in any of the imprudent investment options, nor that he

suffered any other type of specific financial loss.

Davis brings two causes of action against Old Dominion,

relying on these allegations: the first for breach of fiduciary

duty of prudence (id. ¶¶ 63-67), and the second for failure to

adequately monitor other fiduciaries (id. at ¶¶ 132-138). He seeks

various types of relief, including reforms to the Plan,

compensatory damages for losses, attorney’s fees and costs, and

such “equitable and remedial relief as the Court deems

appropriate.” (Id. at 23-24.) Furthermore, he asserts these

claims for recovery on behalf of the Plan and its participants as

an entity, rather than as an individual. Davis accordingly

contends that this action is appropriate for class certification

because “joinder is impractical” given the number of possible

plaintiffs (id. ¶ 34), because his “claims are typical of the

claims of Class members” (id. ¶ 35), and because “there are

questions of law and fact common to the Class,

[which] . . . predominate over questions affecting only individual

Class members” (id. ¶ 36).

Old Dominion now moves to dismiss the complaint pursuant to

Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (Doc.

14.) The motion is fully briefed and ready for decision.

II. ANALYSIS

Old Dominion’s motion urges two possible grounds for

dismissal: lack of subject matter jurisdiction pursuant to Rule

12(b)(1) or, in the alternative, failure to state a claim pursuant

to Rule 12(b)(6). (Doc. 14.) As the following analysis explains,

Davis has not demonstrated Article III standing to bring this case.

The court therefore lacks the requisite subject matter

jurisdiction to proceed and will dismiss the complaint without

prejudice on that ground.

A. Legal Standard

Federal district courts exercise limited jurisdiction. Exxon

Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552 (2005).

“‘Article III gives federal courts jurisdiction only over cases

and controversies,’ and standing is ‘an integral component of the

case or controversy requirement.’” CGM, LLC v. BellSouth

Telecomms., Inc., 664 F.3d 46, 52 (4th Cir. 2011) (quoting Miller

v. Brown, 462 F.3d 312, 316 (4th Cir. 2006)). For a case or

controversy to be justiciable in federal court, a plaintiff must

allege “‘such a personal stake in the outcome of the controversy

as to warrant his invocation of federal court jurisdiction and to

justify exercise of the court’s remedial powers on his behalf.’”

White Tail Park, Inc. v. Stroube, 413 F.3d 451, 458 (4th Cir. 2005)

(quoting Planned Parenthood of S.C. v. Rose, 361 F.3d 786, 789

(4th Cir. 2004)). Given the importance of this requirement, “a

federal court can inquire into standing at any stage of a case,

and if it finds the plaintiff lacks standing, it may dismiss the

case.” Goldstein v. Costco Wholesale Corp., 278 F. Supp. 2d 766,

769 (E.D. Va. 2003) (citing Marcus Cable Assocs. V. City of

Bristol, 237 F. Supp. 2d 675, 677 n.2 (W.D. Va. 2002)).

The party seeking to invoke a federal court’s jurisdiction

has the burden of satisfying Article III’s standing requirement.

Miller, 462 F.3d at 316. To meet that burden, a plaintiff must

demonstrate three elements: (1) that he has suffered an injury in

fact that is “concrete and particularized” and “actual or

imminent”; (2) that the injury is fairly traceable to the

challenged conduct; and (3) that a favorable decision is likely to

redress the injury. Lujan v. Defenders of Wildlife, 504 U.S. 555,

560-61 (1992). The Supreme Court “ha[s] consistently stressed

that a plaintiff’s complaint must establish that he has a ‘personal

stake’ in the alleged dispute, and that the alleged injury suffered

is particularized as to him.” Raines v. Byrd, 521 U.S. 811, 819

(1997) (citing Lujan, 504 U.S. at 560-61 and n.1).

In addition, “[w]hen a defendant raises standing as the basis

for a motion under Rule 12(b)(1) to dismiss for lack of subject

matter jurisdiction,” the court is not limited to considering only

allegations made in the well-pleaded complaint as it normally would

be on a motion to dismiss. White Tail Park, Inc., 413 F.3d at

459. Instead, “the district court ‘may consider evidence outside

the pleadings without converting the proceeding to one for summary

judgment.’” Id. (quoting Richmond, Fredericksburg & Potomac R.R.

Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991)); see Moore

v. Va. Cmty. Bankshares, Inc., No. 3:19-cv-45, 2023 WL 2714930, at

*3 (2023) (“[C]ourts may consider affidavits and other extrinsic

information to determine whether subject matter jurisdiction

exists.” (quoting Saval v. BL Ltd., 710 F.2d 1027, 1029 n.2 (4th

Cir. 1983))).

B. Standing

Old Dominion challenges the court’s subject matter

jurisdiction on the basis that Davis lacks standing to sue on

behalf of the class because he did not suffer an individual injury.

(Doc. 15 at 14-16.) It maintains that Davis’s complaint nowhere

alleges that he “sustained injury to his own account” because of

Old Dominion’s actions. (Id. at 16.) Old Dominion notes that

Davis fails to assert that he invested in “any of the eleven

challenged funds, or even in any actively managed funds.” (Id. at

15.) It further offers evidence that Davis did not invest in any

of these funds but rather “invested solely in the Plan’s stable

value funds” which are not the subject of his challenge. (Id.)

Old Dominion concludes that Davis’s individual account “will not

fluctuate one cent whether he wins or loses this case,” and so he

has “no concrete stake in this lawsuit.” (Id. at 16.)

In response, Davis argues that “participants in defined-

contribution plans suffer an injury-in-fact sufficient for Article

III standing when alleging that a fiduciary’s breach has negatively

impacted their accounts,” which he argues he has faced here. (Doc.

20 at 25 (citing In re Mut. Funds Inv. Litig., 529 F.3d 207, 216

(4th Cir. 2008)).) Davis points to a recent case in which a

district court found that plaintiffs had standing when they

“allege[d] injury to their individual 401(k) accounts in the form

of excessive record-keeping and administrative costs as well as an

expensive overall investment menu endured by each Plan

participant.” (Id. at 25-26 (quoting Jones v. Coca-Cola Consol.,

Inc., No. 3:20-cv-00654-FDW-DSC, 2021 WL 1226551, at *4 (W.D.N.C.

Mar. 31, 2021)).) There, the court found that “if the plaintiffs’

allegations are true, they suffered injury in that their retirement

accounts [are] worth less [than] they would have been absent the

breach[s].” (Id. at 26 (quoting Jones, 2021 WL 1226551, at *4

(some alterations added) (citations omitted)).) Davis accordingly

claims that his ”[c]omplaint is freighted with allegations” that

he suffered just such injuries and therefore has standing before

this court. (Id.)

In turn, Old Dominion responds that “nowhere does Davis allege

that [it] committed a plan-wide breach impacting his individual

account,” nor does he “allege that every fund in the Plan’s

investment menu . . . was in the wrong share class.” (Doc. 21 at

9.) It asserts that “[t]he only substantive allegation the

Complaint makes is that the Committee imprudently offered [certain

funds] in the R-5 share class instead of the R-6 share class” (id.

at 6) and that Davis “does not dispute that he never invested in

any of the eleven challenged funds” (id. at 7).

As a preliminary matter, the court must address the disparity

between the complaint filed with the court and the one Davis

appears to cite throughout his most recent briefing. As Old

Dominion notes, while Davis claims that the “[c]omplaint is 38

pages long and contains 138 separate paragraphs” (Doc. 20 at 11),

the complaint filed on the docket is only 25 pages long and

contains paragraphs numbered 1 through 67 and 132 through 138 (74

total paragraphs) (see Doc. 1). Old Dominion’s characterization

that Davis’s subsequent briefing refers to “phantom paragraphs” is

apt, as Davis’s response to the motion to dismiss oddly and

repeatedly cites to paragraphs that simply do not appear in the

complaint on the docket.

Davis chides Old Dominion for ignoring various of his

allegations (Doc. 20 at 11, 17, 19, 26, 27) and asserts that the

“[c]omplaint’s allegations are not limited to imprudence and

losses stemming from investments as Defendant argues” (id. at 26).

However, not only does the complaint not contain “detailed

allegations” regarding excessive compensation received by the

Plan’s recordkeeper as argued by Davis (id. at 17), the terms

“excessive compensation,” “float compensation,” “direct fee

compensation,” and “revenue sharing compensation” relied on by

Davis do not appear at any point in the complaint.2 Davis makes a

passing allegation that he “pa[id] excessive recordkeeping and

administrative costs associated with the Plan” (Doc. 1 ¶ 16), and

his prayer for relief includes a request to “[r]eform the Plan to

obtain bids for recordkeeping and to pay only reasonable

recordkeeping expenses” (id. at 23). Nowhere, however, does Davis

allege that Old Dominion “imprudently caused the Plan’s

recordkeeper . . . to receive millions of dollars of excessive

compensation from the Plan.” (Doc. 20 at 17.) Thus, the court

will confine its analysis of standing to the actual contents of

the complaint and Davis’s responsive arguments that pertain to the

complaint’s allegations concerning imprudent investments on the

Plan menu and excessive fees related to those investments. See

2 The word “compensation” appears once, in ERISA’s definition of

fiduciary, and the word “recordkeeper” appears only where the complaint

names the Plan’s recordkeeper. (Doc. 1 ¶¶ 26, 41.)

Raines, 521 U.S. at 818 (“One element of the case-or-controversy

requirement is that appellees, based on their complaint, must

establish that they have standing to sue.” (citing Lujan, 504 U.S.

at 561) (emphasis added)); see also W.R. Huff Asset Mgmt. Co., LLC

v. Deloitte & Touche LLP, 549 F.3d 100, 110-11 (2d Cir. 2008)

(finding that plaintiff lacked standing in part because the claimed

injuries to itself were raised “in its briefs, but not in its

complaint”).

Although ERISA, 88 Stat. 829 § 502(a)(2), 29 U.S.C.

§ 1132(a)(2), “does not provide a remedy for individual injuries

distinct from plan injuries,” it does authorize a participant to

bring a civil action seeking relief for breaches of fiduciary duty

as outlined in § 1109.3 LaRue v. DeWolff, Boberg & Assocs., Inc.,

552 U.S. 248, 256 (2008) (finding that the “provision does

authorize recovery for fiduciary breaches that impair the value of

plan assets in a participant’s individual account”). Davis asserts

that he has standing to sue on behalf of the Plan to seek redress

for the injury Old Dominion has caused it in the form of “millions

of dollars in losses caused by Defendant’s fiduciary breach” and

ongoing “expos[ure] to harm and continued losses.” (Doc. 1 ¶ 20.)

Davis further states he has shown an individual injury “because he

3 Old Dominion does not dispute that Davis has statutory standing, as a

participant in the Plan, to bring this action pursuant to § 1132(a)(2).

participated in the Plan and was injured and continues to be

injured by Defendant’s unlawful conduct.” (Id. ¶ 21.)

“There is no ERISA exception to Article III.” Thole v. U.S.

Bank N.A., 140 S. Ct. 1615, 1622 (2020). The Supreme Court “has

rejected the argument that ‘a plaintiff automatically satisfies

the injury-in-fact requirement whenever a statute grants a person

a statutory right and purports to authorize that person to sue to

vindicate that right.” Id. at 1620. Likewise, “Article III

standing requires a concrete injury even in the context of a

statutory violation.” Id. at 1620-21 (quoting Spokeo, Inc. v.

Robins, 136 S. Ct. 1540, 1549 (2016)).

The Supreme Court and appellate courts have drawn a

distinction between defined benefit plans and defined contribution

plans in the context of finding an individual injury that satisfies

Article III standing pursuant to ERISA. With defined benefit

plans, the Supreme Court has held that plan participants do not

have standing to sue for plan-wide fiduciary mismanagement unless

“the mismanagement of the plan was so egregious that it

substantially increased the risk that the plan . . . would fail”

entirely since “retirees receive a fixed payment each month” that

“do[es] not fluctuate . . . because of the plan fiduciaries’ good

or bad investment decisions.” Id. at 1621, 1618. The same

limitation does not apply to defined contribution plans, where

“fiduciary misconduct need not threaten the solvency of the entire

plan to reduce benefits below the amount that participants would

otherwise receive.” LaRue, 552 U.S. at 255-56 (emphasis added).

Instead, participants in defined contribution plans retain an

individual equitable interest in the plan and may sue for

enforcement of that interest. See Thole, 140 S. Ct. at 1619-20

(citing LaRue, 552 U.S. at 254-56) (suggesting that participants

in defined contribution plans are somewhat akin to beneficiaries

of private trusts). Thus, while ERISA “does not provide a remedy

for individual injuries distinct from plan injuries, [it] does

authorize recovery for fiduciary breaches that impair the value of

plan assets in a participant’s individual account.” LaRue, 552

U.S. at 256.

Similarly, the Fourth Circuit has held that participants in

a defined contribution plan have standing pursuant to ERISA to

“seek to recover amounts that they claim should have been in their

accounts had it not been for alleged fiduciary impropriety,” even

when those participants had “cashed out” their benefits. Mut.

Funds Inv. Litig., 529 F.3d at 210. While the court’s analysis

focused on plaintiffs’ statutory standing, it determined that

plaintiffs also needed to have personally “suffered an injury that

could be redressed by the court” in order to have constitutional

standing to bring their ERISA claims. Id. at 219. According to

the court, the plaintiffs had constitutional standing because “the

defendants breached fiduciary obligations imposed by ERISA . . .

and those breaches had an adverse impact on the value of the plan

assets in the plaintiffs’ individual accounts.” Id. It was only

by virtue of the individual injuries plaintiffs’ accounts

sustained due to the alleged breach of fiduciary duties, however,

that the court was able to proceed. See id. at 215 (“[I]f the

plaintiff colorably claims that under the plan and ERISA he was

entitled to more than he received on the day he cashed out, then

he . . . must be accorded participant standing.” (citation

omitted)).4

Here, Old Dominion has met its burden of showing that Davis

was not individually harmed and therefore lacks standing on the

face of the complaint to proceed in this case. A review of the

records offered by Old Dominion, which may be considered at this

stage given the jurisdictional nature of this issue, supports its

claim that Davis did not, in fact, invest in any of the challenged

funds. Old Dominion has attached Davis’s account statements from

the years at issue (Docs. 15-2, 15-3, 15-4, 15-5, 15-6, 15-7, 15-

4 The Fourth Circuit has held that when pursuing certain forms of

equitable relief, plaintiffs may not need to allege specific financial

loss. See Peters v. Aetna Inc., 2 F.4th 199, 219-21 (2021) (holding

that plaintiffs had standing to bring claims for surcharge, disgorgement,

and declaratory and injunctive relief even in the absence of any

aggregate financial loss, which would be necessary for standing to

recover compensatory damages). But even in such instances, plaintiffs

must have another cognizable individual injury to have standing. Namely,

plaintiffs must show that the defendants either breached a fiduciary

duty toward them individually or that defendants were unjustly enriched

by plaintiffs’ activities. See id.

8) which show that Davis invested in only three funds,5 none of

which was included in the complaint’s list of eleven challenged

funds.

Nor does Davis ever dispute Old Dominion’s showing on this

issue. Davis acknowledges that he must allege an individual injury

in order to bring this action, reciting the Fourth Circuit holding

that “participants in defined-contribution plans suffer an injury-

in-fact sufficient for Article III standing when alleging that a

fiduciary’s breach has negatively impacted their accounts.” (Doc.

20 at 25 (citing Mut. Funds Inv. Litig., 529 F.3d at 216) (emphasis

added).) And his complaint asserts that he “participated in the

Plan, paying excessive recordkeeping and administrative costs

associated with the Plan and investing in the imprudent investment

options offered by the Plan, which are the subject of this

lawsuit.” (Doc. 1 ¶ 16.) But there is no factual reference to

Davis’s own investment choices or the fees he was paying, focusing

rather on allegations of generalized injury to the Plan as a basis

for individual standing. (See, e.g., id. ¶ 21 (“Plaintiff has

standing to bring this action on behalf of the Plan because he

participated in the Plan and was injured and continues to be

injured by Defendant’s unlawful conduct.”).) Indeed, neither the

5 The records show that from 2016 through 2022, Davis selected JPMCB

Stable Asset Income Fund-G (Doc. 15-2 at 1-2), Great-West Select

Guaranteed Fund (Docs. 15-3 at 1-2, 15-4 at 1-2, 15-5 at 1-2, 15-6 at

1-2, 15-7 at 1-2), and E I Fixed Account – Series Class V (Doc. 15-8 at

1-2).

complaint nor Davis’s response brief further asserts that he

invested in the challenged funds, and he neither demonstrates nor

even claims that his own retirement account was harmed by the

alleged imprudent investment options. The only injury on which

Davis appears to hang his individual standing claim, “allowing

Empower Financial to collect excessive compensation from

Plaintiff,” is not alleged in the complaint. (Doc. 20 at 27.)

His complaint also lacks allegations that might indicate unjust

compensation resulting from various fee structures attendant to

the alleged Plan mismanagement, leaving him with no individual

injury on which to rest his claim.

Davis concedes that Old Dominion’s argument as to standing

“might have merit if Plaintiff had brought a specific count of

imprudence pertaining to investments only.” (Id.) Davis asserts

that “such a count does not exist” (id.), but that is precisely

what his complaint alleges (Doc. 1 ¶ 63-67 (“First Claim for

Relief”) (alleging that “Defendant breached its fiduciary duties

by selecting and retaining imprudent share classes and investments

for the Plan” (emphasis added))). Without any plausible

allegations indicating that Davis’s own retirement account was

injured by Old Dominion’s alleged breach of fiduciary duty of

prudence and failure to adequately monitor other fiduciaries,

Davis has not met his burden of showing that he has suffered an

injury-in-fact. Thus, he lacks Article III standing to pursue his

claim.

Having found it lacks subject matter jurisdiction over

Davis’s claim, the court need not consider Old Dominion’s motion

to dismiss pursuant to Rule 12(b)(6).

III. CONCLUSION

For the reasons stated,

IT IS THEREFORE ORDERED that Old Dominion’s motion to dismiss

for lack of subject matter jurisdiction (Doc. 14) is GRANTED and

the complaint is DISMISSED WITHOUT PREJUDICE.

/s/ Thomas D. Schroeder

United States District Judge

September 6, 2023