The opinion
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
MARK MILANO et al.,
No. 20-cv-17793 (MEF)(SDA)
Plaintiffs,
OPINION and ORDER
v.
COGNIZANT TECHNOLOGY SOLUTIONS
U.S. CORPORATION et al.,
Defendants.
* * *
For the purpose of this Opinion and Order, the Court largely
assumes familiarity with the facts and procedural history of
this case.
* * *
The employees of a particular company1 were given the opportunity
to invest in a retirement plan (“the Plan”).2 See First Amended
Class Action Complaint (“Complaint”) (ECF 73) ¶¶ 22–27; see also
id. ¶ 28.
Within the Plan were various funds. See id. ¶¶ 59-60. A fund
designed for those planning to retire in 2025, for example. See
id. ¶¶ 22, 25, 27. And one set up for people looking to stop
working in 2040. See id. ¶ 24. Or 2050. See id. ¶ 26.
1 Cognizant Technology Solutions U.S. Corporation.
2 The Plan is a defined contribution plan. See Complaint ¶ 51.
Certain company employees3 invested in a sub-set of these Plan
funds. See id. ¶¶ 22-27. And in connection with their
investments, those employees had to pay “recordkeeping and
administrative fees.”4 See id. ¶¶ 16, 110.
But the company employees came to believe that there was a
problem: the fees they were being charged were too high. See
id. ¶¶ 16, 28.
And so too were the fees being charged to other company
employees --- who seem to have been invested in other funds
under the umbrella of the same overarching company retirement
Plan. See id. ¶ 16; id. ¶ 135 (referring to the “recordkeeping
expenses of the Plan” as a whole).5
To the employees, the high fees (plus other things) suggested
that the entity entrusted with running the retirement Plan,6 see
id. ¶¶ 40, 133, was not handling things in the right way. See
id. ¶¶ 135-36.
So the employees sued.
3 Mark Milano, Robert Cameron, Rodney Hergenrader, Katherine H.
Joncas, and Charles Van Hooser.
4 Administering a retirement plan requires “recordkeeping,”
which typically involves, among other things, “track[ing] the
balances of individual accounts, provid[ing] regular account
statements, and offer[ing] informational and accessibility
services to participants.” Hughes v. Northwestern Univ., 595
U.S. 170, 174 (2022); see also Complaint ¶ 111. This is
specialized work, and retirement plan sponsors generally hire
third parties to take care of it. See U.S. Gov’t Accountability
Office, GAO-12-325, 401(k) Plans: Increased Education Outreach
and Broader Oversight May Help Reduce Plan Fees 1 n.2 (2012).
Third-party administrators need to get paid, and the fees that
they charge vary.
5 For a qualifier, see footnote 10.
6 The 401(k) Investment Committee of Cognizant Technology
Solutions U.S. Corporation.
From here, the employees are called “the Plaintiffs”7 and the
entity responsible for investing Plan assets, see id. ¶ 37, is
“the Defendant.”8
* * *
The Plaintiffs sued under the Employee Retirement Income
Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq.9
ERISA requires certain retirement-plan managers to act as
fiduciaries. See 29 U.S.C. § 1002(21)(A); Renfro v. Unisys
Corp., 671 F.3d 314, 321 (3d Cir. 2011). And fiduciaries need
to act prudently. See 29 U.S.C. § 1104(a)(1)(B); Sweda v. Univ.
of Pa., 923 F.3d 320, 327-28 (3d Cir. 2019).
The Plaintiffs claim that the Defendant was obligated to manage
the Plan as a fiduciary, see Complaint ¶¶ 133-34, but that its
management was not prudent. See id. ¶ 135.
How so?
In part because, the argument goes, the Defendant permitted fees
that were too high to be charged to people invested in various
funds within the Plan. See Complaint ¶ 110. The Defendant
“failed to control the administrative and recordkeeping expenses
of the Plan,” id. ¶ 135, and this left the Plaintiffs “saddled .
. . with above-market recordkeeping fees.” Id. ¶ 118.
The Plaintiffs seemingly invoke the allegedly too-high fees
charged in (1) Plan funds they themselves were invested in, and
(2) Plan funds that they themselves were not invested in --- but
that other people were.10
7 Recall: Mark Milano, Robert Cameron, Rodney Hergenrader,
Katherine H. Joncas, and Charles Van Hooser.
8 Recall: the 401(k) Investment Committee of Cognizant
Technology Solutions U.S. Corporation.
9 The focus of this Opinion and Order is only on count one of
the Plaintiffs’ lawsuit. See Complaint ¶¶ 132-38. Count two
presses another claim. See id. ¶¶ 139-145. And it names other
defendants. See id.
10 This looks to be the best reading of the complaint. See,
e.g., Complaint ¶ 16 (alleging that the Defendant “breached the
duties [it] owed to the Plan, to [the] Plaintiffs, and to the
other participants in the Plan by . . . failing to control the
Plan’s recordkeeping [fees]”); id. ¶ 121 (relying on “the Plan’s
The question on the table: do the Plaintiffs have standing under
Article III of the Constitution to press their count-one ERISA
claim to the extent it is based in part11 on the fees associated
with Plan funds the Plaintiffs did not invest in?12
per participant administrative and recordkeeping fees”); id. ¶¶
135-36 (alleging that, had the Defendant not “failed to control
the administrative and recordkeeping expenses of the Plan,” “the
Plan’s participants would have had more money available to them
for their retirement”). But if the Plaintiffs mean to be
pressing imprudence allegations based only on fees charged in
Plan funds that they themselves were invested in, while they
were invested in them --- they should so clarify.
11 “In part” because the count-one ERISA claim is apparently
cumulative --- it is based on the idea that various choices made
by the Defendant together add up to unlawful imprudence. Some
of the complained-of choices relate to fees. See Complaint ¶
135. Others do not. See id. And as noted, some of the
Defendant’s alleged fee-related choices seem to concern Plan
funds in which the Plaintiffs were invested, while others do
not. In short, only a slice of the Plaintiffs’ overall
imprudence claim is impacted by a possible Article III standing
issue. But that slice needs accounting for before getting to
the overall merits of the case. This is because the Plaintiffs
have opted to press their imprudence claim on a holistic, all-
packaged-together basis. None of the Defendant’s allegedly
imprudent choices stand alone, in their own, free-standing ERISA
counts; rather, each choice is treated by the complaint as part
of a single overarching ERISA violation, with each choice
tallying up, on a cumulative basis, to imprudence. See id. ¶¶
135-36; see generally Mator v. Wesco Distrib. Inc., 102 F.4th
172, 190 (3d Cir. 2024) (suggesting that duty-of-prudence claims
must be evaluated on a “‘holistic’” basis); Sweda, 923 F.3d at
331 (same). It makes little sense to evaluate a claim put
together in this way without first knowing what it consists of.
If the question on the table is whether someone spent $10 on a
bag of groceries, there is no point in answering until we know
what items to actually count up --- three apples, a dozen eggs,
and a quart of milk, or that same mix of things, but minus the
eggs.
12 The parties have not spoken to whether the Plaintiffs have
standing as to the particular question referenced in the text.
But raising this issue, even if the parties have not, is the
* * *
To begin to answer, start with some background.
Roughly speaking, there are two basic ways that retirement-plan
recordkeeping fees are paid for. See Hughes, 595 U.S. at 174
(describing these); Mator v. Wesco Distrib. Inc., 102 F.4th 172,
179 (3d Cir. 2024) (same); see also Sarah Holden, Alex Johnson,
& Elena B. Chism, The Economics of Providing 401(k) Plans:
Services, Fees, and Expenses, 2023, ICI Rsch. Persp. (July
2024), at 6, https://www.ici.org/system/files/2024-07/per30-
06.pdf (same).
The first is the direct fee model.
Its defining feature: “paying for plan-level recordkeeping
services directly from participant accounts.” Holden, Johnson,
& Chism, Economics of Providing 401(k) Plans, at 6 (emphasis
added).
The direct fees imposed can vary from plan-participant to plan-
participant. For example, the direct fee might be charged based
on how much each participant has invested in the retirement
plan. See Dominique C. Badoer, Charles P. Costello &
Christopher M. James, I Can See Clearly Now: The Impact of
Disclosure Requirements on 401(k) Fees, 136 J. Fin. Econ. 471,
474 (2020).
But “typically,” the direct fee model involves all participants
in an overall retirement plan paying roughly the same “fixed”
amount, regardless of the particular funds within the retirement
plan they are invested in. See Veronika K. Pool, Clemens Sialm
& Irina Stefanescu, Mutual Fund Revenue Sharing in 401(k) Plans
9 (Nat’l Bureau of Econ. Rsch., Working Paper No. 30721, 2011);
see also Hughes, 595 U.S. at 174; Sweda, 923 F.3d at 324.
The second model is the indirect fee model.
Under this model, administrative expenses are paid without any
“direct charge to either the employer or plan participant.”
Lauren K. Valastro, How Misapplying Twombly Erodes Retirement
Funds, 32 Geo. Mason L. Rev. 421, 433 (2025); see also Ian Ayres
& Quinn Curtis, Beyond Diversification: The Pervasive Problem of
Court’s obligation. See, e.g., Boley v. Universal Health
Servs., Inc., 36 F.4th 124, 130 (3d Cir. 2022).
Excessive Fees and “Dominated Funds” in 401(k) Plans, 124 Yale
L.J. 1476, 1486 (2015).
How does this work?
Recordkeeping is typically paid for by means of “rebates” passed
upstream --- from individual funds up to the entity doing the
administrative work. See Pool, Sialm & Stefanescu, Mutual Fund
Revenue Sharing, Nat’l Bureau of Econ. Rsch. at 1; Badoer,
Costello & James, I Can See Clearly Now, 136 J. Fin. Econ. at
474.
Passing “rebates” up the chain is generally called “revenue
sharing.” See Pool, Sialm & Stefanescu, Mutual Fund Revenue
Sharing, Nat’l Bureau of Econ. Rsch. at at 1, 3; Ayres & Curtis,
Beyond Diversification, 124 Yale L.J. at 1486.
And revenue-sharing of this sort typically (but not necessarily)
works on a variable and non-uniform basis --- that is, with
participants in an overall retirement plan required to pay
somewhat different amounts (or at least based on roughly
different formulas), based to an extent on the particular funds
within the retirement plan they are invested in.
Under a revenue-sharing arrangement, fees are “expressed through
an ‘expense ratio’: a percentage of the plan participant’s total
assets invested.” See Valastro, Retirement Funds, 32 Geo. Mason
L. Rev. at 433; Pool, Sialm & Stefanescu, Mutual Fund Revenue
Sharing, Nat’l Bureau of Econ. Rsch. at 9.
And the expense ratios can “differ substantially across
[investment] options.” See Pool, Sialm & Stefanescu, Mutual
Fund Revenue Sharing, Nat’l Bureau of Econ. Rsch. at 9; see also
Valastro, Retirement Funds, 32 Geo. Mason L. Rev. at 433.
Bottom line: retirement plan recordkeeping fees are generally
covered either on (1) a direct basis, in which case the fees are
often (but not necessarily) uniform --- that is, imposed without
regard to the fund in which a plan participant is invested in;
or (2) on an indirect basis, in which case the fees are often
(but not necessarily) non-uniform --- that is, varying to an
extent depending on the particular funds within a retirement
plan that a plan participant is invested in.
* * *
Why might all of this matter here for Article III standing?
The reason is this: in count one of their complaint, the
Plaintiffs contend, among other things, that the Defendant
breached their ERISA duty of prudence by permitting
administrative fees to be charged that were too high. See
Complaint ¶ 135.
In support of this claim, the Plaintiffs seemingly13 invoke fees
paid by participants in a wide range of Plan funds.
But the Plaintiffs were invested in only three Plan funds. See
Complaint ¶¶ 22-27. And there seem to have been many more Plan
funds than that.14
Do the Plaintiffs plausibly have Article III standing to press
an imprudence claim that is based, in part, on the allegedly
too-high administrative fees that were charged by the Plan as to
funds that the Plaintiffs were not, themselves, invested in?
As a legal matter, the answer may well turn on whether fee
expenses were covered (a) on a uniform basis across the Plan ---
that is, regardless of the particular funds Plan participants
were invested in (as is often the case under the direct fee
model) or (b) on a dis-uniform basis --- that is, depending on
the particular funds Plan participants were invested in (as is
often the case under the indirect fee model).
In the first situation, (a), there is almost surely standing for
now. See Boley v. Universal Health Servs., Inc., 36 F.4th 124,
131 (3d Cir. 2022).
13 See footnote 10.
14 The menu of investment options that appears to have been
available to Plan participants is more than forty pages long and
lists out more than fifty funds per page. See Complaint,
Exhibit K (“Exhibit K”) (ECF 73-11). And the parties seem to
proceed on the assumption that there were available funds in the
Plan that the Plaintiffs were never invested in. See Letter
from Mark K. Gyandoh (ECF 96) at 1 (acknowledging that the
Plaintiffs “did not necessarily invest in the MassMutual
funds”); Letter from Bryan Nese (ECF 98) at 1 (“Plaintiffs
concede that they did not invest in the five MassMutual funds
they challenge.”); footnote 10.
In the second situation, (b), the question is closer. See,
e.g., Collins v. Ne. Grocery, Inc., 149 F.4th 163, 173-74 (2d
Cir. 2025).
But before getting to the legal landscape, note that the
information put before the Court to this point is, simply,
difficult to get to the bottom of. It is not entirely clear as
a factual matter whether this is a first situation case (covered
by Boley) or a second situation case (potentially covered by
Collins).
* * *
As to the facts, start by noting that, per the materials put
before the Court, payment for recordkeeping fees seems
potentially to have been handled differently before and after
September 2018 --- with a direct-fee model after September 2018
and an indirect-fee model before September 2018.
As to the post-September 2018 period, things are easier to
follow.
According to the Defendant, in September 2018, the Plan
“switched to a flat, per-participant recordkeeping fee.”
Memorandum of Law in Support of Defendants’ Motion to Dismiss
Amended Complaint (“Defendants’ Brief”) (ECF 81) at 8-9.
And, per the Defendant again, in September 2018, the flat fee
was $42 per participant. See id. Later, in 2019, that fee
dropped, first to $26 per participant, and then to $23 per
participant. See id. at 9.
The key point: from September 2018 forward, it looks like the
fees were apparently the same for all participants in the Plan,
regardless of the particular Plan funds they were invested in.
And in their briefing, the Plaintiffs seem to accept this
timeline. See Plaintiffs’ Memorandum of Law in Opposition to
Defendants’ Motion to Dismiss the First Amended Complaint (ECF
85) at 22-23.15
15 As noted, courts have sua sponte obligations to notice and
resolve standing difficulties. And what a plaintiff must do to
establish standing varies depending on the stage of the case.
See Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992). At
some point, if not now, certain factual complexities may well
need to be addressed. In particular, the Defendant indicates
But before September 2018, fees look like they may well have
been covered on a non-uniform basis --- with payments by Plan
participants depending to an extent on the particular Plan funds
in which they were invested.
Per the Defendant, before September 2018, the Plan relied on a
“revenue sharing arrangement.” See Defendants’ Brief at 8.
As discussed above, revenue sharing often means some non-
uniformity in how retirement-plan fees are covered.
And it looks like there may have been that sort of non-
uniformity here.
A particular document put before the Court is a copy of the menu
of investment options that were available to participants in the
Plan. See Exhibit K. And according to the just-referenced
document, as to some Plan funds, there appears to have been no
revenue sharing. See, e.g., id. at 1 (listing investment
options with 0.00% revenue sharing).16 But as to other Plan
that the Plan moved to the “flat, per-participant” model in
September 2018. See Defendants’ Brief at 8-9. (As discussed
below, the Plan had apparently relied before September 2018 on a
revenue sharing model. See id.) But the document that sets
forth the revenue sharing associated with each investment option
seems to be dated to November 2018, after revenue sharing
purportedly ceased. See Exhibit K. Other materials deepen the
uncertainty about the timeline here. See Declaration of Melissa
D. Hill, Exhibit 5 (ECF 17-5) at 10 (2019 fee disclosure
referring to administrative fees “paid through revenue sharing
arrangements”); Declaration of Melissa D. Hill, Exhibit 6 (ECF
17-6) at 11 (2020 fee disclosure using the same language);
Declaration of Alex Lakatos, Exhibit 7 (“Exhibit 7”) (ECF 82-7)
at 35, 49 (indicating that the recordkeeper received “indirect
compensation” in 2020 and 2022).
16 Those funds with 0.00% revenue sharing may be particularly
important here. The Plaintiffs were allegedly invested in three
American Century One Choice target-date funds. See Complaint ¶¶
22-27. And the menu of investment options appears to include
American Century Target Date funds from the relevant vintages,
that involved 0.00% revenue sharing. See Exhibit K at 26. But
if the Plaintiffs were not paying anything in recordkeeping fees
during the pre-September 2018 period, would they have Article
funds, revenue sharing reached as high as 1.60%. See id. at 4,
17, 35.
This seems to suggest non-uniformity.17
In a nutshell: while the parties have not provided a detailed
account of the underlying facts here, the Court’s tentative18
sense is that during the time covered by the complaint (from
2014 forward),19 the allegations are of a later period of
seemingly uniform fee payments by Plan participants (starting in
around September 2018) and an earlier period of seemingly non-
uniform fee payments by Plan participants.
Why this overall picture matters is unpacked just below.
* * *
If fees were covered on a uniform basis across the funds in the
Plan, then, as to the time period when that was the case, the
Plaintiffs likely have Article III standing to press an
imprudence argument against the Defendant based on too-high fees
--- even as to Plan funds the Plaintiffs were not themselves
invested in.
For that period,20 the Third Circuit’s decision in Boley is
likely dispositive.
The Boley opinion described the retirement plan at issue as
having charged “each Plan participant a flat annual
III standing to bring a challenge based in part on recordkeeping
fees charged during that time period?
17 Or does it? The Defendant indicates that “MassMutual
credited back a portion of fees received to participant accounts
to offset administrative expenses, such as recordkeeping
expenses.” Defendants’ Brief at 8. This is also reflected in
language contained in at least some of the pre-September 2018
fee disclosures. See Declaration of Melissa D. Hill, Exhibit 8
(ECF 17-8) at 13. This might be a surface indication of “fee
levelization” at work. See Lucas v. MGM Resorts Int’l, 724 F.
Supp. 3d 1142, 1148 (D. Nev. 2024). But there is no real detail
on any of any of this in the materials put before the Court.
18 “Tentative” because the Court has too little to go on here,
and what there is is elusive.
19 See Complaint ¶ 10 (defining the class period).
20 Seemingly: from around the fall of 2018 forward.
recordkeeping and administrative fee.” Boley, 36 F.4th at 131.
And the court of appeals therefore held that an “allegedly
excessive annual fee would represent a concrete and personal
injury to a plaintiff regardless of the funds in which he or she
invested.” Id. at 131.21
But if fees were covered on a non-uniform basis across the funds
in the Plan, then, as to the time period when that was the
case,22 do the Plaintiffs have standing to press an imprudence
argument based in part on too-high fees --- even as to Plan
funds the Plaintiffs were not themselves invested in?
A number of cases suggest the answer may potentially be “no.”
The main one is the Second Circuit’s recent decision in Collins
v. Northeast Grocery, Inc. See 149 F.4th at 173-74 (no standing
where the complaint “identified only one fund” with allegedly
improper revenue sharing, but there was no allegation that any
plaintiff was invested in either that fund or any other funds
with revenue sharing arrangements).
And there are other cases, too, that might well be read that
way. Look to, for example, Lopez v. Embry-Riddle Aeronautical
Univ., Inc., 2024 WL 4769632, at *7 (M.D. Fla. Nov. 13, 2024);
Sabana v. CoreLogic, Inc., 2024 WL 755723, at *4 (C.D. Cal. Jan.
26, 2024); and O’Driscoll v. Plexus Corp., 2022 WL 3600824, at
*4 (E.D. Wis. Aug. 23, 2022).
21 The underlying complaint in Boley may cast some doubt on
whether the retirement plan in that case actually involved a
uniform, across-the-plan recordkeeping fee. See Class Action
Complaint ¶ 95 (“A more prudent arrangement in this case would
have been . . . for the Defendants to negotiate and/or obtain
reasonable direct compensation per participant
recordkeeping/administration fees.”), Boley v. Universal Health
Servs., Inc., 337 F.R.D. 626 (E.D. Pa. 2021). Whether that is
or is not relevant for properly understanding Boley is an issue
for another day. And note also: Boley involved appellate
review of a case that was at the class certification stage. See
Boley, 36 F.4th at 129-30. That “several broader failures . . .
affecting multiple funds in the same way” were enough for
standing in Boley at the class certification stage, see id. at
132, may or may not be enough to establish standing at other
stages of a case. See Lujan, 504 U.S. at 561.
22 Seemingly: before the fall of 2018.
But the Court does not have the benefit of the parties’ read on
these cases about non-uniform fees. They have not been cited in
the parties’ legal papers (and Collins came down after the
briefing in this case was filed).
* * *
There is, in short, a possible Article III standing issue with
an aspect of the Plaintiffs’ count-one ERISA claim.
And the standing issue cannot be tackled by the Court now.
First, its resolution depends on factual information that is too
sparse and too opaque to reliably work through at this point.
And second, its resolution depends on an assessment of the legal
implications of the underlying facts --- but the key legal
authorities have not been addressed by the parties.
Until the Article III standing questions here are worked out,
there is no way to thoughtfully resolve the Defendant’s motion
to dismiss. See footnote 11.
Against this backdrop, the Court will proceed as follows.
The parties shall each file a letter of no more than two pages
on or before November 5 indicating how they wish to proceed. Is
new briefing required? Will the Plaintiffs seek to replead?
Etc.
Meanwhile, the Court will (and hereby does) deny for now,
without prejudice, the motion to dismiss at ECF 80. This will
allow the Defendant to refile a motion to dismiss later, as it
may wish to, that responds to new developments in this case that
may follow from resolution of the standing issue.
* * *
IT IS on this 27th day of October, 2025,,SO ORDERED.
JE
And if, down the road, the Defendant does not want to revise
its motion to dismiss, it can request permission from the Court
to simply revive it, without need of a new filing.