Mary Boley v. Universal Health Services Inc

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

___________

No. 21-2014

____________

MARY K. BOLEY; KANDIE SUTTER; PHYLLIS

JOHNSON, Individually and as representatives of a class of

similarly situated persons, on behalf of the Universal Health

Services, Inc. Retirement Savings Plan

v.

UNIVERSAL HEALTH SERVICES, INC.; UNIVERSAL

INC.; THE UHS RETIREMENT PLANS INVESTMENT

COMMITTEE; DOES 1-10,

Whose Names Are Currently Unknown

Universal Health Services, Inc. and Health Universal

Health Services, Inc. Retirement Plans Investment

Committee,

Appellants

_______________________

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

D.C. Civil Action No. 2-20-cv-02644

(District Judge: Honorable Mark A. Kearney)

______________

Argued: February 11, 2022

Before: GREENAWAY, JR., SCIRICA and COWEN1,

Circuit Judges.

(Filed: June 1, 2022)

Deborah S. Davidson

Morgan Lewis & Bockius

110 North Wacker Drive

Suite 2800

Chicago, IL 60606

Michael E. Kenneally [ARGUED]

Morgan Lewis & Bockius

1111 Pennsylvania Avenue, N.W.

Suite 800 North

Washington, DC 20004

Matthew D. Klayman

Brian T. Ortelere

Morgan Lewis & Bockius

1

The Honorable Robert E. Cowen assumed inactive status on

April 1, 2022 after the argument and conference in this case,

but before the filing of the opinion. This opinion is filed by a

quorum of the panel pursuant to 28 U.S.C. § 46(d) and Third

Circuit I.O.P. Chapter 12.

2

1701 Market Street

Philadelphia, PA 19103

Sean K. McMahan

Morgan Lewis & Bockius

1717 Main Street

Suite 3200

Dallas, TX 75201

Counsel for Appellants

John M. Masslon, II

Washington Legal Foundation

2009 Massachusetts Avenue, N.W.

Washington, DC 20036

Counsel for Amicus Appellant

Alec Berin

James C. Shah

Miller Shah

1845 Walnut Street

Suite 806

Philadelphia, PA 19103

James E. Miller [ARGUED]

Miller Shah

65 Main Street

Chester, CT 06412

Mark K. Gyandoh

Gabrielle P. Kelerchian

Capozzi Adler

3

312 Old Lancaster Road

Merion Station, PA 19066

Donald R. Reavey

Capozzi Adler

2933 North Front Street

Harrisburg, PA 17110

Counsel for Appellees

_________________

OPINION OF THE COURT

_________________

SCIRICA, Circuit Judge

In this interlocutory appeal, fiduciaries of a retirement

plan appeal the District Court’s certification of a class of

participants who allege the fiduciaries breached their duty

under the Employee Retirement Income Security Act of 1974

(“ERISA”). At issue in this case is whether the typicality

requirement of Federal Rule of Civil Procedure 23(a) is

satisfied when the class representatives did not invest in each

of a defined contribution retirement plan’s available

investment options.

We will affirm. Because the class representatives allege

actions or a course of conduct by ERISA fiduciaries that

affected multiple funds in the same way, their claims are

typical of those of the class.

4

I. FACTS AND PROCEDURAL HISTORY

Universal Health Services, Inc. sponsors the Universal

Health Services, Inc., Retirement Savings Plan (the “Plan”), a

defined contribution retirement plan,2 in which qualified

employees can participate and invest a portion of their

paycheck in selected investment options. The Plan’s

investment options and administrative arrangements are

chosen and ratified by the UHS Retirement Plans Investment

Committee (the “Committee”). The Committee is appointed

and overseen by Universal. Both Universal and the Committee

2

ERISA covers two types of retirement plans: defined benefit

plans and defined contribution plans. A defined benefit plan

“generally promises the participant a fixed level of retirement

income, which is typically based on the employee’s years of

service and compensation.” LaRue v. DeWolff, Boberg &

Assocs., Inc., 552 U.S. 248, 250 n.1 (2008); see 29 U.S.C.

§ 1002(35). The promised payments are made to participants

from the plan’s “general pool of assets.” Hughes Aircraft Co.

v. Jacobson, 525 U.S. 432, 439 (1999). A defined contribution

plan, in contrast, “promises the participant the value of an

individual account at retirement, which is largely a function of

the amounts contributed to that account and the investment

performance of those contributions.” LaRue, 552 U.S. at 250

n.1. In a defined contribution plan, “all of the plan’s money is

allocable to plan participants,” and the “vested benefits are the

contents of [each participant’s] account: contributions (from

both the participant and employer) plus investment gains

minus investment losses and any allocable expenses.” Graden

v. Conexant Sys. Inc., 496 F.3d 291, 297, 301 (3d Cir. 2007).

5

serve as the Plan’s fiduciaries and administrators (collectively,

“Universal").

Since 2014, the Plan’s available investment options

consisted of thirty-seven funds, including mutual funds and a

collective investment trust. As with most investment funds,

the Plan funds charge participants annual management fees.

The Plan also charges participants an annual recordkeeping

and administrative fee. Each year, every investor in the Plan

would pay the annual recordkeeping and administrative fee,

plus the additional fees associated with whichever investment

fund or funds in which he or she chose to invest.

Among the investment options is the Fidelity Freedom

Fund suite, consisting of thirteen target date funds. Target date

funds are managed funds that shift in investment strategy as a

target retirement year approaches. The Fidelity Freedom Fund

suite was designated as the Plan’s Qualified Default

Investment Alternative, meaning Universal would

automatically invest Plan participants’ money in one of the

thirteen Fidelity Freedom Funds if no other investment

selection was made.

The class representatives are three current and former

participants in the Plan (the “Named Plaintiffs”). Between

them, the Named Plaintiffs invested in seven of the Plan’s

thirty-seven investment options. They were also charged the

Plan’s annual fee for recordkeeping and administrative

services.

The Named Plaintiffs, on behalf of themselves and all

other Plan participants, sued Universal under 29 U.S.C.

6

§ 1132(a)(2)3 and 29 U.S.C. § 1109.4 The Named Plaintiffs

allege Universal breached its fiduciary duty by including the

Fidelity Freedom Fund suite in the plan, charging excessive

recordkeeping and administrative fees, and employing a

flawed process for selecting and monitoring the Plan’s

investment options, resulting in the selection of expensive

investment options instead of readily-available lower-cost

alternatives. The Named Plaintiffs also allege certain

Universal defendants breached their fiduciary duty by failing

to monitor the Committee appointed to manage the Plan.

Universal moved for partial dismissal of the Named

Plaintiffs’ claims, contending the Named Plaintiffs lacked

constitutional standing to pursue claims relating to funds in

3

An ERISA civil action may be brought “by the Secretary, or

by a participant, beneficiary or fiduciary for appropriate relief

under section 1109 of this title.” 29 U.S.C. § 1132(a)(2).

4

The relevant provisions under ERISA regarding liability for

breach of fiduciary duty are set out in 29 U.S.C. § 1109(a):

Any person who is a fiduciary with respect to a

plan who breaches any of the responsibilities,

obligations, or duties imposed upon fiduciaries

by this subchapter shall be personally liable to

make good to such plan any losses to the plan

resulting from each such breach, and to restore to

such plan any profits of such fiduciary which

have been made through use of assets of the plan

by the fiduciary, and shall be subject to such

other equitable or remedial relief as the court

may deem appropriate, including removal of

such fiduciary.

7

which they did not personally invest. The District Court denied

Universal’s motion, holding the Named Plaintiffs had standing

to pursue all their claims because they alleged concrete injuries

resulting from Universal’s Plan-wide misconduct. Boley v.

Universal Health Servs., Inc., 498 F. Supp. 3d 715, 719 (E.D.

Pa. 2020). Accordingly, the Named Plaintiffs were permitted

to bring their claims as alleged, because “claims relating to

allegedly imprudent decision-making processes injure all plan

participants.” Id. at 723.

The Named Plaintiffs then moved to certify a class

under Rule 23(b)(1), comprising all current and former Plan

participants (the “Class”). In opposition, Universal argued that

because the Named Plaintiffs did not invest in thirty of the

Plan’s funds, they lack standing to bring claims relating to

these funds, making these claims atypical to those of the Class.

Universal also argued the Named Plaintiffs’ claims were

atypical because the Named Plaintiffs lacked incentive to

demonstrate reasonable alternatives to the thirty funds in which

they did not invest.5

The District Court rejected Universal’s argument and

certified a class composed of all participants in the Plan from

5

Universal also argued that Named Plaintiffs’ claims were

atypical in the Class because of individualized defenses under

ERISA § 404(c) and potentially differing limitations periods.

But the District Court found there were no individualized

defenses and no differing limitations periods. Defendants

opted not to appeal that aspect of the District Court’s decision.

8

June 5, 2014, to the present.6 Boley v. Universal Health Servs.,

Inc., 337 F.R.D. 626 (E.D. Pa. 2021). It emphasized “[t]he

focus of the Participants’ claims is on [Universal’s] conduct as

to all Plan participants rather than about the individual

investment choices made by Participants and putative Class

members.” Id. at 636. Referencing its earlier decision denying

Universal’s partial motion to dismiss for lack of standing, the

District Court reiterated its view that the Named Plaintiffs

challenged Universal’s Plan-wide conduct. For this reason, the

District Court held the Named Plaintiffs’ claims were typical

6

The District Court certified this class under Rule 23(b)(1).

Fed. R. Civ. P. 23(b)(1) provides that a class action may be

maintained if:

prosecuting separate actions by or against

individual class members would create a risk of

(A) inconsistent or varying adjudications with

respect to individual class members that would

establish incompatible standards of conduct for

the party opposing the class; or (B) 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.

The District Court held certification was proper under both

Rule 23(b)(1)(A) and Rule 23(b)(1)(B). 337 F.R.D. at 638–39.

Universal does not challenge that certification was proper

under either Rule 23(b)(1)(A) or (b)(1)(B). It only challenges

that the general requirement of typicality under Rule 23(a) was

satisfied.

9

of claims regarding the funds in which the Named Plaintiffs

did not invest. Universal petitioned for leave to appeal the

class certification decision on an interlocutory basis under Fed.

R. Civ. P. 23(f). We granted Universal’s petition for an

interlocutory appeal.

II. JURISDICTION

The District Court had statutory federal-question

jurisdiction over this ERISA lawsuit under 28 U.S.C. § 1331.

We have jurisdiction over this interlocutory appeal of a class

certification decision under 28 U.S.C. § 1292(e). See also Fed.

R. Civ. P. 23(f).

Universal does not challenge our statutory jurisdiction

over this suit but, as part of its typicality argument, challenges

the Named Plaintiffs’ standing under Article III. Specifically,

for purposes of this appeal, Universal characterizes the Named

Plaintiffs’ lack of standing as destroying typicality. But a lack

of standing would present a more fundamental problem for the

Named Plaintiffs because a lack of standing necessitates

dismissal of claims, whether brought in a class action or in any

other kind of suit. Because “our continuing obligation to

assure that we have jurisdiction requires that we raise the issue

of standing sua sponte,” Wayne Land & Mineral Grp. v. Del.

River Basin Comm’n, 959 F.3d 569, 574 (3d Cir. 2020)

(cleaned up) (quoting Seneca Res. Corp. v. Twp. of Highland,

10

863 F.3d 245, 252 (3d Cir. 2017)), we will address the Named

Plaintiffs’ standing directly, as a question of jurisdiction.7

To establish standing, a plaintiff must show “(i) that he

suffered an injury in fact that is concrete, particularized, and

actual or imminent; (ii) that the injury was likely caused by the

defendant; and (iii) that the injury would likely be redressed by

judicial relief.” TransUnion LLC v. Ramirez, 141 S. Ct. 2190,

2203 (2021) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555,

560–61 (1992)). “[S]tanding is not dispensed in gross,” and “a

plaintiff must demonstrate standing for each claim he seeks to

press and for each form of relief that is sought.” Town of

Chester v. Laroe Ests., Inc., 137 S. Ct. 1645, 1650 (2017)

(citation omitted). Review of a party’s standing to sue is de

novo. Free Speech Coal., Inc. v. Att’y Gen., 974 F.3d 408, 419

(3d Cir. 2020).

To determine whether the Named Plaintiffs have

standing, we first look to the Complaint. Count I claims a

breach of fiduciary duty and Count II claims a failure to

monitor fiduciaries. For Count I, the Named Plaintiffs allege

three specific breaches of fiduciary duty: first, Universal’s

alleged imprudence in offering the excessively expensive

Fidelity Freedom Fund suite to Plan participants; second,

Universal’s alleged failure to monitor and reduce the

7

Because we address standing sua sponte, it is immaterial that

we only certified Universal’s petition to appeal the District

Court’s order pertaining to class certification, not the earlier

order pertaining to standing. Moreover, we are satisfied the

standing arguments were fully briefed by the parties, albeit in

the context of typicality and class certification, rather than

jurisdiction.

11

excessively high recordkeeping and administrative fees for the

Plan; and third, Universal’s alleged lack of a “prudent

investment evaluation process,” App. 59, ¶47, which resulted

in the Plan offering a menu of excessively expensive

investments.

Taking these claims out of order, Universal concedes

the Named Plaintiffs have standing for the second claim

challenging the recordkeeping and administrative costs. We

agree. The challenged conduct—charging each Plan

participant a flat annual recordkeeping and administrative

fee—affected all Plan participants in the same way. This

allegedly excessive annual fee would represent a concrete and

personal injury to a plaintiff regardless of the funds in which

he or she invested. It is immaterial to our standing analysis that

each plaintiff’s actual recovery would be personal to his or her

individual account, or that, due to the effects of compounding

interest, a flat annual fee represents a higher ultimate cost for a

plaintiff further from retirement than one close to retirement.

For the alleged imprudent selection of the Fidelity

Freedom Fund suite, the Named Plaintiffs similarly have a

concrete injury flowing from the challenged conduct. The

Named Plaintiffs each invested in at least one of the Fidelity

Freedom Funds. Importantly, the Named Plaintiffs’

allegations in the Complaint are that all of the funds in the suite

were imprudent for the same reasons—they were all

excessively expensive funds, because they invested in high fee

actively managed funds rather than low-cost index funds. If

the Named Plaintiffs’ allegations are true, each class

representative suffered a concrete injury traceable to

Universal’s imprudent choice to include the Fidelity Freedom

Fund suite in the Plan, rather than a suite consisting of target

12

date funds that invested in less expensive index funds. The

Named Plaintiffs have standing to bring this claim.

The standing analysis for the final claim under Count I

is also similar. For this claim, the Named Plaintiffs allege

Universal “lack[ed] a prudent investment evaluation process”

when choosing and evaluating investments offered to Plan

participants. App. 59, ¶ 47. The Named Plaintiffs contend this

failure resulted in an excessively expensive investment menu.

Universal allegedly failed to “consider ways in which to lessen

the fee burden” on Plan participants, App. 57–58, ¶ 45, leading

to the Plan paying total investment management fees nearly

double those paid by comparable Plans. Because each class

representative invested in at least one fund with allegedly

excessive fees, the Named Plaintiffs adequately alleged they

suffered injury from Universal’s imprudent investment

evaluation process, and, accordingly, have standing to bring

this claim.

For Count II, the Named Plaintiffs allege a failure to

monitor the performance of the Committee and its appointed

members, resulting in “imprudent, excessively costly, and

poorly performing” investments. App. 68, ¶ 80(c). This Count

incorporates the factual allegations supporting the three claims

in Count I, and, accordingly, relates to Universal’s conduct

regarding the administration of the Plan as a whole, not specific

funds. For this reason, Count II, like the claims in Count I,

alleges conduct by Universal that led to concrete injuries to all

of the Named Plaintiffs. Accordingly, the Named Plaintiffs

have standing to bring this claim as well.

Since the Named Plaintiffs allege concrete injuries

traceable to the challenged decisions and courses of conduct of

13

the defendants, they have met the requirements for standing.

Article III does not prevent the Named Plaintiffs from

representing parties who invested in funds that were allegedly

imprudent due to the same decisions or courses of conduct. In

Sweda v. University of Pennsylvania we held that participants

in a defined contribution ERISA plan have standing to bring

claims alleging the fiduciary’s “process of selecting and

managing options must have been flawed” even though the

class representatives did not invest in every fund. 923 F.3d

320, 331 (3d Cir. 2019). We noted in Sweda that the class

representatives alleged they had invested in some of the

underperforming funds, and “[t]his allegation links the named

plaintiffs with the underperforming investment options and is

sufficient to show individual injuries.” Id. at 334 n.10; see also

Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 593 (8th Cir.

2009) (noting that as long as the named plaintiffs have alleged

individualized injuries with respect to all of their claims, they

“may proceed under § 1132(a)(2) on behalf of the plan or other

participants” even if relief “sweeps beyond [their] own

injur[ies]”).

Universal asks us to reach the opposite conclusion,

contending the Named Plaintiffs’ allegations are really thirty-

seven separate claims challenging thirty-seven separate

investment options included in the Plan. Universal

characterizes the Named Plaintiffs’ claims as mere “artful

pleading” and the District Court’s holding that the Named

Plaintiffs had standing as “exalting form over substance.”

Appellants’ Br. 40. But the Named Plaintiffs do not allege

thirty-seven individual breaches of fiduciary duty, but rather

several broader failures by Universal affecting multiple funds

in the same way. The District Court’s conclusion that the

Named Plaintiffs “do not pursue such piecemeal claims,” 498

14

F. Supp. 3d at 724, addressed the substance of the Named

Plaintiffs’ allegations. The decision to offer the suite of

Fidelity Freedom Funds was, in effect, one decision that led to

thirteen allegedly imprudent funds being included in the Plan;

the alleged failure to continuously evaluate management fees

affected all funds in the Plan in the same way; and the alleged

failure to monitor appointees resulted in high fees across the

Plan menu. To establish standing, class representatives need

only show a constitutionally adequate injury flowing from

those decisions or failures. The Named Plaintiffs allege such

an injury for each claim.

Universal suggests this straightforward standing inquiry

should be adjusted in light of the Supreme Court’s decision in

Thole v. U.S. Bank N.A., 140 S. Ct. 1615 (2020). True, Thole

held that, in the absence of a personal loss to a plaintiff’s

account, an abstract breach of fiduciary duty or a diminishment

in a plan’s assets is insufficient to confer standing. See id. at

1619–20. But the Named Plaintiffs here have alleged the kind

of concrete, personalized injuries traceable to the challenged

conduct by defendants that Thole requires.

Since the Named Plaintiffs each had a concrete and

personalized stake in each claim alleged in the complaint, they

may proceed under Article III. As the District Court properly

recognized, Universal’s concerns regarding the representation

of absent class members might implicate class certification or

damages but are distinct from the requirements of Article III.

III. CLASS CERTIFICATION

We review a district court’s certification of a class for

abuse of discretion. Newton v. Merrill Lynch, Pierce, Fenner

15

& Smith, Inc., 259 F.3d 154, 165 (3d Cir. 2001). A district

court abuses its discretion if its decision granting or denying

class certification “rests upon a clearly erroneous finding of

fact, an errant conclusion of law or an improper application of

law to fact.” In re Hydrogen Peroxide Antitrust Litig., 552

F.3d 305, 312 (3d Cir. 2008) (quoting Newton, 259 F.3d at

165).

In this appeal, Universal contends class certification

was improper because the class failed to satisfy the Rule

23(a)(3) requirement that the class representative’s claims be

“typical of the claims . . . of the class.” Fed. R. Civ. P. 23(a)(3).

The requirement of typicality is imposed to prevent

certification when “the legal theories of the named plaintiffs

potentially conflict with those of the [class] absentees.”

Georgine v. Amchem Prods., Inc., 83 F.3d 610, 631 (3d Cir.

1996); see also Beck v. Maximus, Inc., 457 F.3d 291, 296 (3d

Cir. 2006) (noting the Supreme Court’s statement that

typicality and adequacy of representation “‘tend to merge’

because both look to potential conflicts” (alteration omitted)

(quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 626

n.20 (1997))). To avoid conflict, typicality seeks to ensure “the

interests of the class and the class representatives are aligned

‘so that the latter will work to benefit the entire class through

the pursuit of their own goals.’” Newton, 259 F.3d at 182–83

(quoting Barnes v. Am. Tobacco Co., 161 F.3d 127, 141 (3d

Cir. 1998)). In evaluating typicality, we focus on whether the

class representatives’ legal theory and claim, or the individual

circumstances on which those theories and claims are based,

are different from those of the class. In re Schering Plough

Corp. ERISA Litig., 589 F.3d 585, 597–98 (3d Cir. 2009).

Here, the Named Plaintiffs allege Universal breached its

fiduciary duty under ERISA by failing to properly manage

16

these investment options. But because the Named Plaintiffs

did not invest in all thirty-seven of the challenged funds,

Universal contends Plaintiffs’ claims are not typical of the

class. According to Universal, in the context of a defined

contribution plan under ERISA, named class representatives’

claims are not typical of the class unless the named

representatives invested in each of the challenged funds,

because, otherwise, the representatives would lack an incentive

to litigate on behalf of the class.

Universal points out that to recover under ERISA, a

plaintiff must show both an inadequate fiduciary process and

the objective imprudence of offering each challenged fund.

See Renfro v. Unisys Corp., 671 F.3d 314, 322 (3d Cir. 2011).

Because the Named Plaintiffs did not invest in all the Plan’s

funds, Universal contends the Named Plaintiffs have no

incentive to focus their litigation efforts on the objective

imprudence of offering the funds in which they did not invest.

After all, any recovery stemming from those funds will not be

allocated to the Named Plaintiffs’ accounts. See Graden v.

Conexant Sys. Inc., 496 F.3d 291, 296 n.6 (3d Cir. 2007)

(explaining that any recovery under ERISA goes solely to the

participants who invested in the imprudent fund). This lack of

incentive, Universal insists, precludes a finding that the Named

Plaintiffs’ claims are typical of those of the class.

We do not find Universal’s incentive argument

persuasive. The Named Plaintiffs have alleged that Universal

employed a flawed fund selection process resulting in a menu

of excessively expensive funds. They have also alleged

Universal failed to monitor expense ratios and consider

possible ways to lessen fees charged to participants. These

claims are the same for participants across all the Plan’s thirty-

17

seven funds. Each participant’s potential recovery, regardless

of the fund in which he or she invested, is under the same legal

theory—Universal’s breach of its fiduciary duty under ERISA

in managing the Plan’s investment options. Likewise, each

participant who was charged excessive fees when investing in

any of the Plan’s funds can trace his or her injury to the same

practice—Universal’s alleged failure to properly consider

expense ratios when selecting and updating the Plan’s

investment options.

The same is true for the Named Plaintiffs’ allegations

that Universal imprudently offered a suite of Fidelity Freedom

target date funds with high expense ratios and aggressive

equity allocation as the Plan’s default investment option.

Although the Named Plaintiffs have only invested in three of

the suite’s thirteen target date funds, Universal’s decision to

add and retain the Fidelity Freedom suite is the cause of injury

for each participant across all thirteen funds. Accordingly, the

Named Plaintiffs’ claims relating to the funds in which they

invested are typical of the claims relating to the funds in which

they did not.

This is not to say there are no factual differences

between any of the individual thirty-seven funds. Universal’s

alleged breach may have resulted in some funds charging

participants significantly higher fees than others. But these

differences relate to degree of injury and level of recovery. So

long as the alleged cause of the injury remains the same across

all funds, “even relatively pronounced factual differences will

generally not preclude a finding of typicality.” In re Prudential

Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283,

311 (3d Cir. 2016) (quoting Baby Neal v. Casey, 43 F.3d 48,

58 (3d Cir. 1994)). Indeed, “[o]ur jurisprudence ‘assures that

18

a claim framed as a violative practice can support a class action

embracing a variety of injuries so long as those injuries can all

be linked to the practice.’” Newton, 259 F.3d at 184 (quoting

Baby Neal, 43 F.3d 48, 63 (3d Cir. 1998)).

Typicality does not require the class representatives’

claims be coterminous with those of the class. See Newton,

259 F.3d at 185 (“The inability of a class representative to

prove every other class members’ [sic] claim does not

necessarily result in failure of the typicality requirement.”).

We have held that typicality may be satisfied even if the class

representative must introduce additional evidence to support

the claims of absent class members. See Baby Neal, 43 F.3d at

58 (holding that a class representative suffering one specific

injury from the practice can represent a class suffering other

injuries so long as all the injuries are shown to result from the

practice). Here, the Named Plaintiffs’ interests are sufficiently

aligned with those of the class because the common allegation

for each class member—Universal’s alleged imprudence in

managing the Plan’s funds—is “comparably central to the

claims of the named plaintiffs as to the claims of the

absentees.” Baby Neal, 43 F.3d at 57; see also Newton, 259

F.3d at 185 (holding that typicality was satisfied because the

claims of each class member rested on a securities violation

resulting from a uniform course of conduct even though each

class member may be required to offer individual proof of

damages). For these reasons, typicality is satisfied even though

additional fund-specific proof of objective imprudence may be

required to support the claims of some class members.

The cases Universal cites do not contradict this

typicality inquiry. Universal points to Schering Plough, our

most recent evaluation of typicality in the context of an ERISA

19

challenge to a defined contribution plan, in which we explained

that plaintiffs who lack a “monetary stake in the outcome” do

not have interests sufficiently aligned with those of the class.

589 F.3d at 600. The obvious difference between this case and

Schering Plough is that the Named Plaintiffs here have a

monetary stake in the outcome of the case. Unlike the class

representative in Schering Plough who was potentially subject

to a unique defense that precluded her from recovering

damages, see 589 F.3d at 600, the Named Plaintiffs here are

not subject to any unique defenses. The Named Plaintiffs

invested in seven of the Plan’s funds and, like other class

members, have a monetary stake in proving Universal’s

alleged imprudence.

Universal also relies on Spano v. Boeing Co., 633 F.3d

574 (7th Cir. 2011), another ERISA challenge, in which the

Seventh Circuit, purporting to draw support from Schering

Plough, held typicality was lacking because the possibility that

only some of the funds were imprudent created a potential lack

of “congruence” between the claims of the class representative

and those of absent class members who invested in other funds.

Id. at 586. Specifically, Universal relies on Spano’s per se rule

that a “a class representative in a defined-contribution case

would at a minimum need to have invested in the same funds

as the class members.” Id.

We find Universal’s reliance on Spano misplaced

because that decision was guided by concerns of potential

conflicts between the class representative and the class that are

not present here. As described by the Seventh Circuit in Abbott

v. Lockheed Martin Corp., the class in Spano covered all past

and future participants in the defined contribution plan even

though the allegations only concerned four specific funds. 725

20

F.3d 803, 813 (7th Cir. 2013). Moreover, the claims relating

to those four funds involved “somewhat vague” allegations

objecting to the inclusion of the funds and also alleging

misrepresentation and excessive risk. Id. It was this

“combination of exceedingly broad class definitions and

murky claims” that made it difficult for the Court in Spano to

assess whether “intra-class conflict of the sort that defeats both

the typicality and adequacy-of-representation requirements of

Rule 23(a) was all but inevitable.” Id. (characterizing Spano

as a “warning[] that plaintiffs and courts must take care to

avoid certifying classes in which a significant portion of the

class may have interests adverse to that of the class

representative”).

Unlike Spano, there are no present concerns of intra-

class conflict in this case. In the context of ERISA, as in other

contexts, the potential for intra-class conflict depends on the

type of claim and the contours of the class. See Abbott, 725

F.3d at 813 (noting that class treatment in an ERISA case

“depends on the claims for which certification is sought”). As

stated, the Named Plaintiffs here allege Universal offered an

unnecessarily high-cost suite of actively managed target date

funds and lacked a prudent investment evaluation process

resulting in needlessly high expense ratios across the Plan. The

nature of these claims makes intra-class conflicts unlikely—it

is difficult to imagine class members who have benefited from,

or are content to pay, pointless fees. Cf. Abbott, 725 F.3d at

814 (explaining that it was “unlikely that the sorts of conflicts

that concerned us in Spano will arise” because no investor

would have benefited from a fund alleged to have been “so

low-risk that its growth was insufficient for a retirement

asset”). We are satisfied that the Named Plaintiffs’ interests

are sufficiently aligned with those of the class, and any concern

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for conflicts is speculative. This is sufficient to pass the “low

threshold” that is typicality. Newton, 259 F.3d at 183.

Certainly, there may be some situations where typicality

for an ERISA class would not be satisfied unless the class

representative invested in each of the challenged funds. But

that is not the case here. And because we think the typicality

inquiry is best served done on a case-by-case basis, we decline

to adopt a per se rule as to whether a class representative must

have invested in each of the challenged funds.

We recognize that allowing class representatives to

bring claims relating to funds in which they did not invest may

result in some inefficiency at the damages stage. But these

concerns do not bar certification of this (b)(1) class. Rather,

they more closely resemble concerns that might relate to the

predominance and superiority requirements for (b)(3) classes

than they do the typicality requirement of Rule 23(a).8 See

8

A baseline concern for efficiency is also incorporated into the

Rule 23(a) requirements and is accordingly present when

certifying mandatory classes under (b)(1) or (b)(2). See, e.g.,

Newton, 259 F.3d at 182 (“The significance of commonality is

self-evident: it provides the necessary glue among class

members to make adjudicating the case as a class

worthwhile.”); Baby Neal, 43 F.3d at 64 ( “[I]t is true that

commonality, typicality, and the Rule 23(b)(2) general

applicability requirements all manifest a concern about judicial

efficiency and manageability . . . .”). But the specific,

heightened efficiency concerns of predominance and

superiority are only applicable to (b)(3) classes where the

justification for class treatment is weaker because individual

litigation may be a meaningful alternative to class litigation.

22

Newton, 259 F.3d at 184 (“[W]hether the class representatives’

claims prove the claims of the entire class highlights important

issues of individual reliance and damages that are more

properly considered and relevant under the predominance and

superiority analysis.”).

Indeed, we have held that ERISA “breach of fiduciary

duty claims brought under § 502(a)(2) are paradigmatic

examples of claims appropriate for certification as a Rule

23(b)(1) class.” Schering Plough, 589 F.3d at 604. Consistent

with the basic principles underlying Rule 23(b)(1),

certification of an ERISA class as a (b)(1) class is not

dependent on the degree of individual proof that will be

required for individual plaintiffs to recover, but rather on the

recognition that deciding one plaintiff’s claim might mean

other plaintiffs might be unable to bring their own claims

separately. Id. (holding “it is simply not relevant to the Rule

23(b)(1)(B) inquiry” that plaintiffs’ claims “present individual

issues”). Accordingly, Universal’s concerns about the

individualized proof that will be required for plaintiffs to

recover are not a reason here to prevent certification of a (b)(1)

ERISA class that meets the requirements of Rule 23(a).

CONCLUSION

For these reasons, we will affirm the judgment of the

District Court.

See Amchem, 521 U.S. at 615 (noting that the predominance

and superiority requirements for (b)(3) classes were drafted to

be “[s]ensitive to the competing tugs of individual autonomy

for those who might prefer to go it alone or in a smaller unit,

on the one hand, and systemic efficiency on the other”).

23