# Construction Laborers Pension Trust for Southern California v. Meketa Investment Group, Inc.

> District Court, C.D. California · April 15, 2024

URL: https://www.frixlaw.com/law-library/cases/9986477

## Case

- **Court:** District Court, C.D. California
- **Decided:** April 15, 2024
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:23-cv-07726-CAS (PVCx) Date April 15, 2024
Title CONSTRUCTION LABORERS PENSION TRUST FOR SOUTHERN
CALIFORNIA ET AL V. MEKETA INVESTMENT GROUP, INC. ET AL

Present: The Honorable CHRISTINA A. SNYDER
Catherine Jeang Laura Elias N/A
Deputy Clerk Court Reporter / Recorder Tape No.
Attorneys Present for Plaintiffs: Attorneys Present for Defendants:
Andrew Lowy Eric Serron
Ronald Richman Alexander Bevans
Paul Fine Diana Lloyd
Caroline Trusty
Proceedings: ZOOM HEARING RE: DEFENDANTS’ MOTION TO DISMISS
PLAINTIFFS’ AMENDED COMPLAINT (Dkt. 53, filed on
JANUARY 12, 2024)
DEFENDANTS’ MOTION TO STAY DISCOVERY PENDING
RESOLUTION OF DEFENDANTS’ MOTION TO DISMISS
PLAINTIFFS’ AMENDED COMPLAINT (Dkt. 55, filed on
JANUARY 12, 2024)
I. INTRODUCTION
On September 15, 2023, plaintiffs Construction Laborers Pension Trust for
Southern California (the “Pension Fund”) and the Board of Trustees for the Construction
Laborers Pension Trust for Southern California (the “Board”), each on behalf of the
Construction Laborers Pension Plan for Southern California (the “Plan’”), filed this action
against defendants Meketa Investment Group, Inc. (“Meketa”) and Judy Chambers. Dkt.
1. Plaintiffs asserted four claims for relief: (1) breach of fiduciary duty under the
Employee Retirement Income Security Act of 1974 (“ERISA”), as against all defendants;
(2) breach of contract, as against Meketa; (3) breach of common law fiduciary duty, as
against all defendants; and (4) negligence/gross negligence, as against all defendants. Id.
On November 17, 2023, defendants filed a motion to dismiss plaintiffs’ complaint,
a request for judicial notice in support of their motion to dismiss, and a motion to stay
discovery pending the resolution of their motion to dismiss. Dkts. 31, 32, 33.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:23-cv-07726-CAS (PVCx) Date April 15, 2024
Title CONSTRUCTION LABORERS PENSION TRUST FOR SOUTHERN
CALIFORNIA ET AL V. MEKETA INVESTMENT GROUP, INC. ET AL
On December 8, 2023, the Pension Fund, along with Jon Preciado, Sergio Rascon,
Adrian Esparza, Alex Artiaga, Michael Dea, Hertz Ramirez, Peter Santillan, Jerome Di
Padova, Catherine Moncada, Alan Ludwig, Jeff Stewart, Lance Boyer, Bill Boyd, and
John Cooper, as Trustees of the Construction Laborers Pension Trust for Southern
California, each on behalf of the Plan, filed an amended complaint (the “FAC”) against
defendants. Dkt. 48. Plaintiffs assert the same four claims for relief in the FAC, which
mooted defendants’ motion to dismiss and motion to stay. Id.; dkt. 49.
On January 12, 2024, defendants filed a motion to dismiss the FAC, a motion to
stay discovery pending the resolution of their motion to dismiss, and a corrected request
for judicial notice in support of their motion to dismiss.! Dkts. 53 (“MTD”), 55, 56. On
February 13, 2024, plaintiffs filed an opposition to defendants’ motion to dismiss, a
request for judicial notice in support of their opposition, and an opposition to defendants’
motion to stay discovery.” Dkts. 61 (“Opp.”), 62, 63. On March 5, 2024, defendants
filed a reply in support of their motion to dismiss and a reply in support of their motion to
stay discovery. Dkts. 64 (“Reply”), 65.
On April 15, 2024, the Court held a hearing on defendants’ motion to dismiss the
FAC and motion to stay discovery pending the resolution of their motion to dismiss the
FAC. Having carefully considered the parties’ arguments and submissions, the Court
finds and concludes as follows.

1 Defendants request that the Court take judicial notice of one exhibit: a copy of the
Pension Fund’s complaint and accompanying exhibits filed in a closely related matter,
Cal. Infrastructure Fund I Inc. LLC, v. Onset Gen. Partner, 23SM-cv-00483 (Cal. Sup.
Ct. Feb. 1, 2023). Dkt. 56. The Court finds that judicial notice of this court filing 1s
appropriate pursuant to Federal Rule of Evidence 201.
? Plaintiffs request that the Court consider two exhibits: (1) a copy of the Agreement and
Declaration of Trust Establishing the Construction Laborers Pension Trust for Southern
California, as amended to March 1, 1991 (the “Trust Agreement’), which 1s incorporated
by reference into the FAC, and (2) tolling agreements between the Pension Fund and
defendants dated July 25, 2023 (the “Tolling Agreements”). Dkt. 62. The Court finds it
would be appropriate to consider the first exhibit because it is incorporated by reference.
It is also appropriate to consider the second exhibit under the doctrine of judicial notice.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:23-cv-07726-CAS (PVCx) Date April 15, 2024
Title CONSTRUCTION LABORERS PENSION TRUST FOR SOUTHERN
CALIFORNIA ET AL V. MEKETA INVESTMENT GROUP, INC. ET AL
II. BACKGROUND
The Pension Fund is a Taft-Harley pension fund that was established pursuant to
Section 302(c)(5) of the Labor Management Relations Act, 29 U.S.C. § 186(c)(5). FAC
Defendant Chambers is a Private Markets Consultant and Managing Principal at
defendant Meketa. Id. Plaintiffs bring this action to enforce defendants’ ERISA
liability for breaching their fiduciary duties. Id. § 19.
On November 14, 2014, the Pension Fund retained Pension Consulting Alliance,
Inc., which merged with Meketa in January 2019, to provide investment consulting
services. Id. 2, 31, 85. In the written retainer agreement (the “PCA Agreement’),
defendants agreed to provide its services to the Pension Fund as an ERISA fiduciary. Id.
The Pension Fund engaged defendant to, in addition to several other services,
“identify, interview, conduct due diligence on, and recommend potential Program
Managers for the Infrastructure Fund who would implement the Infrastructure Investment
Policy on its behalf and on behalf of the Plan.” Id. § 3. Regarding the Infrastructure
Investment Program Development, defendant agree to:
(1) “assist in developing a unique investment platform that captures objectives
of the [Pension Fund]”; (11) “review/develop investment strategy, policies,
procedures, goals and objectives”; (i11) “oversee the Program Manager’s
strategy, investment selection process, deal pipeline and investment process”;
(iv) “implement responsible contracting policies and procedures”; (v) “assess
risk profiles of various sub-asset types”; (vi) “propose benchmark and risk
measures”; (vil) “assist with portfolio target allocation and ranges”; (vii)
“advise on investment structuring and commitment pacing”; and (ix) “advise
on portfolio construction.”
Id. § 35. Pursuant to the PCA Agreement, defendant would be paid $75,000 per year □□□□
ongoing program manager due diligence, program monitoring and reporting” and would
oversee the strategy and investment selection process of the Program Manager. Id. § 4.
On December 9, 2014, the Board adopted defendants’ Infrastructure Investment Policy
for the Pension Fund at Chambers’ recommendation. Id. 38-39. The Infrastructure
Investment Policy set forth several objectives and obligations, including Meketa’s

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:23-cv-07726-CAS (PVCx) Date April 15, 2024
Title CONSTRUCTION LABORERS PENSION TRUST FOR SOUTHERN
CALIFORNIA ET AL V. MEKETA INVESTMENT GROUP, INC. ET AL
“responsibility to ‘monitor the investment process for compliance with this policy’” and
“an obligation to monitor and evaluate Infrastructure Fund managers.” Id. {| 40-48.
This case arises out of the recommendation by defendants Meketa and Chambers
of Onset Capital Partners, LLC (“Onset”) as the Program Manager of the Infrastructure
Fund. According to plaintiffs, defendants failed to adequately vet potential Program
Managers and recommended Onset. Id. 5. On March 10, 2015, defendants attended a
Board meeting and presented their preliminary assessment of eight potential managers,
including Onset. Id. 49-50. Although defendants represented that Onset had three
partners, Onset was wholly owned by Wendell McCain and its “three purported
principals—McCain, Eric Perreca, and Charles Snyder, had never worked together before
and, in fact, had been introduced to each other by Chambers[,]” who went to business
school with McCain, for the “exclusive and express purpose of managing the Pension
Fund’s investment.” Id. 9 5,51, 53 (emphasis in original). Plaintiffs allege that
defendants were also aware that McCain had been cited on numerous occasions for
driving without a license, which had been revoked or suspended, and both experienced
financial difficulties and engaged in “time-consuming commercial activities” during
Onset’s tenure. Id. 9] 54-55. However, defendants concealed this relevant information,
including Onset’s lack of experience, and knew or should have known that their March
2015 Presentation was misleading. Id. {§] 52-55.
Based on defendants’ recommendation, Onset was chosen by the Pension Fund to
be the Program Manager and became the general partner of the Infrastructure Fund in
January 2016. Id. {] 60, 62. After the Pension Fund committed to invest $30 million of
Plan assets in the Infrastructure Fund for Onset to manage, Onset repeatedly failed to
follow the Infrastructure Investment Policy guidelines, including by making “a series of
ill-advised investment decisions, putting the Pension Fund’s capital in nine early stage
infrastructure start-up companies (the “Portfolio Companies’’) with little or no
appropriate diligence.” Id. □□ 6-8, 10. According to plaintiffs, defendants breached their
ERISA fiduciary duties by either “fail[ing| to adequately fulfill their duties to monitor
Onset and ensure compliance with the Infrastructure Investment Policy, or [] fail[ing] to
disclose Onset’s repeated violations of the Infrastructure Investment Policy to the Board.”
Id. § 64. Instead of monitoring Onset’s management of the Infrastructure Fund,
defendants accepted Onset’s “baseless methods for valuing different Portfolio
Companies” and material misrepresentations regarding the performance and valuation of

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:23-cv-07726-CAS (PVCx) Date April 15, 2024
Title CONSTRUCTION LABORERS PENSION TRUST FOR SOUTHERN
CALIFORNIA ET AL V. MEKETA INVESTMENT GROUP, INC. ET AL
its investments, and then repeated these valuations in periodic reports to the Pension
Fund. Id. □□□ 76-77. When Onset requested significant additional capital from the
Pension Fund to support the Portfolio Companies, defendants “reflexively recommended”
that the Pension Fund fulfill the request instead of investigating any potential problems at
Onset. Id. 4 14. After the alleged discovery of problems with the claimed valuation of a
Portfolio Company, the Pension Fund notified Chambers in August 2020, of its intent to
terminate Meketa’s services, effective September 2020. Id. 4] 87-88. The Pension Fund
hired third-party advisors to review the Infrastructure Fund’s condition, and they found
that at least three of the Portfolio Companies were worthless, which defendants “either
knew or would have uncovered had they been diligent in the exercise of their fiduciary
duties.” Id. | 15, 91-92. This review ultimately led the Pension Fund to replace Onset
as general partner. Id. Because defendants did not act prudently by recommending
Onset and by failing to review and monitor the Infrastructure Fund’s performance,
plaintiffs allege that they suffered large, avoidable losses. Id. § 17-18.
Il. LEGAL STANDARD
A motion pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal
sufficiency of the claims asserted in a complaint. Under this Rule, a district court
properly dismisses a claim if “there 1s a ‘lack of a cognizable legal theory or the absence
of sufficient facts alleged under a cognizable legal theory.”” Conservation Force v.
Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (quoting Balisteri v. Pacifica Police Dep’t,
901 F.2d 696, 699 (9th Cir. 1988)). “While a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to
provide the ‘grounds’ of his “entitlement to relief’ requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). “[F]actual allegations must
be enough to raise a right to relief above the speculative level.” Id.
In considering a motion pursuant to Rule 12(b)(6), a court must accept as true all
material allegations in the complaint, as well as all reasonable inferences to be drawn
from them. Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). The complaint must be
read in the light most favorable to the nonmoving party. Sprewell v. Golden State
Warriors, 266 F.3d 979, 988 (9th Cir. 2001). However, “a court considering a motion to
dismiss can choose to begin by identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of truth. While legal conclusions can

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:23-cv-07726-CAS (PVCx) Date April 15, 2024
Title CONSTRUCTION LABORERS PENSION TRUST FOR SOUTHERN
CALIFORNIA ET AL V. MEKETA INVESTMENT GROUP, INC. ET AL
provide the framework of a complaint, they must be supported by factual allegations.”
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009); see Moss v. United States Secret Service,
572 F.3d 962, 969 (9th Cir. 2009) (“[F]or a complaint to survive a motion to dismiss, the
non-conclusory ‘factual content,’ and reasonable inferences from that content, must be
plausibly suggestive of a claim entitling the plaintiff to relief.”). Ultimately,
determining whether a complaint states a plausible claim for relief will . . . be a
context-specific task that requires the reviewing court to draw on its judicial experience
and common sense.” Iqbal, 556 U.S. at 679.
Unless a court converts a Rule 12(b)(6) motion into a motion for summary
judgment, a court cannot consider material outside of the complaint (e.¢., facts presented
in briefs, affidavits, or discovery materials). In re American Cont’l Corp./Lincoln Sav. &
Loan Sec. Litig., 102 F.3d 1524, 1537 (9th Cir. 1996), rev’d on other grounds sub nom
Lexecon. Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998). A court
may, however, consider exhibits submitted with or alleged in the complaint and matters
that may be judicially noticed pursuant to Federal Rule of Evidence 201. Inre Silicon
Graphics Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999): see Lee v. City of Los
Angeles, 250 F.3d 668, 689 (9th Cir. 2001).
As a general rule, leave to amend a complaint which has been dismissed should be
freely granted. Fed. R. Civ. P. 15(a). However, leave to amend may be denied when “the
court determines that the allegation of other facts consistent with the challenged pleading
could not possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well Furniture
Co., 806 F.2d 1393, 1401 (9th Cir. 1986).
IV. DISCUSSION
A. Motion to Dismiss the FAC*
1. Plaintiffs’ Claim for Breach of Fiduciary Duty Under ERISA
Defendants argue that plaintiffs’ imprudent vetting and recommendation claims are
time-barred by ERISA’s six-year statute of repose because defendants’ alleged actions

3 Defendants argue that the Court should dismiss the FAC with prejudice because
plaintiffs cannot cure the time-barred allegations, preempted state law claims, or the fact
that their quarrel is not with defendants but with Onset. MTD at 23; Reply at 16-17. In

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:23-cv-07726-CAS (PVCx) Date April 15, 2024
Title CONSTRUCTION LABORERS PENSION TRUST FOR SOUTHERN
CALIFORNIA ET AL V. MEKETA INVESTMENT GROUP, INC. ET AL
necessarily occurred before January 2016, when plaintiffs and Onset executed a limited
partnership agreement (the “LPA’”). MTD at 10; see also 29 U.S.C. § 1113. They further
argue that plaintiffs do not allege “affirmative steps “beyond the breach itself [with] the
effect of concealing the breach from its victims’” to allege the type of concealment or
fraud that would toll the six-year period. MTD at 11; see also Guenther v. Lockheed
Martin Corp., 972 F.3d 1043, 1057 n.10 (9th Cir. 2020) (citation omitted).
According to defendants, this claim also fails because their process leading to their
recommendation of Onset was not imprudent. MTD at 11. Defendants dispute plaintiffs’
allegations and contend that they “disclosed the relevant facts related to Onset’s ability to
manage the Infrastructure Fund” and were not required by the LPA to affirmatively
disclose that “Chambers attended business school with Onset’s founder; that Chambers
introduced Onset’s principals; and that Onset’s founder had tax liens and a suspended
drivers’ license.” Id. at 12. Further, defendants argue they were not required to ensure
Onset’s compliance with the Policy because Onset was not an ERISA fiduciary and had
no duty to comply with the Policy under either the LPA or ERISA. Id. at 15-16. Thus,
defendants contend that “common sense requires the conclusion that [d]efendants had no
responsibility for ensuring Onset’s compliance with standards to which Onset had no
obligation to adhere and that [d]efendants had no power to enforce.” Id. at 16. In
addition, defendants argue that plaintiffs fail to provide either “direct allegations”
regarding how defendants’ supervision of Onset and advice to plaintiffs were imprudent
or “circumstantial factual allegations” that do not improperly rely on hindsight analysis.
Id. at 16-18 (citations omitted). Finally, defendants argue that as an ERISA-covered
plan, rather than a participant, fiduciary, or beneficiary of an ERISA plan, the Pension
Fund lacks ERISA standing. Id. at 20.
In opposition, plaintiffs assert that the parties entered into agreements that tolled
the statute of repose from December 13, 2021, through January 15, 2023, and again from
April 5, 2023, through September 15, 2023, when plaintiffs filed this action. Opp. at 7.
Plaintiffs contend that their imprudent vetting and recommendation claims are not time-
barred because “(1i) [d]efendants breached a continuing duty to advise the Pension Fund
to remove Onset as the general partner and (11) [d]efendants fraudulently concealed their

opposition, plaintiffs argue that if the Court finds the FAC to be deficient, it should grant
plaintiffs leave to amend. Opp. at 22.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘Oo’
Case No. 2:23-cv-07726-CAS (PVCx) Date April 15, 2024
Title CONSTRUCTION LABORERS PENSION TRUST FOR SOUTHERN
CALIFORNIA ET AL V. MEKETA INVESTMENT GROUP, INC. ET AL
breach.” Id. at 7-8: see also Tibble v. Edison Int’l, 575 U.S. 523, 530 (2015) (‘[S]o long
as the alleged breach of the continuing duty occurred within six years of suit, the claim 1s
timely.”). Plaintiffs assert that defendants imprudently continued to recommended Onset
as the general partner and even recommended that the Pension Fund invest additional
funds with Onset in 2020, despite the information they knew or should have known about
Onset. Opp. at 8-10. Moreover, plaintiffs argue that the six-year period should be tolled
because they have sufficiently alleged defendants’ deliberate concealment of several
material facts, such as that:
(1) Onset’s three “partners” had never worked together before, (11) Chambers
had a direct role in Onset’s creation, (111) Onset was an entity wholly owned
by McCain that did not focus on infrastructure investments, and (iv) McCain’s
driver’s license had been suspended or revoked for unknown reasons and he
had had been cited in North Carolina on numerous occasions over a ten-year-
period for driving without a license.
Id. at 10-11. Further, plaintiffs assert that defendants expressly agreed to act as
fiduciaries of the Pension Fund, had a fiduciary duty to monitor the infrastructure
investment program and Onset, and were paid an annual fee of $75,000 to do so.* Id. at
12-13. While defendants claim that they lacked authority to monitor Onset due to the
Infrastructure Fund’s structure, plaintiffs argue that defendants were “actively involved in
overseeing Onset’s investment activities and regularly reported to the Board on the status
of the Infrastructure Fund’s investments.” Id. at 13-14. According to plaintiffs, the

4 Plaintiffs contend that because defendants do not challenge plaintiffs’ allegation that
defendants “breached their duty to act in accordance with the plan documents under
ERISA Section 404(a)(1)(D),” defendants are not entitled to dismissal of the claim in its
entirety. Opp. at 11-12. In reply, defendants argue that they seek dismissal of plaintiffs’
entire claim, including “[p|laintiffs’ conclusory assertion that |d]efendants violated a plan
document under Section 404(a)(1)(D).” Reply at 12.
> According to plaintiffs, “if [d]efendants believed that the structure of the Infrastructure
Fund hampered or prevented them from exercising oversight over Onset, they had a duty
to inform the Pension Fund of that fact—especially given that they were being paid
$75,000 per year to do just that—and propose alternative structures that would have
allowed them to exercise oversight over Onset.” Opp. at 14.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘Oo’
Case No. 2:23-cv-07726-CAS (PVCx) Date April 15, 2024
Title CONSTRUCTION LABORERS PENSION TRUST FOR SOUTHERN
CALIFORNIA ET AL V. MEKETA INVESTMENT GROUP, INC. ET AL
Court may infer that defendants breached their duty of prudence from their allegations
that defendants failed both “to identify investments that were inconsistent with the
Policy” and “to notify the Pension Fund that Onset was making investments that were
inconsistent with the Policy despite knowing that Onset was doing so.” Id. at 15-16.
Plaintiffs assert that defendants ignored numerous red flags regarding Onset’s fraudulent
conduct, accepted Onset’s fraudulently inflated valuations uncritically, and “repeated
them in periodic reports to the Pension Fund.” Id. at 16-17. Finally, plaintiffs argue that
the Pension Fund has standing pursuant to Section 502(a)(2) of ERISA because it is a
fiduciary as the administrator of the Plan and is separate from the Plan under the Trust
Agreement and as alleged in the FAC.° Id. at 18-19 (citing Loc. 159, 342, 343 & 444 v.
Nor-Cal Plumbing, Inc., 185 F.3d 978, 982 (9th Cir. 1999) (“[A] trust fund could qualify
as a fiduciary of a separate ERISA plan so long as it exercises discretionary authority
over the management or administration of the plan or its assets.”).
In reply, defendants contend than “any alleged breaches before March 6, 2016
remain time-barred” by ERISA’s statute of limitations, even if defendants continuously
violated their fiduciary duties. Reply at 7-8 (emphasis in original). Moreover,
defendants argue that the Ninth Circuit has not found the failure to disclose material
information to constitute the type of fraud or concealment that would toll the ERISA
statute of limitations. Id. at 9. Further, defendants assert that the undisputed terms of the
LPA—that Onset had no obligation to follow the Policy or submit to defendants’
monitoring or oversight—defeat plaintiffs’ ERISA claim. Id. at 9-11. According to
defendants, plaintiffs concede they do not directly allege imprudence by defendants and
fail to allege facts to support that defendants knew or should have known of the alleged
misconduct by Onset, particularly at the relevant time. Id. at 12-13. Thus, defendants
argue that plaintiffs fail to allege that defendants “breached any continuing duty of
prudence after March 6, 2016.” Id. at 14.
As an initial matter, the Court finds that the Pension Fund has ERISA standing.

Even if the Pension Fund does not have ERISA standing, plaintiffs argue that their
claims would not be subject to dismissal because (1) the Trustees are also plaintiffs in
their capacity as fiduciaries of the Plan and (2) the Pension Fund is a proper plaintiff with
respect to the non-ERISA claims. Opp. at 20.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:23-cv-07726-CAS (PVCx) Date April 15, 2024
Title CONSTRUCTION LABORERS PENSION TRUST FOR SOUTHERN
CALIFORNIA ET AL V. MEKETA INVESTMENT GROUP, INC. ET AL
Plaintiffs allege that because defendants failed to disclose material information
about Onset, plaintiffs retained Onset in January 2016. With regard to ERISA’s statute of
limitations, the Court agrees with defendants that ERISA’s six-year statute of repose bars
certain of plaintiffs’ allegations. See 29 U.S.C.A. § 1113 (“No action may be
commenced . . . with respect to a fiduciary’s breach of any .. . duty .. . (1) six years after
(A) the date of the last action which constituted a part of the breach or violation, or (B) in
the case of an omission the latest date on which the fiduciary could have cured the breach
or violation|.|””). Based on the parties’ agreement that March 2, 2016, is the last date on
which claims could accrue that fall within both the statute of limitations and the confines
of the 2023 Tolling Agreements, the Court concludes that statements made and conduct
by defendants earlier than March 2, 2016, are barred by the statute of limitations, unless
tolling applies.
To toll the six-year period through the fraud or concealment exception, plaintiffs
must allege that defendants took “steps to hide [their] breach of fiduciary duty.”
Guenther, 972 F.3d at 1057. The Ninth Circuit has explained that “the facts constituting
the claim for breach of fiduciary duty alone cannot also serve as the basis for fraud or
concealment—otherwise, the exception would swallow the rule.” Id. at 1057 n.10. Here,
plaintiffs have not alleged facts beyond those relating to defendants’ breaches of their
fiduciary duties to toll the six-year period. Therefore, the Court GRANTS defendants’
motion to dismiss plaintiffs’ claim for breach of fiduciary duty, as to defendants’ conduct
before March 2, 2016, with leave to amend.
However, the Court finds that plaintiffs have sufficiently pled the remainder of
their breach of fiduciary duty claim to survive a motion to dismiss. Plaintiffs have
alleged that defendants are ERISA fiduciaries of the Pension Fund and breached their
fiduciary duties through several actions and inactions, such as by failing to supervise
Onset, to follow the relevant governing documents, and to generally act prudently in their
work. Accordingly, the Court DENIES defendants’ motion to dismiss, as to the
remainder of plaintiffs’ claim for breach of fiduciary duty under ERISA.
2. Plaintiffs’ Remaining State Law Claims
Defendants argue that ERISA preempts all of plaintiffs’ remaining state law
claims, which are connected to the ERISA-regulated relationship at issue between the
Pension Fund and its ERISA fiduciaries—defendants. MTD at 20-21. Defendants

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES — GENERAL ‘Oo’
Case No. 2:23-cv-07726-CAS (PVCx) Date April 15, 2024
Title CONSTRUCTION LABORERS PENSION TRUST FOR SOUTHERN
CALIFORNIA ET AL V. MEKETA INVESTMENT GROUP, INC. ET AL
further argue that applying state law fiduciary standards to ERISA fiduciaries “‘risk[s]
the imposition of inconsistent standards and remedies’ on the administration of ERISA
plans.” Id. at 21-22 (citing Cox v. Eichler, 765 F. Supp. 601, 606 (N_D. Cal. 1990)).
Finally, defendants contend that because ERISA preempts state law claims that require
the Court to interpret ERISA plan documents, ERISA preempts plaintiffs’ breach of
contract claim, which would require the Court to interpret the Policy. MTD at 22.
In opposition, plaintiffs assert that they are entitled to plead state law claims in the
alternative to their ERISA claim in the event defendants do not concede they are ERISA
fiduciaries. Opp. at 21-22.
In reply, defendants argue that ERISA preempts plaintiffs’ state law claims,
regardless of whether or not they are pled in the alternative. Reply at 15 (citing Cox, 765
F. Supp. at 605). Defendants distinguish this case from the cases cited by plaintiffs
because here, plaintiffs allege that defendants were ERISA fiduciaries, and “|d]|efendants
do not dispute the applicability of ERISA in their Motion to Dismiss.” Reply at 15-16.
ERISA preempts any state law claims that “relate to” and thus have “a connection
with” an employee benefit plan. See Bafford v. Northrop Grumman Corp., 994 F.3d
1020, 1030-31 (9th Cir. 2021) (citation omitted). The Ninth Circuit has “employed a
‘relationship test’ in analyzing ‘connection with’ preemption, under which a state law
claim is preempted when the claim bears on an ERISA-regulated relationship, e.g., the
relationship between plan and plan member, between plan and employer, between
employer and employee.” Paulsen v. CNF Inc., 559 F.3d 1061, 1082 (9th Cir. 2009)
(citation omitted). Here, all three of plaintiffs’ state law claims—breach of contract,
breach of common law fiduciary duty, and negligence/gross negligence—concern the
relationship between the Pension Fund and defendants in their capacity as ERISA
fiduciaries of the Pension Fund. Therefore, regardless of whether plaintiffs plead their
claims in the alternative, ERISA preempts plaintiffs’ state law claims because they bear
on an ERISA-regulated relationship. See Cox, 765 F. Supp. at 605 (“[P]laintiffs may not
assert preempted state law claims, even in the alternative; if ERISA operates to preempt
plaintiffs’ state law claims, preemption is mandatory.”). Accordingly, the Court
GRANTS defendants’ motion to dismiss plaintiffs’ state law claims without prejudice.

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:23-cv-07726-CAS (PVCx) Date April 15, 2024
Title CONSTRUCTION LABORERS PENSION TRUST FOR SOUTHERN
CALIFORNIA ET AL V. MEKETA INVESTMENT GROUP, INC. ET AL
B. Motion to Stay Discovery Pending the Resolution of the Motion to
Dismiss the FAC
In light of the fact that the Court has resolved defendants’ motion to dismiss, the
Court assumes that defendants’ motion to stay discovery is now moot.
V. CONCLUSION
In accordance with the foregoing, the Court GRANTS IN PART and DENIES IN
PART defendants’ motion to dismiss. The Court GRANTS defendants’ motion as to
plaintiffs’ allegations that are barred by ERISA’s statute of limitations and as to
plaintiffs’ state law claims with leave to amend, and DENIES defendants’ motion as to
the remainder of plaintiffs’ claim for breach of fiduciary duty under ERISA. Plaintiffs
shall file an amended complaint within fourteen days of this order. Thirty days
thereafter, defendants shall file a response to the amended complaint.
Because the Court has ruled on defendants’ motion to dismiss, defendants’ motion
to stay discovery is MOOT.
IT IS SO ORDERED.

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Initials of Preparer COMMS

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9986477. Public record. Not legal advice.