Defendant's Attorney: Deborah S. Davidson, et al.

Description: Philadelphia, Pennsylvania employment law lawyers represented Plaintiff, who sued Defendant Employee Retirement Income Security Act of 1974 (“ERISA”) breach of fiduciary duty class action theory.

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
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.
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§ 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
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
une 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
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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.

* * *

Here, the Named Plaintiffs allege Universal breached its
fiduciary duty under ERISA by failing to properly manage
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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.

Outcome: Affirmed

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Defendant's Experts:

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