United States District Court, D. Massachusetts
ASHBY HENDERSON, Individually and on Behalf of Others Similarly Situated, Plaintiff,
THE BANK OF NEW YORK MELLON CORPORATION, et al., Defendants
Ashby Henderson, Individually and on Behalf of All Others
Similarly Situated, Plaintiff: Aron K Liang, Jack W Lee, LEAD
ATTORNEYS, PRO HAC VICE, Minami Tamaki, LLP, San Francisco,
CA; Derek G. Howard, LEAD ATTORNEY, PRO HAC VICE, Howard Law
Firm, Mill Valley, CA; Gregory Y. Porter, LEAD ATTORNEY, PRO
HAC VICE, Bailey & Glasser LLP, Washington, DC; John J.
Roddy, LEAD ATTORNEY, Bailey & Glasser LLP, Boston, MA; J.
Brian McTigue, Regina M. Markey, PRO HAC VICE, McTigue Law,
LLP, Washington, DC.
Bank of New York Mellon Corporation, The Bank of New York
Mellon Trust Company, National Association, BNY Mellon,
National Association, Defendants: K. Issac deVyver, LEAD
ATTORNEY, PRO HAC VICE, Reed Smith LLP, Pittsburgh, PA;
Nellie E. Hestin, LEAD ATTORNEY, Reed Smith LLP, Pittsburgh,
PA; Mary J. Hackett, Melissa M. Taylor, PRO HAC VICE, Reed
Smith LLP, Pittsburgh, PA.
B. Saris, Chief United States District Judge.
proposed nationwide class action, plaintiff Ashby Henderson,
a trust beneficiary, alleges that the defendants, the Bank of
New York Mellon, N.A. (BNY Mellon) and associated
entities, breached their fiduciary duty to
thousands of beneficiaries of trusts for which BNY Mellon
serves as trustee by imprudently investing the trust assets
in poorly performing proprietary financial instruments. The
state-law causes of action are breach of fiduciary duty by
failing to invest prudently (Count 1), allegations of unjust
enrichment as a result of management fees and a request for
restitution (Count 2), and a request for an accounting (Count
defendants have moved to dismiss on the ground that the
claims are precluded by the Securities Litigation Uniform
Standards Act (SLUSA), 15 U.S.C. § 77p. BNY Mellon Trust
Company, N.A. and BNY Mellon Corporation also contend that
they are separate corporate entities that are not directly or
indirectly liable to the plaintiff. After hearing, the Court
concludes that the state-law claims are not preempted and the
defendants' motion to dismiss Henderson's claims
against BNY Mellon, N.A. (Docket No. 23) is DENIED. The
motion to dismiss the plaintiff's claims against BNY
Mellon Trust Company, N.A. and BNY Mellon Corporation (Docket
No. 25) is ALLOWED as to BNY Mellon Corporation.
complaint alleges the following facts which are taken as true
for the purposes of a motion to dismiss. Many of the facts
plaintiff is an income beneficiary of the Wesson Trust,
managed by BNY Mellon as trustee. The trustee had complete
investment discretion and control over the trust assets, and
the beneficiaries were unable to influence the investment
decisions or remove the trustee without court intervention.
Mellon invested the plaintiff's trust assets almost
exclusively in proprietary mutual funds such as the BNY
Mellon Municipal Opportunities Fund, managed by BNY Mellon
Fund Advisors; the Dreyfus High Yield Fund, managed by a BNY
Mellon subsidiary; and the TCW Emerging Markets Income Fund,
managed by a company with a longstanding relationship with
BNY Mellon. These investment decisions were motivated by BNY
Mellon's own financial benefit rather than the best
interests of the trust beneficiaries.
trustee invested in proprietary funds even if non-affiliated
funds were better performing or lower cost. Some of these
proprietary funds were ranked one or two stars out of five by
Morningstar, a well-respected fund rating company. The
trustee failed to move assets from investments when they were
no longer prudent, and discouraged staff from changing the
investments, even if they were of inferior quality to
non-related investments, performed worse, or had higher
costs. The Bank concealed its self-dealing by failing to
disclose its policies and practices of investing in
securities issued by mutual funds, hedge funds, and other
investment vehicles that pay fees to its affiliates for
investment management and other services.
contrast to these investments in poorly performing funds, BNY
Mellon approved non-proprietary investments for their
brokerage customers, who could veto investment decisions or
remove their money if dissatisfied with the defendants'
Rule 12(b)(6) ...