United States District Court, D. Massachusetts
MEMORANDUM & ORDER
Nathaniel M. Gorton, United States District Judge.
are five employees of Massachusetts Institute of Technology
(“MIT”) who are participants in the MIT
Supplemental 401(k) Plan (“the Plan”). They bring
a variety of claims under the Employee Retirement Income
Security Act of 1974 (“ERISA”) arising out of
MIT's allegedly improper relationship with Fidelity
Investments (“Fidelity”), the recordkeeper and
primary investment provider of the Plan.
allege breaches of the ERISA duties of loyalty and prudence
arising out of the Plan's inclusion of retail class
options instead of institutional class options in the funds
provided by Fidelity. In addition, plaintiffs allege that
Fidelity was paid excessive compensation for its
recordkeeping services and that MIT never engaged in a
competitive bidding process for those services. According to
plaintiffs, the Plan was an illicit kickback scheme whereby
Fidelity received inflated fees at the expense of the
Plan's participants in exchange for making donations to
the MIT endowment.
filed a motion to dismiss for failure to state a claim upon
which relief can be granted. On August 31, 2017, Magistrate
Judge Marianne B. Bowler entered a Report and Recommendation
(“R&R”) to dismiss, in part, Counts I, II,
and IV of the complaint. Both parties filed timely objections
to the R&R.
district court refers a dispositive motion to a magistrate
judge for recommended disposition, it must
determine de novo any part of the magistrate judge's
disposition that has been properly objected to.
Civ. P. 72(b)(3).
present case that includes all four counts alleged by the
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to “state
a claim to relief that is plausible on its face.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007). In considering the merits of a motion to dismiss, the
Court must accept all factual allegations in the complaint as
true and draw all reasonable inferences in the
plaintiff's favor. Langadinos v. Am. Airlines,
Inc., 199 F.3d 68, 69 (1st Cir. 2000). Yet
“[t]hreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, ” do
not suffice to state a cause of action. Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). Accordingly, a
complaint does not state a claim for relief where the
well-pled facts fail to warrant an inference of anything more
than the mere possibility of misconduct. Id. at 679.
Count I - Breach of fiduciary duties under 29 U.S.C.
§1104(a)(1)(A) & (B) arising from unreasonable
investment management fees
Judge Bowler recommended dismissal of the duty of loyalty
claim under §1104(a)(1)(B) in Count I but not the duty
of prudence claim under §1104(a)(1)(A) in the same
count. The Court will accept and adopt that recommendation.
allege that defendants selected and retained Plan investment
options with excessive investment management fees instead of
identical, lower-cost share classes of the same funds.
Defendants respond that they did not breach their duties