United States District Court, D. Arizona
G. MURRAT SNOW, District Judge.
Before the Court is Plaintiff's Motion for Class Certification. (Doc. 44.) For the following reasons, the Court grants this Motion in part and denies it in part.
This is a putative class action on behalf of participants in the Pension Plan for the Arizona Pipe Trades Defined Contribution Plan brought pursuant to the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq., to recover benefits that Plaintiff Bryant believes were improperly withheld and miscalculated by Defendants, pension plans and their respective trustees and administrators. Plaintiff Bryant alleges the following facts in support of his claims.
For a number of years, Mr. Bryant worked in the pipe trade profession subject to collective bargaining agreements. He is a member of the America Pipe Trades Pension Trust Fund ("Pension Plan"), a defined benefits plan, and the Arizona Pipe Trades Defined Contribution Plan ("DC Plan") (together, the "Plans"). Pursuant to local union contracts, Mr. Bryant's employers were required to make contributions to the Plans on Mr. Bryant's behalf. Like many union members, Mr. Bryant's trade frequently required him to work for employers outside of his local jurisdiction, including in states such as Nevada and Colorado that are covered by the United Association Reciprocity Program for Pension Funds. To protect employees who work in multiple jurisdictions from losing benefits or being unable to accumulate them in one pension fund, the Reciprocity Program permitted the transfer of reciprocal contributions to the Plans on behalf of the participants working out of state. In many cases, the rates paid by out-of-state employers and transferred to the Plans exceeded those required to be contributed by Arizona employers under the Arizona collective bargaining agreements. Under the terms of the Reciprocity Program and the Plans, the full value of the out-of-state contributions would be prorated between the Plans at the current contribution rates.
In 2004, the Trustees of the Plans allegedly approved Amendment 1 to the pension Plans, which provided that, for employees on whose behalf reciprocal contributions were made at rates higher than those required under the collective bargaining agreements, any excess over the current hourly contribution rate would be paid into participants' individual accounts in the DC Plan and "credit for the full amount of such excess contributions shall be given to the participant." (Doc. 1 at 4.) Thus, upon adoption, excess contributions received by the Pension Plan on behalf of any DC Plan participant would have constituted accrued benefits for those participants in the DC plan. Amendment 1 was made retroactive to June 1, 2002. Plaintiff alleges that the Pension Plan failed to make contributions to the DC Plan as required by the terms of Amendment 1, and that the DC Plan and its administrators and trustees took no action to collect such contributions on behalf of the trust and deserving participants. As a result, participants on or after June 1, 2002 for whom excess contributions should have been made suffered losses to their individual accounts, and all DC Plan participants lost out on the earnings that would have been realized had the excess contributions been properly allocated to the DC Plan and invested with the other pooled assets.
In May of 2004, the Plans were purportedly amended again ("Amendment 2") to provide that if a participant had not earned a full pension credit during a year that reciprocal contributions were paid on his behalf, all reciprocal contributions would be paid into the Pension Plan and no money would be paid into the DC Plan until after the participant had earned a full pension credit. As a result, excess contributions were withheld from the DC Plan for months longer than authorized under Amendment 1, without interest. Amendment 2 also permitted the Pension Fund to keep reciprocal contributions over and above those required to earn a full pension credit and, even where a full pension credit had been earned, the Pension Fund only allocated reciprocal contributions to the DC Plan on a percentage basis: the current contribution rate for the DC plan under Arizona contracts divided by the total hourly contribution to the Plans. Amendment 2 amended the Plans retroactively; the parties dispute whether it did so without notice to participants. Plaintiff contends that his and others' future benefits were diminished as a result, and that the Defendants' actions violated various provisions of the Plans and ERISA, and amounted to a breach of the Trustees' fiduciary obligation.
Under the terms of the DC Plan, participants each had an individual account for accounting purposes that included the contributions made on behalf of an employee, plus the annual investment yield determined by the Trustees to be applicable. On December 18, 2008, the DC Plan was amended retroactively to adopt a mid-year valuation date of November 30, 2008 rather than a single end-of-year valuation date as was prescribed by the terms of the DC Plan. Individual accounts are calculated each year based on the plan's investment yield as of the valuation date. Consequently, participants' accounts reflected a negative investment yield (-20.2782 percent) for the period between November 30, 2008 and May 31, 2009 (that would have been the year-end date), when the investment yield was again positive (9.2889 percent). Moreover, Defendants did not add contributions received upon completion of the mid-year valuation to participants' individual accounts, so the account balances of participants for whom contributions were paid to Defendants between June 1, 2008 and November 30, 2008 were calculated using the depressed investment yield rather than the year-end, positive investment income adjustment, and participants' received reciprocal contributions were never credited with the investment gains received during that time frame.
On August 24, 2007, Mr. Bryant began receiving installment payments from the DC Plan. In January 2012, Defendants asserted that it had overpaid Mr. Bryant and requested that he repay the alleged overpayments at eight percent interest. In July 2013, Plaintiff filed in the instant action (Doc. 1, amended by Doc. 21) and now seeks class certification on behalf of himself and similarly situated participants in the Plans for violations of ERISA, for miscalculations of pension contributions in accordance with the terms of the Plans, resulting in a loss of entitled benefits for participants, and for breaches of the fiduciary duty owed to the putative plaintiff class by Defendants. (Doc. 44.)
I. Legal Standard
Class certification under Rule 23 is a two-step process. First, a plaintiff must demonstrate that four requirements of Rule 23(a) are satisfied: numerosity, commonality, typicality, and adequacy of representation. Fed.R.Civ.P. 23(a). Second, a plaintiff must establish that at least one of the bases for certification in Rule 23(b) is met. Fed.R.Civ.P. 23(b). The party seeking certification bears the burden of demonstrating that it has met all of these requirements, and "the trial court must conduct a rigorous analysis'" to determine whether it has met that burden. Zinser v. Accufix Research Inst., 253 F.3d 1180, 1186 (9th Cir. 2001) (quoting Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1233 (9th Cir. 1996)).
In determining whether to certify a class action, the district court may not inquire into the merits of the class representatives' underlying claims. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177-78 (1974). The district court is required to take the substantive allegations of the complaint as true. In re Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust Litig., 691 F.2d 1335, 1342 (9th Cir. 1982) (internal citation omitted). However, the court ...