The Sixth Circuit recently granted an employer win in an ERISA excessive fee case when it affirmed the dismissal of a proposed class action brought by current and former employees of DENSO International America, Inc., a manufacturer of auto parts. England v. Denso Int’l Am. Inc., No. 24-1360, 2025 U.S. App. LEXIS 10851 (6th Cir. May 6, 2025). The court reasoned that the complaint did not state a claim because it lacked detailed factual allegations showing that comparable recordkeeping services were available to the Plan at a lower price.
Similar to other fee class actions, the plaintiffs here alleged that DENSO breached its duties of prudence and loyalty under ERISA by failing to monitor the Plan’s recordkeeping fees, which were allegedly excessive relative to the level and quality of recordkeeping services provided. In response, DENSO moved to dismiss.
Failure to State a Claim
The trial court reasoned that the complaint did not state a valid claim under ERISA because it rested on conclusory assertions unsupported by detailed factual allegations. The plaintiffs asserted that the Plan paid more than double the amount it should have for recordkeeping services, and they provided a list of fifteen comparably sized plans that paid lower recordkeeping fees. However, the complaint provided no specific details about the types or quality of services that the comparator plans received relative to those the DENSO Plan received. Instead, the plaintiffs conclusorily alleged that all “mega plans,” or plans with more than $500 million in assets, generally receive the same level and quality of services. In other words, they argued that the recordkeeping services for these mega plans are standardized and “fungible” across the industry.
The appellate court affirmed the district court’s dismissal of the complaint, holding that the plaintiffs’ conclusions alone did not allow the court to reasonably infer a breach of the duty of prudence. The court further held that the plaintiffs’ conclusions were contravened by their own data; the very fact that the comparator plans each paid different fees undermined the notion that a cost disparity categorically implied imprudence. In rejecting these conclusory allegations, the court relied on the weight of authority from the Second, Eighth, and Tenth Circuits, which have all dismissed similar excessive fee complaints that failed to provide detailed comparisons of challenged services.
Takeaways
This case serves as another example of a federal Court of Appeals dismissing an ERISA complaint that relies on conclusory assertions. The Second Circuit joins several other circuits across the country in rejecting this commonly raised assertion as an inadequate substitute for detailed factual allegations. Motions to dismiss remain a valuable tool for defendants faced with substantively empty complaints, potentially resolving litigation in its early stages and barring plaintiffs from conducting “fishing expeditions” in discovery on mere supposition.