Class certification was granted by a New York federal judge in the ERISA suit against Deutsche Bank. Class members are participants of a Deutsche Bank Americas Holding Corp. 401(k) plan and are accusing the bank of mismanaging the plan in violation of ERISA or the Employee Retirement Income Security Act.
Class certification was granted by U.S. District Judge Lorna G. Schofield enabling the case to go forward as a class action representing participants and beneficiaries of the Deutsche Bank Matched Savings Plan after December 21, 2009, the individual accounts of which suffered losses. Lead plaintiffs and class members share an interest in remedying mismanagement and claims originate from the same events, i.e. participation in the plan. It was also noted that there are questions of law or fact that are common to the class. Together the judge ruled this warranted class certification.
Questions Seeking Class-wide Resolution:
· Whether or not each defendant was a fiduciary
· Whether or not the company’s process for assembling the plan menu and investment options was tainted by conflict of interest/imprudence
· Whether or not the company’s process for monitoring the plan menu and investment options was tainted by conflict of interest/imprudence
· Whether the company behaved imprudently when failing to control recordkeeping expenses
The resolution of these questions should generate common answers that would drive the investigation of defendant liability.
The company argued that the plaintiffs did not have an adequate understanding of the case – depending on their lawyers heavily for specifics, but the court found this argument unpersuasive considering that the claims involve technical financial decisions that would be difficult for plaintiffs to answer questions about on their own.
Plan participants were offered 22 core investment options. 10 of the options were mutual funds affiliated with DBAHC – proprietary funds that charged investment management and administrative fees that are actually paid out to DBAHC subsidiaries. (*Information regarding core investment options current as of December 2009).
Plaintiffs also alleged that the bank favored high-cost proprietary funds that were to their own benefit – at the expense of plan participants. According to Judge Schofield, the plan has about 22,000 participants and 10,000 former participants that were affected by the design and management of the plans.
Plaintiffs allege the bank served as fiduciaries of the plan and that they breached their duties of care and loyalty when selecting and monitoring plan investments biased for the bank and against plan participants. They also allege that DBAHC engaged in self-dealing transactions, which are prohibited.