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Nicholas Danza, Individually and On Behalf of Defined Honorable Joseph v. Fidelity Management Trust Company and Fidelity Investments

August 20, 2012

NICHOLAS DANZA, INDIVIDUALLY AND ON BEHALF OF DEFINED HONORABLE JOSEPH E. IRENAS CONTRIBUTION PLANS THAT USED DEFENDANTS AS THEIR QUALIFIED DOMESTIC RELATIONS (JEI/KMW) SERVICE PROVIDER AND ALL SIMILARLY SITUATED BENEFICIARIES OF SUCH ERISA- COVERED EMPLOYEE BENEFIT PLANS, PLAINTIFFS,
v.
FIDELITY MANAGEMENT TRUST COMPANY AND FIDELITY INVESTMENTS INSTITUTIONAL OPERATIONS COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Irenas, Senior District Judge:

order

OPINION

Plaintiffs allege that Defendants charged excessive and unreasonable fees for services related to their ERISA governed defined contribution plans (hereinafter "401(k) Plans"). Presently before the Court is Defendants' Motion to Dismiss for failure to state a claim.

I.

Great Atlantic & Pacific Tea Company, Inc. ("A&P") employed Plaintiff Danza whom participated in A&P's 401(k) Plan ("A&P Plan"). (Compl. ¶ 20) Generally, ERISA's anti-alienation provision prohibits the assignment of a 401(k) Plan participant's interest. (Compl. ¶ 2) One exception is the division of marital property pursuant to a qualified domestic relations order ("QDRO"). See 29 U.S.C. § 1056(d)(3). A QDRO is a domestic relations order ("DRO") that satisfies certain statutory criteria. 29 U.S.C. § 1056(d)(3)(B(ii). Upon receipt of a DRO, the 401(k) Plan administrator must review and qualify the DRO as a QDRO within a reasonable period of time.*fn1 See 29 U.S.C. 1056(d)(3)(G)(ii). DRO qualification may require significant work to comply with onerous statutory requirements. See 29 U.S.C. § 1056(d)(3) (listing requirements to qualify a DRO as a QDRO).

Defendant Fidelity Management Trust Company ("FMTC") served as trustee of the A&P Plan. (Compl. ¶¶ 25-26) Relevant to the instant dispute, A&P contracted with FMTC to provide QDRO services under the A&P Plan. (See Trust Agreement § 1(ll) & Sched. A) Fidelity Investments Institutional Operations Company ("FIIOC") is an agent or affiliate of FMTC, and is the entity that actually provided those services.*fn2 (See Trust Agreement § 18(a))

To qualify DROs, Defendants created an internet based DRO generator for plan participants. To review and qualify a DRO created on Defendants' website, Defendants charged $300. (See Trust Agreement, Def.'s Cert. Ex. 1, Sched. B at 110) To qualify a DRO created by a third party, Defendants charged $1,200. (Id.)

Lead class Plaintiff Danza used the third party All Pro QDRO, LLC to draft a DRO at a price of $475. (Id. at ¶ 86) In compliance with the fee schedule, Defendants charged Danza $1,200 to review and qualify the DRO. (Compl. ¶¶ 86-87) Plaintiffs allege that this fee was unreasonable.

II.

Federal Rule of Civil Procedure 12(b)(6) provides that a court may dismiss a complaint "for failure to state a claim upon which relief can be granted." In order to survive a motion to dismiss, a complaint must allege facts that raise a right to relief above the speculative level. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007); see also Fed. R. Civ. P. 8(a)(2).

While a court must accept as true all allegations in the plaintiff's complaint, and view them in the light most favorable to the plaintiff, Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008), a court is not required to accept sweeping legal conclusions cast in the form of factual allegations, unwarranted inferences, or unsupported conclusions. Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997). The complaint must state sufficient facts to show that the legal allegations are not simply possible, but plausible. Phillips, 515 F.3d at 234. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 566 U.S. 662, 129 S.Ct. 1937, 1949 (2009).

When evaluating a Rule 12(b)(6) motion to dismiss, the Court considers "only the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim." Lum v. Bank of America, 361 F.3d 217, 221 n.3 (3d Cir. 2004). A document that forms the basis of a claim is one that is "integral to or explicitly relied upon in the complaint." Id. (quoting In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)). Here, Plaintiff does not dispute that the Court should properly consider the Trust Agreement between A&P and FMTC attached as Exhibit 1 to Defendant's Motion to Dismiss.

III.

In Counts I-III, Plaintiffs allege Defendants breached fiduciary and co-fiduciary duties under ERISA ยงยง 404-05. Counts IV-VIII allege claims for prohibited ...


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