MILLS v. MOLINA HEALTHCARE INC (2023)

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DKT. NO. 153]

Plaintiffs are former employees of Defendant Molina Healthcare, Inc. (Molina) and its related entities who participated in an employee pension plan. Plaintiffs allege that Defendants—four fiduciaries of the plan—violated their obligations under the Employee Retirement Income Security Act (ERISA) by selecting untested, inferior, and expensive funds to offer to plan participants. Defendants move for summary judgment. Dkt. No. 153. The Court held a hearing on the motion on September 22, 2023. Because the record contains evidence from which a reasonable factfinder could find for Plaintiffs on most of their claims, the motion is denied, except as it applies to three subparts of Plaintiffs’ prohibited transaction claim for which Plaintiffs have not produced any support.

I.

While the parties were preparing their summary judgment materials, the Court expressed concern about the size of the anticipated record and gave the parties additional time to meet and confer and to excise the exhibits and facts that were not necessary for the Court's ruling. Dkt. No. 149. Despite the parties’ representation that they have conferred and reduced the record, they filed a Joint Appendix of Facts (JAF) that spans 290 pages and a Joint Appendix of Evidence (JAE) with well over 2,000 pages of exhibits. As the Court advised the parties, such large summary judgment records “generally reflect a failure of the parties to adequately focus on the material facts and disputes, and they tend to make it more difficult for the Court to identify the key issues and make the necessary rulings.” Id. at 1. The Court has reviewed the complete record but makes no attempt to comprehensively recount all the facts identified by the parties. Instead, viewing the record in the light most favorable to Plaintiffs, the Court largely limits its discussion to the facts necessary to explain its analysis.

Defendant Molina is a provider of managed healthcare services. JAF 1, Dkt. No. 155-5.¹ Molina sponsors a defined contribution retirement plan for its employees, the Molina Salary Savings Plan (the Plan). JAF 2. Defendant The Board of Directors of Molina Healthcare Inc. (the Board) established Defendant Molina Salary Savings Plan Investment Committee (the Committee) and appointed its members. JAF 3–4. The September 2012 Investment Policy Statement (IPS) provides that the Committee is responsible for periodically evaluating the Plan's investment performance, recommending investment option changes, and monitoring service providers and investment consultants. JAF 5–7. Although most of the relevant actions by Molina were taken by the Committee, the parties generally do not distinguish for purposes of their summary judgment arguments among Molina, the Board, and the Committee (together, the Molina Defendants). The Court assumes for purposes of this motion that the Molina Defendants acted together.

The named Plaintiffs—Michelle Mills, Coy Sarell, Chad Westover, Brent Aleshire, Barbara Kershner, Paula Schaub, and Jennifer Silva—are not mentioned anywhere in the 290-page JAF. It appears to be undisputed, however, that they are all former employees of Molina or its affiliates who participated in the Plan during the relevant period. Dkt. No. 79 ¶¶ 11–17.

ERISA imposes fiduciary duties on a variety of roles related to retirement plans, including so-called “§ 3(21) advisors” who “render[ ] investment advice for a fee.” 29 U.S.C. § 1002(21)(A)(ii). In 2010, NFP Retirement, Inc. (NFP)—then named 401(k) Advisors—became the Plan's § 3(21) investment advisor when it signed an Investment Advisory Agreement (IAA) with Molina. JAF 69–70. NFP is closely related to Defendant flexPATH Strategies, LLC (flexPATH). NFP and flexPATH both shared the same CEO (Vincent Giovinazzo), president (Nicolas Della Vedova), CIO (Jeffrey Elvander), and senior vice president of ERISA compliance (Joel Shapiro). JAF 336–37. flexPATH was owned by Giovinazzo, Vedova, and NFP's parent corporation, and flexPATH and NFP operated out of the same office. JAF 11, 338–39. flexPATH was founded in 2014, registered as an investment advisor in February 2015, and began managing client assets in June 2015. JAF 11, 342–43.

flexPATH offered investment options including target-date funds (TDFs), which are investment funds that adjust their portfolios to become more conservative over time based on an expected target retirement date. JAF 28. TDFs may use either a “through retirement” or a “to retirement” approach; the former continues to adjust allocations beyond the target retirement date, while the latter holds static its allocations after reaching the target date. JAF 39–40. The funds at issue in this case, the flexPATH Index Target-Date Funds (flexPATH TDFs), use a “to retirement” approach and are offered in ten-year target increments (2025, 2035, etc.). JAF 41, 368. Each TDF offers three “glidepaths”: conservative, moderate, and aggressive. JAF 45. The only differentiator among these glidepaths is the risk level. JAF 58. flexPATH touts the offering of these multiple glidepaths as an innovation that offers “custom” solutions to plan participants, while Plaintiffs dispute the characterization of the funds as “custom” and contend that the multiple glidepaths offered little value. JAF 44, 372. It is undisputed that from 2016 through 2019, more than 96% of the flexPATH TDFs were invested in the moderate funds. JAF 376.

In May 2015, flexPATH, NFP, and BlackRock Financial Management, Inc. (BlackRock) entered into an agreement to create a “strategic relationship” in which they cooperated in marketing the flexPATH TDFs. JAF 346–47. The flexPATH TDFs invested only in underlying BlackRock LifePath Index TDFs offered by BlackRock. JAF 357, 362. Wilmington Trust was the trustee with final decision-making authority over the flexPATH TDFs, and flexPATH served as a § 3(21) advisor who could make recommendations to Wilmington Trust on the underlying funds to be used in the TDFs. JAF 351–53. The flexPATH Investment Committee, which had the responsibility to monitor the underlying TDF funds, and Wilmington Trust approved BlackRock as both the glidepath manager and the manager of the underling investments for the flexPATH TDFs. JAF 50, 363–64. It is undisputed that through recommendations to Wilmington Trust, BlackRock determined the asset allocation, investment strategy, and glidepaths for the flexPATH TDFs, and 100% of those assets were allocated to underlying BlackRock TDFs. JAF 355–56. The parties dispute the quality of the BlackRock funds; Defendants characterize BlackRock as a highly rated market leader with well-established funds, while Defendants contend that BlackRock performed near the bottom of its peers. E.g., JAF 52–55.

Molina's IPS required the Committee to select a default investment—known as the qualified default investment alternative (QDIA)—for Plan participants who do not select a particular investment. JAF 73–74. In 2014 and 2015, the Plan's QDIA was a set of “through retirement” TDFs offered by Vanguard. JAF 42, 75. In November 2014 (before the flexPATH TDFs had launched), NFP introduced the Committee to flexPATH, which it described as “a custom target date fund solution.” JAF 76, 413. It is not clear to what extent NFP disclosed its close relationship to flexPATH. At the June 2015 Committee meeting, NFP delivered a marketing presentation on the flexPATH TDFs. JAF 77; JAE 51. NFP reintroduced the flexPATH TDFs again at the September 2015 Committee meeting. JAF 417. Finally, at the November 2015 meeting, the Committee decided to replace the Vanguard TDFs with the flexPATH TDFs as the Plan's QDIA, selecting the moderate glidepath as the default option. JAF 93, 101–02. Molina's notes indicate that the decision to add the flexPATH funds was “[o]n the recommendation of NFP.” JAE 119 at 1.² The parties dispute the information considered by the Committee and the adequacy of its decision-making process, as will be discussed further below.

Meanwhile, in January 2015, Giovinazzo wrote in an internal NFP email that “[t]here are inherent potential conflicts of interest (again potential) that exist within flexPATH, including ․ NFP Retirement adding flexPATH to our clients.” JAE 148 at 2–3.³ A “flexPATH Strategies Sales Guidelines and Training” for financial advisors working with NFP cautioned that “[b]ecause of NFP's ownership interest in flexPATH, there are a few basic compliance and operational requirements that financial advisors ․ must follow” including that “[a]s an existing fiduciary to your client, you many not: ․ Recommend flexPATH Strategies or the flexPATH CITs to existing clients.” JAE 149 at 1. Despite these concerns, NFP's president, Vedova, announced an incentive system for NFP investment advisors, who would receive “additional compensation when flexPATH is implemented into one of [their] retirement plan clients.” JAF 395–96; JAE 145 at 1. It is undisputed that Veronica Lee and Solomon Stewart, who presented to the Molina Committee on behalf of NFP, received additional compensation after the Committee adopted the flexPATH TDFs, and that the payments were made by NFP from funds provided by flexPATH. JAF 400–01.

On March 31, 2016, the Committee entered into a participation agreement with Wilmington Trust, the trustee for the flexPATH TDFs, which authorized Wilmington Trust to invest Plan assets in the flexPATH TDFs. JAF 120, 490. The next day, Molina and flexPATH executed an Investment Manager Agreement (IMA) in which flexPATH agreed to “serve as an ERISA section 3(38) manager for the Plan” and to “provide asset allocation services by choosing investment options for the Plan that can qualify as a [QDIA].” JAF 111; JAE 53 at 1. A § 3(38) advisor is one who, among other things, “has the power to manage, acquire, or dispose of any asset of a plan.” 29 U.S.C. § 1002(38). The parties dispute whether flexPATH in fact had such power, but the IMA provided that “flexPATH will have complete authority and discretion in providing the Management Services. [Molina] authorizes flexPATH to use affiliated investment options, including flexPATH CITs.” JAE 53 at 2.⁴ The IMA also provided that flexPATH would not charge Molina or the plan additional fees “if flexPATH CITs are selected in performing the Management Services,” and that “[a]ny compensation received by an affiliate of flexPATH in connection with the utilization of flexPATH CITs ․ will be paid out of amounts received by flexPATH for the performance of the Management Services without additional cost to [Molina] or the Plan.” Id.

On April 5, 2016, Molina sent its recordkeeper a letter of direction instructing it to replace the Vanguard TDFs with the flexPATH TDFs. JAF 123, 494. A document purporting to be minutes of a May 15, 2016 flexPath meeting states that Molina “has independently selected [flexPATH] to serve as a 3(38) fiduciary to the selection and monitoring of the plan's asset allocation solution,” and that flexPATH performed a “TDF Fit Analysis” and selected the flexPATH TDFs as the QDIA. JAE 45. flexPATH argued at the hearing that the minutes merely memorialized an earlier decision but could not identify the date of any such decision. Plaintiffs object to the exhibit, dispute its significance, and note, among other things, that its metadata indicates that the document was created in July 2019. JAF 124.⁵ On May 16, 2016—the next day—the Plan's assets were transferred to the flexPATH TDFs. JAF 131. Patricia Fitzpatrick, a Committee member, testified in her deposition that the Committee had the authority to include and replace investment options in the Plan and could have stopped the transfer of funds from the Vanguard TDFs to the flexPATH TDFs until the moment it was completed. JAE 150 at 85.

From 2016 through 2019, the flexPATH TDFs represented between 50.6% and 58.6% of all Plan assets, and the Plan ultimately invested more than $378 million in the flexPATH TDFs (with more than $200 million invested in 2016). JAF 420; JAE 125 at 10. A quarterly update prepared by flexPATH was presented to the Committee at every Committee meeting from February 2017 to 2020, although Plaintiffs contend—and Defendants cite no contrary evidence—that it was NFP and not flexPATH who presented the materials. JAF 270, 573. The parties dispute the adequacy of these reports and whether they provided sufficient information to comply with the IPS or to allow Molina to evaluate the performance of the funds. In August 2018, the Committee switched to a less expensive share class of the flexPATH TDFs, which flexPATH had launched four months earlier. JAF 278.

In late 2019 and early 2020, the Committee sent a request for proposals for the Plan's investment advisor to seven companies, five of which responded (including NFP). JAF 284–86. The Committee selected three companies—Captrust, RBG, and Sageview—to interview and give presentations. JAF 291. All three recommended the removal of the flexPATH TDFs, with one noting that the “additional cost and revenue sharing” between NFP and flexPATH were “an example of a significant conflict of interest that we can eliminate.” JAF 496, 499. The Committee ultimately selected SageView, which replaced NFP in 2020. JAF 294–95, 299. SageView recommended, and the Committee approved, the replacement of the flexPATH TDFs with Fidelity TDFs. JAF 302, 307. The parties offer competing expert opinions on whether the flexPATH TDFs were imprudent investments and caused losses to Plan members during their time as the QDIA.

On March 18, 2022, Plaintiffs filed this putative class action alleging ERISA claims against Molina. Dkt. No. 1. On July 21, 2022, after Molina moved to dismiss the complaint, Plaintiffs filed a First Amended Complaint (FAC) that added claims against the other Molina Defendants and NFP. Dkt. No. 43. Defendants moved to dismiss the FAC, and on September 9, 2022, Plaintiffs filed the Second Amended Complaint (SAC), adding claims against flexPATH. Dkt. No. 79. The Court granted in part Defendants’ motions to dismiss the SAC, finding that (1) Plaintiff's cause of action relating to the use of higher-cost versions of Plan investments failed to state a claim, (2) the remaining claims against NFP were time-barred, and (3) Plaintiff's claim against the Molina Defendants for their selection of flexPATH as an investment advisor failed to state a claim because Plaintiffs had not alleged any losses caused by that decision that were distinct from the losses allegedly caused by the investment in the flexPATH TDFs. Dkt. No. 123.

The Court otherwise denied the motions to dismiss, leaving the following live claims: (1) breach of fiduciary duties by the Molina Defendants and flexPATH based on their selection and retention of the flexPATH TDFs, (2) breach of fiduciary duties by Molina and the Board based on their failure to monitor their delegated fiduciaries, and (3) prohibited transactions by the Molina Defendants and flexPATH. Id. Pursuant to a stipulated motion, the Court later certified a class of “[a]ll participants of the Molina Salary Savings Plan from March 18, 2016 through October 26, 2020 who invested in a flexPATH Index target date fund through an individual Plan account, and their beneficiaries, excluding Defendants.” Dkt. No. 127. Defendants now move for summary judgment on the remaining claims. Dkt. No. 153.

II.

Summary judgment is appropriate where the record, taken in the light most favorable to the opposing party, shows “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48 (1986). “The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor.” Anderson, 477 U.S. at 255. The moving party has the initial burden of establishing that there are no disputed material facts. Id. at 256. “If a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact ․ the court may ․ consider the fact undisputed.” Fed. R. Civ. P. 56(e)(2). Furthermore, “Rule 56[(a)] mandates the entry of summary judgment ․ against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

III.

A.

Plaintiffs allege in Count 1 of the SAC that Defendants breached their fiduciary duties under 29 U.S.C. § 1104(a)(1) by adding and retaining the flexPATH Funds in the Plan. Dkt. No. 79 ¶¶ 128–36. Defendants do not dispute that they are fiduciaries for purposes of ERISA. ERISA requires that:

a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and—

(A) for the exclusive purpose of:

(i) providing benefits to participants and their beneficiaries; and

(ii) defraying reasonable expenses of administering the plan;

(B) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims;

․ and

(D) in accordance with the documents and instruments governing the plan ․

29 U.S.C. § 1104(a)(1). Plaintiffs allege that all Defendants violated their duty of prudence under § 1104(a)(1)(B) and their duty to comply with the IPS's requirements for the selection of Plan investments under § 1104(a)(1)(D). Plaintiffs also allege that flexPATH violated its duty of loyalty under § 1104(a)(1)(A).

1.

The Molina Defendants argue that they are entitled to summary judgment on Count 1 because they took no relevant action during the repose period and because flexPATH had complete authority and discretion to select the QDIA. ERISA's statute of repose generally requires claims to be brought within “six years after (A) the date of the last action which constituted a part of the breach or violation, or (B) in the case of an omission the latest date on which the fiduciary could have cured the breach or violation.” 29 U.S.C. § 1113(1). Plaintiffs filed this suit against Molina on March 18, 2022, so their claim is timely only if it accrued after March 18, 2016.

In their motion to dismiss the SAC, the Molina Defendants argued that the claims against them are time-barred because they made the decision to add the flexPATH TDFs by January 2016, outside the repose period, and took no relevant actions thereafter, since it was flexPATH that added the flexPATH TDFs in May 2016. The Court denied the motion because Plaintiffs alleged that the Molina Defendants added the flexPATH TDFs to the Plan in May 2016, not merely that they made the decision to do so. Dkt. No. 123 at 12. The Molina Defendants now argue that these allegations are conclusively false because the March 31, 2016 IMA assigned to flexPATH “complete authority and discretion” to select the funds, JAE 53 at 2, and the Molina Defendants did not intrude on that authority.

The summary judgment record is not as clear as the Molina Defendants contend. Although the IMA recites that flexPATH was a § 3(38) advisor with authority to select the QDIA, a reasonable factfinder might conclude that this ostensible delegation of authority did not reflect the realities of the decision-making process.⁶ For example, at the hearing, flexPATH's counsel was unable to identify a date on which flexPATH decided to adopt the flexPATH TDFs as the Plan's QDIA, instead arguing that “[t]here is no precise date,” and that the March 31, 2016 participation agreement and the April 1, 2016 IMA “are the last conceivable actions that flexPATH took in effectuating the addition of the flexPATH funds to the Plan.” But the participation agreement was a transaction between Molina and Wilmington Trust to which flexPATH was not a party, and the April 1 IMA is the contract by which flexPATH assumed its role as a § 3(38) advisor. Thus, to the extent Defendants suggest that flexPATH as the § 3(38) advisor made the decision to select the flexPATH TDFs, it could only have done so in that capacity after April 1, 2016. And while flexPATH argues that its May 15, 2016 minutes referencing its “Fit Analysis” and selection of the flexPATH TDFs merely memorialized an earlier decision, the minutes themselves do not identify any such decision or any action at an earlier date.

In sum, it is not clear on this record that flexPATH made an independent evaluation or took action that insulates Molina from responsibility for its choice of the flexPATH TDFs. A reasonable factfinder might conclude that Molina's appointment of flexPATH as an investment advisor was not distinct from the decision to add the flexPATH TDFs, but rather a step in the process of implementing the Committee's decision to add those funds. Moreover, a reasonable factfinder could find that Molina's March 31, 2016 participation letter authorizing Wilmington Trust to invest Plan assets in the flexPATH TDFs and its execution of the IMA were acts by Molina within the repose period that constituted parts of its breach of fiduciary duty.⁷

The Molina Defendants rely on Judge Selna's recent summary judgment ruling in Lauderdale v. NFP Ret., Inc., No. 8:21-CV-301-JVS, 2022 WL 17260510 (C.D. Cal. Nov. 17, 2022), a case brought by Plaintiffs’ counsel raising similar challenges to the adoption of the flexPATH TDFs in a different retirement plan advised by NFP. Judge Selna granted summary judgment to the plan administrators based on a similar delegation of authority to flexPATH as a § 3(38) investment manager, which he found precluded causation. Id. at *15 (the issue is whether Wood Defendants’ approval of the flexPATH target-date funds ‘caused’ flexPATH to select the funds, given that flexPATH retained the sole authority and discretion to make that ultimate decision․ While the Wood Defendants might have ‘greenlit’ use of the flexPATH target-date funds, it was flexPATH who made the choice to select those funds.”). The record in Lauderdale (which did not include a statute of repose challenge) does not appear to have contained the same disputes regarding whether flexPATH in fact acted as a § 3(38) advisor or made the decision to select the funds. Because flexPATH's role is disputed here and it is unclear who ultimately bears responsibility for the decision to adopt the flexPATH TDFs, the Molina Defendants have not shown that their acts within the repose period are irrelevant or that they are entitled to a summary judgment ruling that Plaintiffs’ claims against them are time-barred.⁸

2.

Defendants next argue that they are entitled to summary judgment on Count 1 because there is no evidence that any breach caused a loss to the Plan, both because the flexPATH TDFs were prudent investments and because they resulted in net gains relative to independent benchmarks and peer funds. Although framed in terms of causation, their argument that the flexPATH TDFs were prudent investment options implicates the existence of a breach.

a.

As fiduciaries, Defendants were required to act “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use” and “in accordance with the documents and instruments governing the plan.” 29 U.S.C. § 1104(a)(1)(B), (D). “[E]ven in a defined-contribution plan where participants choose their investments, plan fiduciaries are required to conduct their own independent evaluation to determine which investments may be prudently included in the plan's menu of options.” Hughes v. Nw. Univ., 595 U.S. 170, 176 (2022) (citing Tibble v. Edison Int'l, 575 U.S. 523, 529–30 (2015)). In assessing prudence, courts evaluate whether the fiduciary “employed the appropriate methods to investigate the merits of the investment” at the time of the challenged transaction. Wright v. Oregon Metallurgical Corp., 360 F.3d 1090, 1097 (9th Cir. 2004). Thus, “the court focuses not only on the merits of the transaction, but also on the thoroughness of the investigation into the merits of the transaction.” Tibble v. Edison Int'l, 843 F.3d 1187, 1197 (9th Cir. 2016) (en banc) (quoting Howard v. Shay, 100 F.3d 1484, 1488 (9th Cir. 1996)). “[T]he prudence inquiry is fact intensive. And, because it involves the application of a reasonableness standard, rarely will such a determination be appropriate on a motion for summary judgment.” Terraza v. Safeway Inc., 241 F. Supp. 3d 1057, 1078 (N.D. Cal. 2017) (cleaned up).

A fiduciary also has a duty of loyalty that requires him to act “solely in the interest of the participants and beneficiaries” and for the exclusive purpose of providing benefits to participants and their beneficiaries. 29 U.S.C. § 1104(a)(1)(A). This duty prohibits fiduciaries from “engaging in transactions that involve self-dealing or that otherwise involve or create a conflict between the [their] fiduciary duties and personal interests.’ ” Terraza, 241 F. Supp. 3d at 1069 (quoting Restatement (Third) of Trusts § 78 (2007)). “When it is possible to question the fiduciaries’ loyalty, they are obliged at a minimum to engage in an intensive and scrupulous independent investigation of their options to insure that they act in the best interests of the plan beneficiaries.” Howard, 100 F.3d at 1488–89 (cleaned up).

On this record, a reasonable factfinder could find that the Molina Defendants breached their duty of prudence and that flexPATH—to the extent it in fact selected the flexPATH TDFs—breached its duties of prudence and loyalty. The IPS stated that “[t]he selection of investment options offered under the Plan is among the Committee's most important responsibilities” and provided criteria for the Committee to consider when evaluating investments, including that “[i]nvestment performance should be at least competitive with an appropriate style-specific benchmark and the median return for an appropriate, style-specific peer group.” JAE 12 at 2–3. The Committee was also required to maintain a “score card” based on objective criteria to evaluate each fund's overall performance. Id. at 4. The score card methodology contemplated that active asset allocations including TDFs “are evaluated over a five year time period.” Id. at 8.

Defendants have not shown as a matter of law that the selection of the flexPATH TDFs complied with the IPS or was the product of an investigation that satisfied their duty of prudence. When NFP first presented to the Committee about the flexPATH TDFs, the relevant funds did not yet exist, and they certainly did not have a five-year history from which the Committee could evaluate their performance. It is undisputed that NFP neither presented score cards for the flexPATH TDFs nor disclosed that the flexPATH TDFs only invested in the BlackRock TDFs. JAF 428. And the deposition testimony of several Committee members raises questions about the adequacy of their decision-making process: one did not know what a glidepath was, others were unaware of BlackRock's role in the TDFs, and multiple members did not recall considering investing directly in the BlackRock funds to avoid the additional layer of fees charged by flexPATH. JAF 455–56, 458–60. While this deposition testimony may reflect no more than faded memories over time, it at least raises the possibility that Defendants will be unable to show a prudent process for selecting flexPATH.

Moreover, while Defendants produce an expert report concluding that the Plan's investment in the flexPATH TDFs and the Committee's process were prudent, Plaintiffs produce competing expert reports plausibly opining that the investments were imprudent for numerous reasons. E.g., JAE 100 at 4 (“The flexPATH Index TDFs were not ‘reasonable investment options’ for the Plan as Dr. Chalmers contends. Dr. Chalmers’ entire performance analysis comparing the flexPATH Index TDFs to the Vanguard Target Retirement TDFs and other comparators and benchmarks is flawed and unreliable. He violates industry performance standards when he argues that a performance history is unnecessary. His defense of the flexPATH Index TDFs creates an impossible framework of no accountability that contradicts the existence of prudent fiduciary practices, including acting in accordance with an IPS.”); JAE 101 at 7 ¶ 28 (“The flexPATH Index TDFs provided no value to Plan participants compared to other available TDFs. The flexPATH Index TDFs were merely repackaged BlackRock LifePath Index TDFs under the label ‘flexPATH’. But the flexPATH Index TDFs added an additional cost to Plan participants.”); JAE 105 at 43 (“A prudent fiduciary would not consider a TDF for a [defined contribution] plan without a minimum of five years of performance history, nor was there any reason to consider a TDF with less than five years of experience.”); id. at 59 (“At no time did the Committee evaluate the performance of the flexPATH Index TDFs relative to a peer group.”). On this disputed record, Plaintiffs have at least raised a genuine fact issue as to whether the selection of the flexPATH TDFs was a prudent decision made pursuant to a prudent process. And to the extent the decision was made by flexPATH, a reasonable factfinder could conclude that its selection of its own funds (selectively promoted to Molina by its closely related affiliate NFP) was not a decision made solely for the benefit of the Plan's beneficiaries.

b.

The focus of Defendants’ argument is whether these breaches—if indeed they were breaches—caused losses to the Plan members. Under ERISA, a fiduciary who breaches his duties “shall be personally liable to make good to [the] plan any losses to the plan resulting from each such breach.” 29 U.S.C. § 1109(a). A fiduciary must pay only the damages resulting from the portion of the investment that was imprudent, not the entire amount of the investment. Cal. Ironworkers Field Pension Tr. v. Loomis Sayles & Co., 259 F.3d 1036, 1047 (9th Cir. 2001). “[T]he causal connection between breach and loss, like breach itself, is a fact-intensive inquiry” that may not be susceptible to summary judgment. Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915, 919 (8th Cir. 1994).

The parties dispute who bears the burden on the issue of causation—a question that has divided circuit courts. See Brotherston v. Putnam Invs., LLC, 907 F.3d 17, 35 (1st Cir. 2018) (“Our sister courts are split on who bears the burden of proving or disproving causation once a plaintiff has proven a loss in the wake of an imprudent investment decision.” (collecting cases)). The Ninth Circuit does not appear to have addressed this split. In Brotherston, on which both sides rely, the First Cricut joined the Fourth, Fifth, and Eighth Circuits by “hold[ing] that once an ERISA plaintiff has shown a breach of fiduciary duty and loss to the plan, the burden shifts to the fiduciary to prove that such loss was not caused by its breach, that is, to prove that the resulting investment decision was objectively prudent.” Id. at 39. The Brotherston court, however, identified the Ninth Circuit as having reached the opposite conclusion, apparently based on its statement in Wright Corp., 360 F.3d at 1099, that “[a] plaintiff must show a causal link between the failure to investigate and the harm suffered by the plan.” Brotherston, 907 F.3d at 35.

The Ninth Circuit's decision in Wright did not directly address the burden-shifting question, and it is unnecessary at this stage to resolve the parties’ dispute. Regardless of who bears the burden, Plaintiffs have raised genuine disputes of fact as to whether a prudent fiduciary would have selected the flexPATH TDFs and whether their selection caused losses to the Plan vis-à-vis a prudent alternative. While Defendants have produced evidence from which a reasonable factfinder could find that the flexPATH TDFs were not imprudent investments, Plaintiffs have produced controverting evidence. In particular, as discussed above, Plaintiffs have produced expert reports opining that the flexPATH TDFs added no value to the underlying BlackRock TDFs and merely added a layer of fees, making them inherently imprudent investments, as would have been apparent ex ante to a prudent fiduciary. While disputing their conclusions, Defendants have not challenged Plaintiffs’ experts’ credentials or the admissibility of their opinions, which raise genuine issues of material fact.⁹

Similarly, Plaintiffs’ damages expert, Brian Becker, calculated damages for the class period by comparing the performance of the flexPATH TDFs to four competing TDFs, including the Vanguard TDFs that Molina replaced with the flexPATH TDFs. JAE 166. Based on Becker's calculations, the Plan's assets would have increased by between $9.4 million and $26.7 million if the Plan had used the other TDFs instead of the flexPATH TDFs. Id. at 5. To be sure, Defendants offer different benchmarks against which the flexPATH TDFs compare more favorably, but this only shows that there are fact issues to be resolved at trial. See Brotherston, 907 F.3d at 34 (whether expert “picked suitable benchmarks, or calculated the returns correctly, or focused on the correct time period” were “questions of fact”). While Defendants are correct that Plaintiffs cannot merely cherry-pick a comparator that in hindsight performed better than the flexPATH TDFs, it is not clear that they have done so here. In particular, a reasonable factfinder might conclude that Plaintiffs’ evidence that the flexPATH TDFs underperformed the Vanguard TDFs they replaced provides a nonspeculative basis for calculating damages based on the profits the Plan would have obtained if Defendants had not switched to the flexPATH TDFs. Cf. Skinner v. Northrop Grumman Ret. Plan B, 673 F.3d 1162, 1167 (9th Cir. 2012) (“A trustee who breaches his or her duty could be liable for loss of value to the trust or for any profits that the trust would have accrued in the absence of the breach.”).¹⁰

Accordingly, Defendants have not shown that they are entitled to summary judgment on Plaintiffs’ claim for breach of fiduciary duty in Count 1.

B.

Count 3 of the SAC, Plaintiffs’ second surviving claim, alleges that Molina and the Board breached their fiduciary duty to monitor the fiduciaries to whom they delegated authority, in particular the Committee and flexPATH. Dkt. No. 79 ¶¶ 143–53. The parties’ summary judgment arguments reframe the claim as whether the Molina Defendants adequately monitored flexPATH. The Molina Defendants’ first argument—that they are entitled to summary judgment on the monitoring claim because it is derivative and Plaintiffs cannot show an underlying breach—fails because Plaintiffs have raised fact issues as to the existence of an underlying breach. Thus, summary judgment turns on the Molina Defendants’ second argument: that there is no evidence they failed to adequately monitor flexPATH's performance.

ERISA imposes a “limited duty” upon fiduciaries to monitor and review the performance of their appointed fiduciaries to ensure that they are fulfilling their fiduciary obligations. Lauderdale, 2022 WL 17260510, at *24; In re Computer Scis. Corp. Erisa Litig., 635 F. Supp. 2d 1128, 1144 (C.D. Cal. 2009). “An appointing fiduciary ‘must act with prudence in supervising or monitoring the agent's performance and compliance with terms of delegation’ ” and “should ‘review the performance of [its] appointees at reasonable intervals and in such a manner as may be reasonably expected to ensure that their performance has been in compliance with the terms of the plan and statutory standards.’ ” Lauderdale, 2022 WL 17260510, at *24 (quoting Restatement (Third) of Trusts § 80 cmt. D(2); In re Computer Scis. Corp., 635 F. Supp. 2d at 1144). Delegating fiduciaries cannot “abdicate their duties under ERISA merely through the device of giving their lieutenants primary responsibility for the day to day management” of the plan. Leigh v. Engle, 727 F.2d 113, 135 (7th Cir. 1984). When delegating fiduciaries know that their delegees have “conflicting loyalties” with respect to investments, they must “take prudent and reasonable action to determine whether the administrators were fulfilling their fiduciary obligations,” although they need not examine every action taken by the delegees. Id.

The Molina Defendants argue that because the Committee received reports from flexPATH at quarterly meetings and ultimately removed both flexPATH and the flexPATH TDFs in 2020, they satisfied their limited duty to monitor flexPATH as a matter of law. Plaintiffs, on the other hand, produce expert testimony opining that the Molina Defendants fell short of industry standards and did not adequately monitor flexPATH's performance—which could only be done by monitoring the performance of the flexPATH TDFs—because (1) they never evaluated the performance of the flexPATH TDFs relative to a peer group, (2) they never received or reviewed score cards for the flexPATH TDFs, in violation of the IPS, and (3) they never asked anyone from flexPATH to attend a Committee meeting, instead relying on NFP. JAE 105 at 59–60. On this record, particularly given flexPATH's inexperience and potential conflicts of interest, the Molina Defendants have not shown that no reasonable factfinder could find a breach of fiduciary duty based on their failure to more closely monitor flexPATH.

C.

Plaintiffs’ final surviving claim, Count 4, alleges that Defendants engaged in prohibited transactions in violation of 29 U.S.C. § 1106(a) and (b) when they added the flexPATH TDFs to the Plan. Dkt. No. 79 ¶¶ 154–59. Subsection (a) prohibits certain types of transactions between a plan and a party in interest, three of which Plaintiffs claim are relevant here:

A fiduciary with respect to a plan shall not cause the plan to engage in a transaction, if he knows or should know that such transaction constitutes a direct or indirect—

(A) sale or exchange, or leasing, of any property between the plan and a party in interest;

․

(C) furnishing of goods, services, or facilities between the plan and a party in interest; [or]

(D) transfer to, or use by or for the benefit of a party in interest, of any assets of the plan[.]

29 U.S.C. § 1106(a)(1). Plaintiffs allege that all Defendants violated these provisions.

Subsection (b) prohibits three types of transactions between a plan and a fiduciary, all of which Plaintiffs allege are relevant:

A fiduciary with respect to a plan shall not—

(1) deal with the assets of the plan in his own interest or for his own account,

(2) in his individual or in any other capacity act in any transaction involving the plan on behalf of a party (or represent a party) whose interests are adverse to the interests of the plan or the interests of its participants or beneficiaries, or

(3) receive any consideration for his own personal account from any party dealing with such plan in connection with a transaction involving the assets of the plan.

Id. § 1106(b). Plaintiffs allege that flexPATH violated these provisions when selecting funds that benefited it.

1.

The Molina Defendants argue that they are entitled to summary judgment on Plaintiffs’ prohibited transaction claim for two reasons. First, citing to JAF 119, they argue that “it is undisputed that it was flexPATH—not the Molina Defendants—who caused the flexPATH TDFs to be added to the Plan,” such that the Molina Defendants cannot be liable for causing a prohibited transaction. Dkt. No. 153-1 at 64. But Plaintiffs vigorously dispute this purported fact, both in JAF 119 and elsewhere. Because the record is unclear as to who actually selected the flexPATH TDFs and who caused their addition to the Plan, the Molina Defendants have not shown as a matter of law that flexPATH's role shields them from liability.

Second, the Molina Defendants argue that the prohibited transaction claim in Count 4 is time-barred for the same reason as the fiduciary duty breach claim in Count 1. Once again, they rely on JAF 119 to argue that “the undisputed evidence is that it was flexPATH, as the Plan's § 3(38) investment manager, that added the flexPATH TDFs to the Plan.” Dkt. No. 153-1 at 66. But as explained in connection with Count 1, the record is far less clear than the Molina Defendants represent, and a reasonable factfinder might determine that Molina took actions within the repose period that caused the investment of Plan assets in the flexPATH TDFs, including signing the IMA on April 1, 2016 and sending the March 31, 2016 participation letter authorizing Wilmington Trust to invest Plan assets in the flexPATH TDFs. Thus, the Molina Defendants have not shown that they are entitled to summary judgment on Count 4.¹¹

2.

a.

flexPATH raises several arguments for summary judgment on Count 4. First, it invokes the statute of repose. Plaintiffs did not assert claims against flexPATH until they filed the SAC in September 2022. However, the FAC, which asserted claims against NFP, was deemed filed on May 13, 2016. Dkt. Nos. 42, 47. flexPATH notes both dates and argues that Plaintiffs’ prohibited transaction claim is untimely regardless of which date controls. However, flexPATH makes no argument and produces no evidence that the SAC does not relate back to the FAC. Since flexPATH as the movant bears the burden of showing its entitlement to summary judgment, in the absence of evidence or argument by either side, the Court assumes that the SAC relates back to the FAC. Accordingly, Plaintiffs’ prohibited transaction claim against flexPATH is timely if “the last action which constituted a part of the ․ violation” occurred after May 13, 2016. 29 U.S.C. § 1113(1).

flexPATH argues that its selection of the flexPATH TDFs occurred no later than April 1, 2016, when the IMA was executed. flexPATH relies on Wright, 360 F.3d at 1101, for the proposition that the relevant “transaction” in a prohibited transaction claim is the selection of the fund for the plan. flexPATH overreads Wright. In that case, which did not address the statute of repose, the plaintiffs sought to assert a prohibited transaction claim based only on the decision to continue holding plan assets. The Ninth Circuit held that the plaintiffs had not identified any transaction that could support a § 1106 claim because “[t]he decision ․ to continue to hold 15% of Plan assets in employer stock was not a ‘transaction.’ ” Id. Here, in contrast, the Plan's funds were transferred to the flexPATH TDFs on May 16, 2016. This was clearly a transaction—or at least the completion of a transaction—that took place within the repose period. Moreover, while the record is unclear as to which Defendant caused the transaction, there is at least some evidence that flexPATH was responsible. Indeed, flexPATH claims that it conducted an independent review and selected the flexPATH TDFs as the QDIA, although it is unable to identify any date for this decision and appears to suggest that it completed its relevant acts before Molina actually hired it as a financial advisor with authority to select the QDIA. And the primary evidence on which flexPATH relies to document this decisionmaking is dated May 15, 2016—within the repose period. On this record, flexPATH is not entitled to summary judgment based on the statute of repose.

b.

Turning to the merits, flexPATH first argues that Plaintiffs’ claims under § 1106(a)(1)(A) and (C) fail because the investment of Plan funds in the flexPATH TDFs was not a “sale or exchange, or leasing, of any property” or a “furnishing of goods, services, or facilities between the plan and a party in interest,” as required for those violations. Plaintiffs merely respond that “flexPATH does not explain why the statute would somehow not apply to investment services.” Dkt. No. 153-1 at 72. Plaintiffs have not made any attempt to show that flexPATH caused a prohibited sale, exchange, or leasing of property, and their § 1106(a)(1)(A) claim fails as a matter of law. Plaintiffs do not explain what investment services form the basis of their § 1106(a)(1)(C) claim, but to the extent the transaction they seek to challenge is Molina's hiring of flexPATH to provide investment services, they have not shown that flexPATH caused that transaction (or indeed that flexPATH was a fiduciary before that transaction). In any event, flexPATH was hired before May 13, 2016, the beginning of the repose period. Thus, Plaintiffs have not identified any viable basis for their § 1106(a)(1)(C) claim, and flexPATH is entitled to summary judgment on that claim.

c.

flexPATH argues that Plaintiffs’ claim under § 1106(a)(1)(D), which prohibits transactions that constitute a direct or indirect “transfer to, or use by or for the benefit of a party in interest, of any assets of the plan,” fails because the selection of the flexPATH TDFs was intended to benefit the Plan. On Defendants’ motion to dismiss, the Court rejected a similar argument by the Molina Defendants, observing that “[t]hey cite no authority within the Ninth Circuit applying an intent requirement, and, like the court in Lauderdale, this Court ‘is not inclined to impose an intent requirement that is not in the text of the statute.’ ” Dkt. No. 123 at 24 (citing Lauderdale v. NFP Ret., Inc., No. 8:21-CV-301-JVS, 2022 WL 422831, at *20 (C.D. Cal. Feb. 8, 2022)). flexPATH now repeats the same argument but cites an unpublished Ninth Circuit decision that appears to suggest an intent requirement. Voluntary Emps. Beneficiary Ass'n. v. Ross, 191 F.3d 462 (9th Cir. 1999) (unpublished) (summarily stating that liability for use of plan assets by or for the benefit or a party in interest “will require proof that TSA acted with the intent to benefit Ross as required by section 1106(a)(1)”). Even assuming that intent is required, however, flexPATH's argument fails because a reasonable factfinder might conclude that flexPATH chose the flexPATH TDFs not because they were the best fit for the Plan but because the Plan's transfer of hundreds of millions of dollars to those funds benefited flexPATH. Thus, flexPATH has not shown that it is entitled to summary judgment on Plaintiffs’ claim under § 1106(a)(1)(D).

d.

As for the prohibition on self-dealing transactions in § 1106(b), flexPATH argues that Plaintiffs’ claim fails because flexPATH received no additional compensation from the investment of Plan funds into the flexPATH TDFs. While flexPATH is correct that the payment of predetermined fees to flexPATH for its services as an investment manager is not a fiduciary act that by itself gives rise to a § 1106(b) claim, Santomenno v. Transamerica Life Ins. Co., 883 F.3d 833, 840–41 (9th Cir. 2018), the service fees are not the benefit on which Plaintiffs’ claim relies. As in Lauderdale,

[P]laintiffs are not using flexPATH's collection of service fees as a basis of their prohibited-transaction claim; rather, they claim that the benefit is derived from the transfer of the Plan assets to the Wilmington trust, which resulted from the decision to select the flexPATH target-date funds. In other words, the transaction that benefitted flexPATH was its decision to select the target-date funds. This decision to cause the Plan to invest in flexPATH's own proprietary funds provided “seed money” for flexPATH to grow its business as a legitimate company and help bolster flexPATH's reputation in the industry.

2022 WL 17260510, at *23.

Viewing the evidence in the light most favorable to Plaintiffs, flexPATH has not shown that no reasonable factfinder could conclude that its investment of nearly $400 million in Plan funds (approximately $200 million of which was transferred in 2016) into the flexPATH TDFs constituted a “deal[ing] with the assets of the plan in [flexPATH's] own interest” in violation of § 1106(b)(1) or a “transaction involving the plan on behalf of a party ․ whose interests are adverse to the interests of the plan or the interests of its participants” in violation of § 1106(b)(2). See id. at *24 (“[V]iewing the evidence in the light most favorable to Plaintiffs, a reasonable factfinder could conclude that flexPATH dealt with the Plan's assets as the discretionary investment manager in its own interest in violation of section 1106(b)(1)–(2).”).

In contrast, § 1106(b)(3), which prohibits a plan fiduciary from “receiv[ing] any consideration for his own personal account from any party dealing with such plan in connection with a transaction involving the assets of the plan,” does not appear to fit Plaintiffs’ theory. Plaintiffs have not identified any relevant consideration flexPATH received “for [its] own personal account.” See id. (“Section 1106(b)(3) does not apply here because this subsection addresses a situation in which a defendant engaged in self-dealing by accepting ‘kickbacks,’ which is inapplicable here.”). Accordingly, flexPATH is entitled to summary judgment on Plaintiffs’ claim under § 1106(b)(3).

e.

Finally, flexPATH argues that Plaintiffs’ § 1106 claim is barred in its entirety because the statutory exemption in § 1108(b)(8) applies. That provision states that the prohibitions in § 1106 do not apply to:

Any transaction between a plan and (i) a common or collective trust fund or pooled investment fund maintained by a party in interest which is a bank or trust company supervised by a State or Federal agency ․ if—

(A) the transaction is a sale or purchase of an interest in the fund,

(B) the bank, trust company, or insurance company receives not more than reasonable compensation, and

(C) such transaction is expressly permitted by the instrument under which the plan is maintained, or by a fiduciary (other than the bank, trust company, or insurance company, or an affiliate thereof) who has authority to manage and control the assets of the plan.

29 U.S.C. § 1108(b)(8).

Plaintiffs challenge only the second element, arguing that there are “genuine disputes as to whether the Plan received any legitimate services in exchange for flexPATH's fee as a 3(38) manager,” which implicates the reasonableness of the fees it received. Dkt. No. 153-1 at 74. The parties dispute how to characterize the transaction at issue and whether flexPATH received any compensation for the transaction. Plaintiffs contend that the Plan's retention of flexPATH as a financial advisor is sufficiently related to the Plan's investment in the flexPATH TDFs that the fees flexPATH received under the IMA can be considered as compensation for purposes of § 1108(b)(8). Plaintiffs also emphasize the downstream benefits flexPATH received from the investment of several hundred million dollars in Plan assets into its TDFs. In contrast, flexPATH defines the relevant transaction narrowly as the Plan's investment in the flexPATH TDFs and argues that the advisor fees flexPATH received are irrelevant because the retention of flexPATH was entirely independent from the investment in its TDFs. Thus, flexPATH contends that it received no compensation for transferring the Plan's funds to its TDFs.

The parties collectively devote less than two pages of the 91-page joint summary judgment brief to these issues, and the Court's attempts to clarify the parties’ positions at the hearing were not wholly successful. On this record, flexPATH has not shown that no reasonable factfinder could find that Molina hired flexPATH to implement its decision to transfer Plan assets to the flexPATH TDFs. Thus, there appear to be fact issues as to whether the advisor fees paid to flexPATH should be considered as compensation for the challenged transaction, and flexPATH has not cited any legal authority precluding this conclusion as a matter of law. Moreover, a reasonable factfinder could conclude that flexPATH's services were unnecessary and duplicative of the services provided by NFP, such that the compensation paid to flexPATH was unreasonable. Although the Court has some doubts about the viability of Plaintiffs’ theory, the record and the arguments and authorities presented to the Court raise more questions than they answer, and those questions will be better addressed at trial. On the record before the Court, flexPATH has not shown as a matter of law that it is entitled to protection under § 1108(b)(8).

IV.

Defendants’ motion for summary judgment is GRANTED IN PART as to Plaintiffs’ claims against flexPATH under 29 U.S.C. § 1106(a)(1)(A), (a)(1)(C), and (b)(3), and those claims are DISMISSED on the merits with prejudice. The motion is otherwise DENIED.

FOOTNOTES

1.   The parties did not file a separate joint appendix of objections, but the JAF contains many disputes, a few of which include evidentiary objections. Unless otherwise indicated, citations to the JAF are to undisputed facts, to the undisputed portions of partially disputed facts, or to the portions of disputed facts that do not appear to be genuinely in dispute based on the stated dispute. See Dkt. No. 91 at 6 (“If a party disputes a fact in bad faith by offering evidence that does not contradict the proffered fact or by failing to provide a specific citation to the supporting evidence, the Court will deem the fact undisputed for purposes of the motion.”).To the extent the Court relies on evidence to which an evidentiary objection was raised, the Court overrules the objection, having found the contents of the evidence could be admitted at trial. See, e.g., Sandoval v. County of San Diego, 985 F.3d 657, 666 (9th Cir. 2021) (“If the contents of a document can be presented in a form that would be admissible at trial—for example, through live testimony by the author of the document—the mere fact that the document itself might be excludable hearsay provides no basis for refusing to consider it on summary judgment.”). To the extent the Court does not rely on evidence objected to by the parties, the objections are overruled as moot.

2.   In a December 2015 internal NFP email, Giovinazzo (the CEO of both NFP and flexPATH) wrote that “Vanguard is our primary competitor in the index space,” noted that flexPATH's higher expenses were “a major challenge to overcome,” and stated that “[t]o date, we have had only one significant sales success displacing Vanguard in favor of flexPATH.” JAE 146 at 2. It is unclear whether Giovinazzo was referring to Molina.

3.   Giovinazzo's signature block on the email lists him as president. The parties have included as an undisputed fact that Giovinazzo was CEO of both NFP and flexPATH while Vedova was president of both companies. JAF 336.

4.   Elsewhere in the JAF, directly under a heading that states, “flexPATH did not function as a § 3(38) investment manager,” the parties include as an undisputed fact that “flexPATH did not have authority as a § 3(38) advisor to select or deselect the underlying funds or the glidepath manager.” JAF 516. At the hearing, Defendants clarified that they intended to agree on this point only as it pertains to flexPATH's role vis-à-vis Wilmington Trust under their subadvisor agreement. No such limitation is contained in JAF 516, but Plaintiffs appear to agree that JAF 516 intended to refer to the subadvisor agreement.

5.   The nature of Plaintiffs’ objection is not entirely clear, but because the Court's analysis does not turn on the admissibility of Exhibit 45, the objection is overruled as moot.

6.   The Court's references in this order to what a reasonable factfinder might conclude should not be taken as indications of the conclusions the Court will reach when acting as a factfinder at the bench trial. See Kearney v. Standard Ins. Co., 175 F.3d 1084, 1095 (9th Cir. 1999) (en banc) (describing differences between district court's role when ruling on summary judgment and when finding facts at trial).

7.   Plaintiffs also rely on Molina's April 5, 2016 letter of direction instructing its recordkeeper to replace the Vanguard TDFs with the flexPATH TDFs. Molina argues that this letter cannot be the basis for liability because Molina expressly acted in its capacity as the Plan's sponsor rather than as a fiduciary when sending the letter. In light of the other actions within the repose period that raise fact issues, the Court need not resolve this dispute.

8.   The Court therefore does not reach the remaining disputes raised by the parties in connection with the statute of repose, including (1) whether Molina's failure to stop the transfer of funds within the repose period could subject it to liability, (2) whether Molina may additionally be liable in Count 1 for failing to prudently monitor the investments within the repose period, and (3) whether Molina may be subject to co-fiduciary liability for the selection of the flexPATH TDFs even if it delegated authority to flexPATH.

9.   Defense counsel suggested at the hearing that a Daubert motion is forthcoming, but no such challenge is before the Court as part of the summary judgment record.

10.   Defendants rely on Brotherston to argue that the only acceptable benchmark for loss calculation is a portfolio of benchmark or index funds. But the alleged fiduciary breach in Brotherston involved the selection of an entire portfolio, so the proper comparator was the portfolio that would have been selected absent the breach. 907 F.3d at 34 (“With the exception of the QDIAs, the entire portfolio of investment options ․ was selected by the use of imprudent means, or so the district court itself conditionally found. So to determine whether there was a loss, it is reasonable to compare the actual returns on that portfolio to the returns that would have been generated by a portfolio of benchmark funds or indexes comparable but for the fact that they do not claim to be able to pick winners and losers, or charge for doing so.”). Defendants cite no cases holding that a plaintiff alleging the imprudent replacement of one fund with another fund cannot use the performance of the replaced fund as a measure of loss resulting from the breach.The Court's finding that Defendants have not met their summary judgment burden on loss causation does not preclude them from attempting to show in their anticipated Daubert motions that Becker's methodology is flawed and that he has selected improper comparators.

11.   The Molina Defendants also briefly adopt flexPATH's argument that Plaintiffs cannot overcome the exemption in 29 U.S.C. § 1108. That argument fails for the reasons explained below.

Stanley Blumenfeld, Jr., United States District Judge