The opinion of the court was delivered by: Herndon, Chief Judge
I. Introduction and Background
Pending before the Court is Plaintiffs' motion for class certification (Doc. 45). Defendants oppose the motion. Based on the pleadings and applicable case law, the Court GRANTS the motion.
Plaintiffs Pat Beesley, Greg Martin, Ron Miller, Willie Mitchell, Anthony Reed, David Miller, John Tonelle, Paul Glenney, and Nelda Kistler bring this action against Defendants International Paper Company ("International Paper"), International Paper 401(k) Committee ("Committee"), The International Paper Fiduciary Review Committee, Robert Florio, Mark Lehman, Ethel A. Scully, Bob Hunkeler, Jerome N. Carter, Alicen Francis, David Whitehouse, and Patricia Neuhoff pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. § § 1001-1461 ("ERISA"), on behalf of a proposed class of participants in the International Paper Hourly Savings Plan ("Hourly Plan") and the International Paper Salaried Savings Plan ("Salaried Plan"). Plaintiffs allege breaches of fiduciary duty pursuant to ERISA § 409, 29 U.S.C. § 1109, ERISA §§ 502(a)(2), (3), 29 U.S.C. § 1132(a)(2), (3), and seek, among other things, to restore the Plans for losses caused by breaches of fiduciary duty. Plaintiffs claim that the breaches occurred on a plan-wide basis, and were the result of decisions made at the plan, rather than the individual level, affecting all of the participants and beneficiaries in the International Paper-sponsored 401(k) plans. Plaintiffs' First Amended Complaint contains two counts: Count I -breach of fiduciary duty pursuant to ERISA 502(a)(2) and Count II - other remedies for breach of fiduciary duty pursuant to ERISA 502(a)(3) (Doc. 169).
Plaintiffs filed their original Motion for Class Certification (Doc. 45) and Memorandum in Support of Plaintiff's Motion for Class Certification (Doc. 46) on November 22, 2006 before discovery had commenced. However, merits discovery was stayed from January 4, 2007 through September 24, 2007, until the Court ruled upon Defendants' Motion to Transfer Venue (Doc. 55). However, when the Court ruled upon that order, it imposed a stay with respect to the motion for class certification pending the outcome of an appeal of an Order granting class certification entered by District Judge Michael J. Reagan in a similar ERISA breach of fiduciary duty case, Lively v. Dynegy, Inc., 2007 WL 685861 (S.D. Ill. March 2, 2007). (Doc. 83).
On April 4, 2008, the Court lifted the stay regarding the class certification proceedings as the Lively case settled prior to the Seventh Circuit issuing a decision. (Doc. 140). On April 30, 2008, the Court issued its Amended Scheduling Order which set the deadline for Plaintiffs to file an amended motion for class certification on July 1, 2008. Plaintiffs filed a timely amendment to their motion for class certification (Doc. 187). Defendants filed an opposition to plaintiff's supplemental and amended motion for class certification (Doc. 230). Plaintiffs have filed a reply to that opposition (Doc. 236).
Defendant International Paper offers two 401(k) plans to its employees (the Hourly Plan and the Salaried Plan). Participants contribute varying percentages of their before tax (and in some cases, after-tax) earnings to the Plan. International Paper matches those contributions, also in varying percentages. The Plans are governed by ERISA. The named plaintiffs are all participants in the Plans. The assets of the Plans are held in a Master Trust. Both Plans share the services of record-keepers, investment managers, consultants, and other service providers directly and/or through the Master Trust. The expenses and administrative fees are paid out of Plan assets.
ERISA sets forth the duties that an employer (or its delegates) owe to its 401(k) plan and participants. § 403(c), 29 U.S.C. § 1103(c), requires that the plan's assets be used "solely for the exclusive purposes of providing benefits to participants" and for "defraying reasonable expenses of administering the plan." ERISA mandates that plan fiduciaries - such as the plan sponsor and administrator, as well as others acting in a fiduciary capacity - must discharge their fiduciary duties "solely in the interest of the participants and beneficiaries." 29 U.S.C. § 1104(a)(1).
Plan sponsors, administrators and other fiduciaries must act "with the exclusive purpose of providing benefits to participants and their beneficiaries and defraying reasonable expenses of administering the plan." Id. They must discharge these duties "with the care, skill, and diligence" that a "prudent man" acting in a similar capacity would use under similar circumstances. 29 U.S.C. § 1104(a)(1)(b). The fiduciaries owe these duties to all participants in 401(k) plans.
Plaintiffs allege various breaches of fiduciary duty by International Paper and other defendants. Specifically, Plaintiffs allege that the persons identified as fiduciaries in the Complaint breached their fiduciary duties by causing unreasonable and excessive administrative fees and expenses to be charged against the assets of the Plan, by maintaining the Company Stock Fund as an imprudent investment option and forcing the participants to hold company stock when Defendants had dumped it from the pension fund, by concealing and misleading participants regarding the fees charged and the risk posed by investments in the Company Stock Fund, and by assigning little to no priority to the management of the Plans.
III. Class Certification Standard
Rule 23 of the Federal Rules of Civil Procedure sets forth the prerequisites for a class action: (1) a proposed class must be so numerous that joinder of all members is impracticable ("numerosity"); (2) there must be a question of law or fact common to the class ("commonality"); (3) the claims or defenses of the representative parties must be typical of the claims or defenses of the class ("typicality"); and (4) representative parties must fairly and adequately protect the interests of the class ("adequacy"). See Fed.R.Civ.P. 23(a). In addition to satisfying these four criteria, a party seeking class certification must also demonstrate that the action falls within one of the categories enumerated in Rule 23(b). See Fed.R.Civ.P. 23(b)(1), (b)(2), (b)(3).
A party seeking class certification bears the burden of proving that each of the requirements under Rule 23 have been met, and a failure by the movant to satisfy any one of the prerequisite elements precludes certification. See General Tel. Co. of S.W. v. Falcon, 457 U.S. 147, 160-61 (1982); Retired Chicago Police Ass'n v. City of Chicago, 7 F.3d 584, 596 (7th Cir. 1993). A court has broad discretion to determine whether a proposed class meets the Rule 23 certification requirements. Trotter v. Klincar, 748 F.2d 1177, 1184 (7th Cir. 1984). In making this determination, Rule 23 should be construed liberally to support its policy of favoring the maintenance of class actions. See King v. Kansas City S. Indus., Inc., 519 F.2d 20, 25-36 (7th Cir. 1975). As a general principle, a court is not allowed to engage in analysis of the merits to determine whether the case should be maintained as a class. Retired Police Ass'n, 7 F.3d at 596 (7th Cir. 1993). However, a district court must make a preliminary review into the merits of the case if some of the considerations under Rule 23 overlap the merits. Szabo v. Bridgeport Machs., Inc., 249 F.3d 672 (7th Cir.), cert. denied, 122 S.Ct. 348 (2001); see also Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177-78 (1974). Even where the elements of class certification are not in dispute, a court has a duty to evaluate independently the proposed class to ensure its compliance with the requirements of Rule 23. See Davis v. Hutchins, 321 F.3d 641, 648-49 (7th Cir. 2003).
Courts have implied two prerequisites to class certification that must be satisfied prior to addressing the requirements of Rule 23(a): (1) the class must be sufficiently defined so that the class is identifiable; and (2) the named representative must fall within the proposed class. Alliance to End Repression v. Rochford, 565 F.2d 975, 977 (7th Cir. 1977). Proper identification of the proposed class serves two purposes. First, it alerts the Court and the parties to the potential burdens class certification may entail. Simer v. Rios, 661 F.2d 655, 670 (7th Cir. 1981). In this way, the court can decide whether the class device simply would be an inefficient way of trying the lawsuit for the parties as well as for its own congested docket. Id. Second, proper class identification insures that those individuals actually harmed by defendant's wrongful conduct will be the recipients of the awarded relief. Id.
Plaintiffs seek mandatory certification of the following class: "All persons, excluding the Defendants, and/or other individuals who are or may be liable for the conduct described in this Complaint, who are or were participants or beneficiaries of the Salaried Plan or the Hourly Plan and who are, were, or may have been affected by the conduct set forth in this Complaint, as well as those who will become participants or beneficiaries of either Plan in the future." (Doc. 187, pp. 9-10). The Plaintiffs submit that the proposed class consists of over 71,291 Plan participants. (Doc. 187, p. 12).
Defendants argue that the class period is not precisely defined and, in any case, should begin no earlier than April 1, 2002, because plans before that date have material differences that would not satisfy the commonality and typicality requirements. However, the Court agrees with the Plaintiffs that this time limit argument is premature. Plaintiffs argue that ERISA as a six year statute of limitations for breach of fiduciary duty which may be tolled where a party shows affirmative misrepresentation and concealment. 29 U.S.C. § 1113. Plaintiffs further argue that Defendants' argument is an affirmative defense argument regarding the application of the statute of limitations which requires an examination of the merits of the case. ...