The opinion of the court was delivered by: Reagan, District Judge
This matter is before the Court on Plaintiffs' Second Motion for Class Certification, filed by Plaintiffs Anthony Abbott, Eric Fankhauser, Lloyd DeMartini, Jack Jordan and Dennis Tombaugh as to their First Amended Class Action Complaint against Defendants Lockheed Martin Corporation and Lockheed Martin Investment Management Company (Doc. 160). Plaintiffs bring suit on behalf of themselves and all those similarly situated for breach of the fiduciary duties imposed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1002 et seq. ("ERISA"). Plaintiffs allege that the fiduciaries of the Plans breached their duties to the Plans as a whole, resulting in lost retirement savings of hundreds of millions of dollars.
Lockheed Martin Corporation ("LMC") is a Plan Administrator of the Salaried Savings Plan ("SSP") and the Hourly Savings Plan ("HSP"), and a named fiduciary within the meaning of ERISA §§ 402 and 403, 29 U.S.C. § 1102 and 1103. As such, LMC has the authority and discretion to appoint, remove and replace third-party service providers to the Plans. It is also a fiduciary to both Plans within the meaning of ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A). Lockheed Martin Investment Management Company ("LMIMCo") is a wholly-owned subsidiary of Lockheed Martin that manages Lockheed Martin's employee benefit trusts. LMIMCo is responsible for the Plans' investments and the appointment, removal and replacement of investment managers and trustees. As such, LMIMCo has the authority and discretion to establish funding and investment policies for the Plans, to manage the assets of the Plans, to designate funds as investment funds, to add or delete investment funds and to prescribe any necessary or appropriate rules regarding the availability of investment funds. LMIMCo is a named fiduciary of the SSP, the HSP and the Lockheed Martin Defined Contribution Plans Master Trust within the meaning of ERISA §§ 402 and 403, 29 U.S.C. §§ 1102 and 1103. LMIMCo is a fiduciary with respect to the SSP and the HSP within the meaning of ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A).
Plaintiffs seek certification of the following two classes pursuant to Rule 23(b)(1)(A) and (B):
All persons, who were or are participants or beneficiaries of the Lockheed Martin Corporation Salaried Savings Plan as well as those who will become participants or beneficiaries of the Plan in the future. Excluded from the Class are the Defendants and other individuals who are or may be liable for the conduct described in the Complaint.
All persons, who were or are participants or beneficiaries of the Lockheed Martin Corporation Hourly Savings Plan Plus (the "HSP Plan") as well as those who will become participants or beneficiaries of the HSP Plan in the future. Excluded from the class are Defendants and other individuals who are or may be liable for the conduct described in the Complaint.
Plaintiffs Fankhauser, DeMartini, Johnson, Jordan and Tombaugh seek to represent the SSP Plan Class, and Plaintiff Abbott seeks to represent the HSP Plan Class. Stated simply, Plaintiffs allege that Defendants failed to ensure that fees and expenses paid out of Plan assets were reasonable; failed to select, monitor and maintain prudent investments for the Plans; and failed to disclose material information, all as required by ERISA.
This Court enjoys subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1331 and 29 U.S.C. § 1132(e)(1). Venue is proper pursuant to ERISA § 502(e)(2), 29 U.S.C. § 1132(e)(2).
Plaintiffs allege that they are current or former participants in the Plans within the meaning of ERISA § 3(7), 29 U.S.C. § 1002(7). Plaintiffs also allege that the Plan is an individual account plan within the meaning of ERISA 3(34), 29 U.S.C. § 1002(34) and an employee pension benefit plan for purposes of ERISA § 3(2)(A), 29 U.S.C. § 1002(2)(A). Accordingly, the Plan is subject to ERISA's requirements regarding fiduciary duties. Lively v. Dynegy, Inc., 2007 WL 685861, 1 (S.D.Ill. 2007) (citing Diak v. Dwyer, Costello & Knox, P.C., 33 F.3d 809, 811 (7th Cir.1994); James v. National Bus. Sys., Inc., 924 F.2d 718, 720 (7th Cir.1991)).
Under ERISA § 404, 29 U.S.C. § 1104, a fiduciary must discharge his duties "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;..." 29 U.S.C. § 1104(a)(1)(B). ERISA § 409, 29 U.S.C. § 1109, provides, in pertinent part, "Any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter shall be personally liable to make good to such plan any losses to the plan resulting from each such breach,..." 29 U.S.C. § 1109(a). Finally, ERISA § 502, 29 U.S.C. § 1132, states, in part, "A civil action may be brought... (2) by the Secretary [of Labor], or by a participant, beneficiary or fiduciary for appropriate relief under section 1109 of this title;..." 29 U.S.C. § 1132(a)(2).
Actions for a fiduciary breach under ERISA §§ 409 and 502(a)(2), 29 U.S.C. §§ 1109, 1132(a)(2), must "be brought in a representative capacity on behalf of the plan as a whole." Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 142 n. 9 (1985) (finding that an action was proper under ERISA § 502(a)(2), 29 U.S.C. § 1132(a)(2), where all of the plaintiffs shared "[a] common interest... in the financial integrity of the plan"). The Court has already found that this action is properly brought on behalf of the Plan, see Doc. 226, and that decision is the law of the case, from which the Court sees no sound reason to depart. See Trustees of Pension, Welfare, & Vacation Fringe Benefit Funds of IBEW Local 701 v. Pyramid Elec., 223 F.3d 459, 468 n. 4 (7th Cir. 2000).
At all times relevant to this case, participants in the SSP have been allowed to contribute a percentage of their before-tax and after-tax earnings to the SSP. Lockheed Martin makes matching contributions in varying percentages of the employees' eligible compensation. The same is true of the HSP except that matching contributions may depend on the terms of the collective bargaining agreement. Participants are 100% vested in their accounts. Under the Plan, participants are entitled to invest their contributions in any of 13 investment funds, which include retail mutual funds, commingled funds, "funds of funds" (bundles of funds combined in different percentages to allow for varying degrees of risk and reward), the Stable Value Fund, company stock funds and a self-managed account.
Following the Court's ruling on Defendants' motion for summary judgment, Plaintiffs' First Amended Complaint ("FAC") is narrowed to claims that Defendants breached their fiduciary duties under ERISA by (1) failing to ensure that participants were not harmed by excessive overall fees; (2) failing to administer the Stable Value Fund ("SVF") to ensure that it was a prudent investment option as well as failing to properly disclose information about the SVF to Plan participants; and (3) imprudently diluting returns in the company stock funds by unnecessarily holding cash or holding excessive amounts of cash in them.
Having reviewed carefully the submissions of the parties concerning Plaintiffs' request for class certification and having conducted a hearing on the issue, the Court now is prepared to rule.
A plaintiff must first satisfy the requirements of FEDERAL RULE OF CIVIL PROCEDURE 23(a) in order to be granted a class certification. Rule 23(a) has four requirements: numerosity, commonality, typicality and adequacy of representation. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613 (1997); Harriston v. Chicago Tribune Co., 992 F.2d 697, 703 (7th Cir. 1993). Failure by a plaintiff as to one of the four requirements precludes certification as a class. Retired Chicago Police Ass'n v. City of Chicago, 7 F.3d 584, 596 (7th Cir. 1993). If a plaintiff is able to satisfy all of the requirements of Rule 23(a), the district court must then determine whether a plaintiff's action can be maintained as a class action by meeting one of the requirements of FEDERAL RULE OF CIVIL PROCEDURE 23(b). See Williams v. Chartwell Fin. Servs., Ltd., 204 F.3d 748, 760 (7th Cir. 2001).
In order to determine whether a class should be certified, a court may make factual and legal inquires necessary under Rule 23. Szabo v. Bridgeport Machines, Inc., 249 F.3d 672, 675-76 (7th Cir. 2001). A court need not accept a plaintiff's assertions as conclusive but may receive any evidence necessary to make a decision on class certification. Id.The burden is on the party seeking class certification to demonstrate that all the requirements of Rule 23 have been satisfied. Gen. Tel. Co. of S.W. v. Falcon, 457 U.S. 147, 161 (1982); Trotter v. Klincar, 748 F.2d 1177, 1184 (7th Cir. 1984).
In evaluating a request for class certification, a court must not weigh the merits of a case, see Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177 (1974), although the court must "understand the claims, defenses, relevant facts and applicable substantive law in order to make a meaningful determination of certification issues." Dhamer v. Bristol-Myers Squibb Co., 183 F.R.D. 520, 530 (N.D.Ill. 1998).
A. Propriety of the Proposed Class Definition
As an initial matter, the Court addresses Defendants' objections to the proposed class definition, namely, that the proposed class has not been sufficiently defined, that the class should not include future participants, that the class should be limited to six years and that any class certified should be a carefully tailored Rule 23(b)(1) class. Defendants submit that the proposed class definition is overly broad, including those "who were or may have been affected by the conduct set forth in the Complaint" and who are past, present and future participants.
First, the Court notes that it has determined that ERISA's statute of limitations bars claims which accrued more than six years prior to the filing of the complaint on September 11, 2006. That determination does not, however, bar claims by past participants who were members of the Plan at the time of the alleged conduct that violated ...