United States District Court, D. Connecticut
LEONARD WOOD II and MAYA SHAW, on behalf of themselves and all others similarly situated, Plaintiffs,
PRUDENTIAL RETIREMENT INSURANCE AND ANNUITY COMPANY, Defendant.
MEMORANDUM OF DECISION DENYING PLAINTIFF'S MOTION
FOR CLASS CERTIFICATION TDKT. NO. 671
VANESSA L. BRYANT UNITED STATES DISTRICT JUDGE.
Plaintiff, Maya Shaw, individually and on behalf of all other
persons similarly situated, brings this action against
Defendant Prudential Retirement Insurance and Annuity Company
("PRIAC"), alleging violations of the Employee
Retirement Income Security Act of 1973 ("ERISA"),
Sections 404 and 406, 19 U.S.C. §§ 1104, 1106.
Currently pending before the Court is Plaintiff's Motion
for Class Certification [Dkt. No. 67]. Plaintiff seeks
certification of the following class:
All ERISA-covered employee benefit plans whose plan assets
were invested in Prudential Retirement Insurance and Annuity
Company's Guaranteed Income Fund ("GIF") and/or
Principal Preservation Separate Account ("PPSA") on
or after December 3, 2009.
For the reasons that follow, Plaintiff's Motion is
offers investment options within their Group Annuity
Contracts called the Guaranteed Income Fund
(“GIF”) and the Principal Preservation Separate
Account (“PPSA”). [2/15/2017 Grove Decl. ¶
5]. The principal distinction between GIF and PPSA is that
GIF funds are held in PRIAC's general account and PPSA
funds are held in a separate account for investors alone.
Id. Plaintiff's 401(k) plan, the EXCO Resources,
Inc. (“EXCO”) 401(k), elected to include only the
GIF as an investment option. Id.
and PPSA plans guarantee participants' principal and
accumulated interest at crediting rates that are declared in
advance for six-month periods, and are not subject to change
within those six-month periods. [Tigges Decl. ¶ 11].
PRIAC's Rate Setting Board meets at least four times per
year to set crediting rates for newly funded plans, and twice
a year to reset the crediting rates for existing plans.
[2/15/2017 Grove Decl. ¶ 4]. While Plaintiff has offered
evidence that “most pools” used the same
crediting rate, Defendants counter that plans invested in GIF
and PPSA benefit from a “wide range” of crediting
rates, and that PRIAC provides distinct rate changes to at
least 20% of its rate pools. [See, e.g., Exh. O to
Pl. Mot. at PRUDENTIAL0001436; 2/15/2017 Grove Decl. ¶
18; Exh. 9 to Boyle Decl.]. The crediting rates are subject
to a contractually mandated minimum interest rate, which for
over 90% of the plans within Plaintiff's proposed class
is 1.5 percent. [Kindall Decl. ¶¶ 3-5; Tigges Decl.
¶ 11; 2/15/2017 Grove Decl. ¶ 47]. The remaining
plans have minimum rates of up to 3 percent or are set based
on a National Association of Insurance Commissioners formula.
[2/15/2017 Grove Decl. ¶ 47].
2005, PRIAC has used eight different contract forms for new
GIF and PPSA accounts. Id. ¶ 48. However, older
forms remain in place for funds established prior to 2005.
Id. ¶ 49. These forms have differing language
regarding transfer restrictions. Id. GIF and PPSA
contract terms also differ based on whether customers
participate in full service plans or in investment only
allege that Defendant sets the crediting rate “well
below its internal rate of return . . . on the invested
capital it holds” through the GIF and PPSA and
therefore “guarantees a substantial profit for
itself.” [Compl. ¶ 4]. Defendant calculates, but
does not disclose to its retirement plan clients and their
participants the difference between the crediting rate and
its internal rate of return. [Id.; Exh. O to Pl.
Mot. at PRUDENTIAL0001436]. Plaintiffs therefore allege that
Defendant “collects tens of millions of dollars
annually in undisclosed compensation from the retirement
plans” in violation of its fiduciary duties under
Section 502 of the Employee Retirement Income Security Act
(“ERISA”), 29 U.S.C. § 1132. Id.
ruling on a motion for class certification, the Court
generally accepts the factual allegations of the Complaint as
true. Richards v. FleetBoston Fin. Corp., 235 F.R.D.
165, 168 (D. Conn. 2006) (citing Shelter Realty Corp. v.
Allied Maintenance Corp., 574 F.2d 656, 661 n.15 (2d
Cir. 1978)). However, it may also consider evidence that a
plaintiff has submitted in support of her motion for class
certification, and evidence that a defendant has submitted in
opposition to the motion for class certification.
Id. While a judge must resolve factual disputes
relevant to each Rule 23 requirement, “a district judge
should not assess any aspect of the merits unrelated to a
Rule 23 requirement.” In re Initial Pub. Offerings
Sec. Litig. (“In re IPO”), 471 F.3d
24, 41 (2d Cir. 2006), decision clarified on denial of
reh'g sub nom., In re IPO, 483 F.3d 70 (2d
certification is governed by Federal Rule of Civil Procedure
23. To be certified, the class must satisfy all four
prerequisites set forth in Rule 23(a), and must meet at least
one of the factors set forth in Rule 23(b). Brown v.
Kelly, 609 F.3d 467, 476 (2d Cir. 2010). A
“district court may not grant class certification
without making ...