Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_16-cv-04903/USCOURTS-cand-3_16-cv-04903-9/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1132 E.R.I.S.A.: Employee Benefits

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

MARIA KARLA TERRAZA, Individually 

and On Behalf of the Safeway 401(k) Plan,

Plaintiff,

v.

SAFEWAY INC., et al.,

Defendants.

DENNIS M. LORENZ, Individually and On 

Behalf of All Others Similarly Situated,

Plaintiff,

v.

SAFEWAY INC., et al.,

Defendants.

Case No. 16-cv-03994-JST 

ORDER GRANTING IN PART AND 

DENYING IN PART SAFEWAY 

DEFENDANTS’ MOTIONS FOR 

SUMMARY JUDGMENT; ORDER 

DENYING AS MOOT DEFENDANT 

AON HEWITT’S MOTION FOR 

RECONSIDERATION

Re: ECF Nos. 144, 222

Case No. 16-cv-04903-JST

Re: ECF No. 95

Now before the Court are Safeway’s1 motions for summary judgment in the Terraza and 

Lorenz actions. TECF No. 144; LECF No. 95.

2 Because the issues in the two motions (and cases) 

overlap substantially, the Court issues a single order regarding both motions. The Court also 

resolves issues it left unaddressed in a prior order concerning the summary judgment motion of 

 

1

In the Terraza action, “Safeway” refers here collectively to Defendants Safeway Inc., the 

Safeway Benefit Plans Committee, Peter J. Bocian, David F. Bond, Michael J. Boylan, Robert B. 

Dimond, Laura A. Donald, Dennis J. Dunne, Robert L. Edwards, Bradley S. Fox, Bernard Hardy, 

Russell M. Jackson, Peggy Jones, Suz-Ann Kirby, Robert Larson, Melissa C. Plaisance, Paul 

Rowan, and Andrew J. Scoggin. In the Lorenz action, “Safeway” refers here to Safeway Inc. and 

the Safeway Benefit Plans Committee.

 

2 The Court uses the abbreviations “TECF” to refer to documents on the Court’s electronic docket 

for the Terraza case and “LECF” for those on the electronic docket for the Lorenz case. 

Case 3:16-cv-04903-JST Document 139 Filed 04/12/19 Page 1 of 6
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Defendant Aon Hewitt Investment Consulting, Inc. (“Aon”) in the Terraza action. TECF No. 

220.

3

 

SAFEWAY’S MOTIONS FOR SUMMARY JUDGMENT

Genuine disputes of material fact prevent the Court from granting judgment to Safeway on 

the majority of the issues it raises, for the reasons set forth below: 

Alleged Failure to Introduce Evidence of Causation. Safeway moves for summary 

judgment on the grounds that “Plaintiff has not established a causal link between any specific 

alleged breach and loss to the [Safeway 401(k)] Plan.” TECF No. 144 at 16. There is a triable 

dispute of fact about whether the Safeway Benefit Plans Committee (“BPC”) discharged its duty 

of prudence in monitoring and, in some cases, selecting assets for the Plan. Terraza contends, 

based on expert opinion, that Safeway should have “applied a conservative approach of

monitoring the Plan’s investment options based on a top-quartile criterion and removing

investment options with six quarters of cumulative underperformance.” TECF No. 163 at 12. The 

Court will decide after considering the testimony whether the BPC’s failure to adhere to this 

standard was imprudent. If it was, then the Court will determine whether there were comparable 

assets the BPC could have offered Plan participants that would have performed better. Terraza has

identified such assets; whether they are fair comparators is an issue the Court will resolve at trial. 

Safeway’s argument that Terraza’s case “is premised entirely on . . . hindsight” misses the point. 

TECF No. **** at ***. As they did in their motion to dismiss, the Safeway Defendants again 

conflate the principle that investment decisions should not be evaluated based on information 

available after the decision is made with the need to use historic information available at the time

the decision was made. As the Court stated in its order denying that motion:

While it is true that “we judge a fiduciary’s actions based upon 

information available to the fiduciary at the time of each investment 

decision and not from the vantage point of hindsight,” [Pension Ben. 

Guar. Corp. ex rel. St. Vincent Catholic Med. Centers Ret. Plan v. 

Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 716 (2d Cir. 2013)

(internal citations and quotation marks omitted)], a fiduciary also 

“has a continuing duty of some kind to monitor investments and 

 

3 Aon recently moved for reconsideration based on the Court’s omission of these issues in its 

order. TECF No. 222. 

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remove imprudent ones” that “exists separate and apart from the 

trustee’s duty to exercise prudence in selecting investments at the 

outset.” Tibble [v. Edison Int’l, 135 S. Ct. 1823, 1828-29 (2015)]. 

And Terraza alleges that “[a]ll of this information [regarding the 

challenged funds’ underperformance] was known and/or available to 

Defendants each and every year during the pertinent period when 

they maintained this costly and unreasonable investment option in 

the Plan.” [ECF No. 37] ¶¶ 61-68. 

Terraza v. Safeway Inc., 241 F. Supp. 3d 1057, 1076 (N.D. Cal. 2017). Accordingly, summary 

judgment on this issue must be denied. 

Plaintiffs’ Claims that Selection of the JPMorgan Target Date Funds (“JPM TDFs”) 

Violated the Duties of Loyalty and Prudence. Safeway asserts that Terraza “cannot prove that the 

Safeway Defendants beached their duties of loyalty because she does not present any evidence –

or allegations – that the Safeway Defendants gained any benefit at the expense of Plan 

participants, or acted under a conflict of interest.” TECF No. 144 at 7-8. Safeway argues as to the 

Lorenz complaint that “there is no evidence suggesting that the Committee’s process in selecting 

or retaining the JPM TDFs was imprudent.” LECF No. 95 at 19. To the contrary, there is 

evidence from which the inference can be drawn that the BPC accepted JPM’s proposal to replace 

certain of the Plan’s investment options to shift the responsibility for payments for recordkeeping

services from Safeway to the Plan. Specifically, after analyzing JPM’s proposal, Aon informed

the BPC that the Plan’s revenue-sharing component had been insufficient to offset JPM’s

recordkeeping fees in past quarters and, as a result, that Safeway may soon be required to make 

direct payments to JPM to pay for the shortfall unless the BPC accepted JPM’s proposal. As the 

Court has stated in other orders, there is a dispute of fact about whether this prospect actually 

motivated the BPC; that issue will be resolved at trial. 

Allegations that the Plan Overpaid for Recordkeeping Fees. Safeway moves for summary 

judgment on the issue of the Plan’s recordkeeping fees, arguing that “[t]he record is . . . devoid of 

any admissible evidence in support of Plaintiff’s allegations that the recordkeeping fees paid by 

the Plan were unreasonable.” TECF No. 144 at 8. Safeway’s argument rests on the contention 

that the testimony of Plaintiff’s expert Roger L. Levy is inadmissible. Id. at 12. But since the 

Court has ruled that Levy’s testimony is admissible, TECF No. 202, the basis for this argument 

collapses. Safeway also argues that Plaintiff’s claim “ignores that the Committee successfully 

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renegotiated the Plan’s recordkeeping fees to lower the costs throughout the relevant time period.” 

TECF No. 144 at 8. That the fees were lowered by some amount during the relevant period does 

not establish as a matter of law that Safeway discharged its duty of prudence or that it reasonably 

might have, and should have, obtained the same services at lower cost. For example, in a January 

2012 presentation, Aon informed the BPC that the “Plan’s administrative costs ($65 per 

participant) are slightly above those of the median plan in the Best-Fit Universe ($56 per 

participant)” of comparable plans. TECF No. 152-2 at 11. The Court can determine at trial what 

duty the BPC had to investigate lower recordkeeping fees, whether it discharged that duty, and 

what options were available to it. 

Chesapeake and Interest Income Funds. As Safeway correctly points out, Terraza did not

plead breach or loss related to the Chesapeake or Interest Income Funds. Plaintiff does mention 

the Interest Income Fund in her second amended complaint (“SAC”), but only to note that it is one 

of the funds offered by the Plan, or to state that she did not have information about “the 

actual/effective fees charged by the Interest Income Fund.” TECF No. 72 ¶ 54. The word 

“Chesapeake” does not appear in the SAC at all. 

In response, Terraza affirmatively disclaims any obligation to identify the particular funds 

she challenges in her complaint. She states that her complaint “did not allege that Defendants 

engaged in any prohibited transaction with respect to a specific investment option; instead, 

Plaintiff alleged that Defendants generally “fail[ed] to monitor the investments in the Plan to 

ensure that they provided adequate available returns and were not excessively priced, as were the 

vast majority of the investments in the Plan.” TECF No. 163 at 26 (quoting TECF No. 72 ¶ 49). 

She argues that “[t]his short and plain statement was sufficient to put Defendants on notice that 

plaintiffs alleged defendants had breached their duty to monitor the Plan’s investment options as a 

whole; the Plan investment options identified in the complaint were illustrative.” Id. (internal 

quotation marks omitted). 

Terraza’s argument is strikingly similar to the one Judge Wilson rejected in Tibble v. 

Edison Int’l, 639 F. Supp. 2d 1122, 1127 (C.D. Cal. 2009) (“Tibble II”). In that case, “Plaintiffs’

only allegation in the Complaint [was] that Defendants breached their fiduciary duties by 

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‘engaging in, and causing the Plan to engage in, prohibited transactions in violation of ERISA 

§ 406,’” a “conclusory statement [that] does not identify any specific transactions or identify 

which fiduciary was supposedly responsible for entering into the transaction.” Id. at 1127

(citation omitted). The court granted summary judgment, finding that the prohibited transactions 

claims “fail[ed] because Plaintiffs did not sufficiently allege the[] claims in the Second Amended 

Complaint.” Id. Similarly, here, it is not sufficient for Terraza’s complaint to state that 

Defendants have breached their fiduciary duties but leave them to guess the funds as to which the 

breach allegedly occurred. Nor is it sufficient to suggest that because the Interest Income Fund 

was mentioned in a different capacity, Defendants were on notice that it was the basis of a claim 

for breach of fiduciary duty. Terraza mentions several funds in her complaint that are not the 

subject of criticism, so mere mention of a fund puts no one on notice. E.g., TECF No. 72 ¶ 54

(listing the Interest Income Fund, the PIMCO Bond Fund, the JPMCB SmartRetirement Passive Blend 

2025C-20 Fund, the Dodge & Cox Stock Fund, the Wells Fargo Advantage Large Cap Growth-Inst 

Fund, the Emerald Growth-Inst. Fund, the RS Small Cap Value Portfolio Fund, the SSgA S&P500 

Indx-NL-A Fund, Safeway Co. Stock, and the American Funds EuroPacific Growth-R5 Fund). 

Simply mentioning a fund is not enough to put that fund’s performance at issue. 

Terraza also quotes this Court’s order denying a motion to dismiss a prior version of the 

operative complaint. TECF No. 163 at 26. There, the Court said that to state a claim for breach of 

fiduciary duty, “a complaint does not need to contain factual allegations that refer directly to the 

fiduciary’s knowledge, methods, or investigations at the relevant times,” and that “the court may 

be able to reasonably infer from the circumstantial factual allegations that the fiduciary’s decisionmaking process was flawed.” Terraza, 241 F. Supp. 3d at 1070. This passage addressed the level 

of detail required to plead a fiduciary’s “knowledge, methods, or investigations,” not whether a 

plaintiff is required to identify a particular Plan asset. The Court’s prior order does not assist 

Terraza. 

Accordingly, the Court grants Safeway’s motion as to the Chesapeake and Interest Income 

Funds because the SAC does not allege that either fund was either imprudently selected or 

retained. 

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AON’S MOTION FOR SUMMARY JUDGMENT

The Court’s prior order denying Aon’s motion for summary judgment in the Terraza

action, TECF No. 220, did not address Aon’s arguments regarding the Chesapeake or Interest 

Income Funds. As to those funds, Aon’s motion is now granted. Its motion for reconsideration, 

TECF No. 222, is denied as moot. 

CONCLUSION

Safeway’s motions for summary judgment are granted with respect to the Chesapeake and 

Interest Income Funds. In all other respects, Safeway’s motions are denied. The Court also 

supplements its prior order regarding Aon’s motion for summary judgment by granting the motion 

in Aon’s favor as to the Chesapeake and Interest Income Funds. 

IT IS SO ORDERED.

Dated: April 12, 2019

______________________________________

JON S. TIGAR

United States District Judge

Case 3:16-cv-04903-JST Document 139 Filed 04/12/19 Page 6 of 6