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United States District Court 

Northern District of California 

IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF CALIFORNIA 

MICHAEL F. DORMAN, individually 

as a participant in the SCHWAB 

PLAN RETIREMENT SAVINGS AND 

INVESTMENT PLAN and on behalf 

of a class of all those 

similarly situated, 

Plaintiff, 

v. 

THE CHARLES SCHWAB 

CORPORATION; CHARLES SCHWAB & 

CO INC.; SCHWAB RETIREMENT 

PLAN SERVICES INC.; CHARLES 

SCHWAB BANK; CHARLES SCHWAB 

INVESTMENT MANAGEMENT, INC.; 

WALTER W. BETTINGER III; 

CHARLES R. SCHWAB; JOSEPH R. 

MARTINETTO; MARTHA TUMA; JAY 

ALLEN; DAVE CALLAHAN; JOHN C. 

CLARK; JOHN DOES 1-50; and XYZ 

CORPORATIONS 1-5, 

Defendants. 

Case No. 17-cv-00285-CW 

ORDER ON DEFENDANTS’ MOTION 

TO DISMISS THE FIRST AMENDED 

COMPLAINT 

(Dkt. No. 88) 

Defendants The Charles Schwab Corporation, Charles Schwab & 

Co. Inc., Schwab Retirement Plan Services Inc., Charles Schwab 

Bank, Charles Schwab Investment Management, Inc., Walter W. 

Bettinger III, Charles R. Schwab, Joseph Martinetto, Martha Tuma, 

Jay Allen, Dave Callahan, and John C. Clark move to dismiss 

Plaintiff Michael F. Dorman’s first amended complaint. On July 

17, 2018, the parties appeared for a hearing. Having considered 

the papers and the arguments of counsel, the Court GRANTS in part 

Defendants’ motion to dismiss. 
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BACKGROUND1

The Plan is a defined contribution, individual account plan. 

All eligible employees of The Charles Schwab Corporation (CSC) 

and its affiliates may participate in the Plan. Participants in 

the Plan may choose to invest in various Schwab-affiliated and 

unaffiliated investment options. For example, on January 1, 

2011, the Plan offered twelve core investment options: four 

affiliated funds, seven unaffiliated funds, one company stock 

fund, and a family of affiliated target date funds. Declaration 

of Holly Morgan (Morgan Decl.), Ex. 3 (2011 Summary Plan 

Description). As of April 24, 2017, the Plan offered seventeen 

core investment options: seven Vanguard index funds, eight Schwab 

index funds, one company stock fund, and the Schwab Bank Savings 

Account. Id., Ex. 6 (2017 Summary Plan Description) at 15. 

Dorman is an individual who participated in the Plan from 

2009 to 2015. During his participation, Dorman invested in both 

affiliated and unaffiliated options, including seven Vanguard 

funds. Id. ¶ 4; Ex. 2 (Dorman SRI: Allocation Report). 

Dorman has sued three groups of Defendants. The first is 

the Entity Defendants: Schwab; Charles Schwab & Co, Inc. (CS&Co), 

Schwab’s broker-dealer subsidiary that allegedly provided several 

of the affiliated funds at issue; Charles Schwab Investment 

Management, Inc. (CSIM), an investment management company that 

allegedly managed some of the affiliated funds at issue; Charles 

Schwab Bank (CSBank), a Schwab subsidiary that is a federal 

savings association; and Schwab Retirement Plan Services, Inc. 

 1

 Unless otherwise noted, the factual background is taken 

from the First Amended Complaint (FAC). See Docket No. 56. 
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(SRPS), which allegedly provided recordkeeping and similar 

services to the Plan. The second group is the Fiduciary 

Defendants, which includes the Entity Defendants listed above as 

well as members of the Plan’s Employee Benefits Administration 

Committee (EBAC), who allegedly chose the investments, paid fees 

from the Plan’s assets, generally administered the Plan, and 

periodically reported to Schwab’s Board. The third is the Board 

of Director Defendants, which includes several individual members 

of the board of CS&Co. 

 Dorman’s complaint alleges five counts: (I) that the 

Fiduciary Defendants breached their ERISA §§ 404(a) and 

(b) duties by including affiliated funds without investigating 

cheaper, better performing alternatives, (II) that the Fiduciary 

Defendants violated ERISA § 406(a), which prohibits ERISA 

fiduciaries from causing ERISA plans to engage in certain 

enumerated transactions with parties in interest, (III) that the 

Board of Director Defendants violated their duties of prudence 

and loyalty under ERISA § 404(a)(1)(A) and (B), (IV) that the 

Fiduciary Defendants are liable under ERISA § 405 for the 

misconduct of other fiduciaries, and (V) that equitable relief 

should be granted under ERISA § 502(a)(3) against the Equity 

Defendants who knowingly participated and received the benefits 

of the fiduciary breaches and transactions above. Defendants 

move to dismiss all claims for failure to state a claim. For the 

reasons below, Defendants’ motion to dismiss counts I, III, IV 

are GRANTED with leave to amend, except as to the self-directed 

brokerage (PCRA) fund. Defendants’ motion to dismiss counts II 

and V is DENIED. 
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LEGAL STANDARD 

A complaint must contain a “short and plain statement of the 

claim showing that the pleader is entitled to relief.” Fed. R. 

Civ. P. 8(a). The plaintiff must proffer “enough facts to state 

a claim to relief that is plausible on its face.” Ashcroft v. 

Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. 

Twombly, 550 U.S. 544, 570 (2007)). On a motion under Rule 

12(b)(6) for failure to state a claim, dismissal is appropriate 

only when the complaint does not give the defendant fair notice 

of a legally cognizable claim and the grounds on which it rests. 

Twombly, 550 U.S. at 555. A claim is facially plausible “when 

the plaintiff pleads factual content that allows the court to 

draw the reasonable inference that the defendant is liable for 

the misconduct alleged.” Iqbal, 556 U.S. at 678. 

In considering whether the complaint is sufficient to state 

a claim, the court will take all material allegations as true and 

construe them in the light most favorable to the plaintiff. 

Metzler Inv. GMBH v. Corinthian Colleges, Inc., 540 F.3d 1049, 

1061 (9th Cir. 2008). The court’s review is limited to the face 

of the complaint, materials incorporated into the complaint by 

reference, and facts of which the court may take judicial notice. 

Id. at 1061. However, the court need not accept legal 

conclusions, including threadbare “recitals of the elements of a 

cause of action, supported by mere conclusory statements.” 

Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555). 

DISCUSSION 

I. Fiduciary breach claim 

Defendants request dismissal of Dorman’s ERISA claim for 
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breach of the fiduciary duties of prudence and loyalty. “An 

ERISA fiduciary must discharge his responsibility with the care, 

skill, prudence, and diligence that a prudent person acting in a 

like capacity and familiar with such matters would use.” Tibble 

v. Edison Int’l, 135 S. Ct. 1823, 1828 (2015). The duty of 

loyalty requires a ERISA fiduciary to act “solely in the interest 

of the participants and beneficiaries.” White v. Chevron Corp., 

2016 WL 4502808, at *1 (N.D. Cal. Aug. 29, 2016) (quoting 

§ 404(a)(1)(A)). For example, it is inappropriate for 

fiduciaries to engage in self-dealing, or otherwise create a 

conflict between their personal interests and their fiduciary 

duties. Id. at *4 (citing Rest. (Third) of Trusts § 78 (2007)). 

With respect to the duty of prudence, the focus is on whether the 

fiduciaries “employed the appropriate methods to investigate the 

merits of the investment and to structure the investment.” 

Tibble v. Edison Int’l, 729 F.3d 1110, 1136 (9th Cir. 

2013), vacated on other grounds, 135 S. Ct. at 1823. 

A. Affiliated funds 

Dorman’s fiduciary breach claim first alleges that 

Defendants improperly offered and maintained many affiliated 

funds and failed to investigate alternatives that had lower fees 

and better performance. FAC ¶ 116. 

Defendants respond that including affiliated funds is not 

per se improper. Thus, this fact alone does not show that it is 

plausible that Defendants breached their fiduciary duties. They 

contrast this case with Cryer, where the plan offered only 

affiliated funds. Cryer v. Franklin Templeton Res., Inc., 2017 

WL 818788, at *4 (N.D. Cal. Jan. 17, 2017) (approving plaintiff’s 
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allegations that defendant “breached its fiduciary duty by 

offering only its own products . . . which charged higher fees 

than and performed poorly as compared to available comparable 

non-proprietary funds and products”). Indeed, the facts in Cryer 

raised a stronger inference that the plan’s fiduciaries did not 

conduct a proper investigation into other alternatives in the 

market. Here, Defendants offered a roughly equal mix of 

affiliated and unaffiliated funds, and so Cryer’s rationale does 

not apply. 

Dorman’s position seems to be that it is enough to allege 

that Defendants offered one affiliated fund with cheaper, better 

performing alternatives. This cannot be correct. To so hold 

would mean that almost every plan administrator who offered an 

affiliated fund would be subject to an ERISA suit. Standing 

alone, offering and retaining funds that have underperformed 

modestly and have somewhat higher fees is not enough to show 

malfeasance. 

As a preliminary matter, the Schwab funds appear to have 

charged only slightly higher fees and underperformed by only a 

modest amount. For example, Schwab’s S&P 500 Index Fund fees 

were 0.09% in 2011, while three other funds’ fees were 0.04%, 

0.05%, and 0.06%. FAC ¶ 53. Schwab’s S&P 500 Index Fund’s 

tracking error in 2013-2015 averaged 0.11%, while a couple of 

other funds identified by Dorman averaged .03% to 0.07% during 

those same years, with one fund averaging 0.13% in 2013. Id. 

¶ 56. This may not be “out of the ordinary enough to make the 

funds imprudent.” Tibble, 729 F.3d at 1135 (holding that summary 

judgment was warranted where expense ratio of roughly forty funds 
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varied from .03% to 2%); Hecker v. Deere & Co., 556 F.3d 575, 586 

(7th Cir. 2009) (dismissing claim where twenty funds’ expense 

ratios were .07% to just over 1%). 

In any event, in choosing funds, a fiduciary considers not 

only modest differences in price and performance, but also other 

relevant factors, such as strategy, security lending practices, 

economic cycles, and market fluctuations. The law is clear that 

fiduciaries can “value investment features other than price, and 

indeed are required to do so.” White v. Chevron Corp., 2017 WL 

2352137, at *14 (N.D. Cal. May 31, 2017). See also Hecker, 556 

F.3d at 586 (“nothing in ERISA requires every fiduciary to scour 

the market to find and offer the cheapest possible fund (which 

might, of course, be plagued by other problems)”). For these 

reasons, funds may continue to hold a fund despite slight 

underperformance. “Indeed, a fiduciary may – and often does – 

retain investments through a period of underperformance as part 

of a long-range investment strategy.” White, 2016 WL 4502808, at 

*17 (citing Jenkins v. Yager, 444 F.3d 916, 926 (7th Cir. 2006)). 

While Dorman contends that he does not have to rule out 

“every possible lawful explanation” for Defendants’ conduct, he 

is required under Iqbal to show that his allegations are 

plausible. Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 596–97 

(8th Cir. 2009). He has not done so here. It is not reasonable 

to infer from Dorman’s allegations that Defendants acted 

disloyally and the process by which they managed the Plan was 

flawed. White, 2016 WL 4502808, at *17 (holding that “ERISA 

requires a plaintiff to plead some other objective indicia of 

imprudence”); Pension Ben. Guar. Corp. ex rel. St. Vincent 
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Catholic Med. Centers Ret. Plan v. Morgan Stanley Inv. Mgmt. 

Inc., 712 F.3d 705, 718 (2d Cir. 2013) (stating that a plaintiff 

must ensure that his allegations contain “nonconclusory factual 

content raising a plausible inference of misconduct and does not 

rely on ‘the vantage point of hindsight.’”); cf. id. Braden, 588 

F.3d at 596 (holding that allegations that fiduciaries provided 

plan with “a relatively limited menu of funds” “despite the ready 

availability of better options” raised the inference that “the 

process by which appellees selected and managed the funds in the 

Plan would have been tainted by failure of effort, competence, or 

loyalty”). 

B. Stable value fund claim 

Dorman’s fiduciary breach claim also challenges Defendants’ 

decision to include the Schwab Value Advantage Money Fund (a 

money market fund) and the Schwab Savings Account (a demand 

deposit account) as the Plan’s capital preservation options 

instead of an unaffiliated stable value fund. Dorman alleges 

that, after Schwab’s stable value fund folded, Defendants 

replaced it with the two affiliated funds described above. 

Dorman argues that this was an act of imprudent self-dealing. He 

further argues that Defendants should have offered a stable value 

fund, which “hold[s] longer-duration instruments” and “generally 

outperform[s] money market funds, which invest exclusively in 

short-term securities.” Abbott v. Lockheed Martin Corp., 725 

F.3d 803, 806 (7th Cir. 2013). Dorman also states that the 

Schwab Value Advantage Money Fund and Savings Account 

underperformed drastically as compared to the Hueler Index 

Average Return, which is the industry standard measurement of the 
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average return of stable value funds. 

Defendants argue that Dorman’s allegations in support of 

this claim are demonstrably false, citing a communication that 

Schwab sent out to Plan participants stating that seventy percent 

of the funds previously invested in the Stable Value Fund were 

reallocated to an unaffiliated fund and thirty percent were 

reallocated to a Schwab money market fund. Declaration of Tulio 

Chirinos (Chirinos Decl.), Ex. 13 (March 20, 2012 Notice). At 

the hearing, Dorman conceded Defendants’ point and argued that 

his claim still holds weight with respect to the thirty percent 

of funds transferred to the Schwab money market fund. This 

concession undermines Dorman’s claim. First, the FAC’s 

allegations are factually incorrect. Second, Dorman’s revised 

theory does not address the fact that Defendants reallocated 

seventy percent of the funds to unaffiliated funds, rendering 

implausible his assertion that Defendants engaged in improper 

self-dealing. 

Moreover, Defendants are not required to provide a stable 

value fund. ERISA does not require a plan to include such a 

fund; it “requires only that the Plan offer some type of low-risk 

capital preservation option.” White, 2017 WL 2352137, at *11. 

Accordingly, Dorman’s allegations regarding the stable value fund 

do not support his claim. 

C. Self-Directed Brokerage (PCRA) 

Defendants further challenge Dorman’s allegations with 

respect to the inclusion of Schwab’s Self-Directed Brokerage 

system, which Defendants call the PCRA. This system allows 

participants to elect to invest in numerous mutual funds and 
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other types of securities, including domestic and foreign stocks 

and bonds, mutual funds, and exchange-traded funds. FAC ¶¶ 82-

83. Dorman alleges that Defendants offered this system, which 

was too complex for “all but the most sophisticated of 

investors,” without investigating whether another self-directed 

brokerage would have been a better option than their own. Id. ¶¶ 

88-89. Dorman alleges that Defendants did so because they could 

collect fees from PCRA participants. 

These allegations are insufficient to support a breach of 

fiduciary duty claim. The claim that PCRA was overly complex is 

vague. Moreover, the inclusion of the PCRA actually shows that 

Defendants provided participants with “additional investment 

options” and “opportunity to diversify,” which discourages an 

inference of breach of fiduciary duty. Id. ¶ 88. And, while the 

Entity Defendants may have received some fees from program 

participants, this fact alone does not raise an inference of 

breach of fiduciary duty. As explained previously, offering 

affiliated funds is not enough. 

In addition, Dorman lacks standing to bring a claim 

attacking PCRA because he himself did not use this program. To 

establish Article III standing, a plaintiff must demonstrate he 

“(1) suffered an injury in fact, (2) that is fairly traceable to 

the challenged conduct of the defendant, and (3) that is likely 

to be redressed by a favorable judicial decision.” Spokeo, Inc. 

v. Robins, 136 S. Ct. 1540, 1547 (2016), as revised (May 24, 

2016). Such an injury must be “an invasion of a legally 

protected interest that is concrete and particularized.” Id. at 

1548 (internal quotation marks omitted). This is a threshold 
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jurisdictional question that must be considered in every case. 

Bruce v. United States, 759 F.2d 755, 757 (9th Cir. 1985). 

 PCRA is separate from the core investment options made 

available through the Plan. 2017 Summary Plan Description at 16 

(“CRA is a self-directed brokerage account” that “allows you to 

make investments outside of Core Funds available through the 

401(k) Plan”). PCRA is an optional product “for more experienced 

investors who want to take a greater role in managing their 

retirement portfolios.” Id. To open a PCRA, a participant must 

complete an online PCRA application. Id. Dorman does not allege 

that he participated in the PCRA; Defendants’ senior benefits 

manager filed a declaration indicating that Dorman never 

participated in the PCRA. Morgan Decl. ¶ 8. 

 Because Dorman did not participate in the PCRA, he lacks 

standing to bring the PCRA claim alleged in his complaint. He 

cannot allege that he was injured by Defendants’ allegedly 

overly-complicated program if he never actually experienced that 

program. See Marshall v. Northrop Grumman Corp., 2017 WL 

2930839, at *9 (C.D. Cal. Jan. 30, 2017) (holding that plaintiff 

lacks standing with respect to optional investment options and 

services); Daugherty v. Univ. of Chicago, 2017 WL 4227942, at *5 

(N.D. Ill. Sept. 22, 2017) (holding that a plaintiff who did not 

participate in CRP and TIAA loan programs does not have standing 

to challenge those programs under ERISA because of Spokeo’s 

concrete injury requirement). This is in contrast to Cryer, 

where the plaintif’s allegation that he had been injured was 

fairly traceable to Defendants’ decision to offer only its own 

funds. Cryer, 2017 WL 818788, at *4. 
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II. Prohibited transaction claim 

Defendants also move to dismiss Dorman’s prohibited 

transactions claim, which alleges that Defendants violated ERISA 

§ 406 by “including and failing to remove the Schwab Affiliated 

Products and Services as investment options within the Plan or as 

services for the Plan” and by paying fees and expenses to 

affiliates using Plan assets. FAC ¶¶ 119-24. 

A. Statute of limitations 

Defendants first argue that this claim fails because it is 

time barred under ERISA’s statute of limitations. 

A claim may be dismissed under Rule 12(b)(6) if it is clear 

from the face of the complaint that the statute of limitations 

has run. Jablon v. Dean Witter & Co., 614 F.2d 677, 682 (9th 

Cir. 1980). ERISA’s statute of limitations provides, “No action 

may be commenced under this subchapter with respect to a 

fiduciary’s breach . . . after the earlier of –” 

(1) 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, 

or 

(2) three years after the earliest date on which the 

plaintiff had actual knowledge of the breach or 

violation; 

[ . . . ] 

ERISA § 1113(a). 

Defendants’ argument relates to subsection (2). They 

contend that Dorman had actual knowledge of the specific facts 

supporting his prohibited transaction claim, namely, that the 

Plan paid fees to Schwab for affiliated products and services, 

more than three years before he filed suit. Defendants point to 
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a 2011 annual fee disclosure statement which they state was sent 

via U.S. mail or email to all Plan participants in August 2012. 

Chirinos Decl. ¶ 5, Ex. 3. 

Defendants have not demonstrated actual knowledge that is 

clear from the face of the complaint and judicially noticeable 

documents. They have not shown that Dorman in fact received the 

2011 annual fee disclosure statement. Accordingly, dismissal 

based on the statute of limitations is inappropriate at this 

time. 

B. Transactions do not involve Plan assets 

Defendants also argue that Dorman failed to plead adequately 

that the transactions at issue involve “assets of the plan,” as 

required for a prohibited transaction claim. Dorman points out 

that only certain subparts of ERISA § 406(a) and (b) require plan 

assets to be implicated: 

(a) Transactions between plan and party in interest. 

Except as provided in section 1108 of this title: 

(1) 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; 

(B) lending of money or other extension of 

credit between the plan and a party in 

interest; 

(C) furnishing of goods, services, or 

facilities between the plan and a party in 

interest; 

(D) transfer to, or use by or for the benefit 

of a party in interest, of any assets of the 

plan; or 

(E) acquisition, on behalf of the plan, of 

any employer security or employer real 

property in violation of section 1107(a) of 

this title. 

(2) No fiduciary who has authority or discretion 

to control or manage the assets of a plan shall 

permit the plan to hold any employer security or 
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employer real property if he knows or should know 

that holding such security or real property 

violates section 1107(a) of this title. 

(b) Transactions between plan and fiduciary. 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. 

Emphasis added. Further, Dorman contends that ERISA 

provides that shares of the mutual funds owned by a plan are 

plan assets. ERISA § 401(b)(1). Because Dorman alleges 

that his claims implicate shares of mutual funds, the 

requirement that the transactions involve plan assets is 

satisfied. 

C. Statutory and class exemptions 

Next, Defendants argue that the prohibited transaction 

claim is barred because it is expressly permitted by various 

ERISA exemptions which allow an investment management 

company to offer affiliated funds as part of a 401(k) plan, 

including PTE 77-3 and ERISA § 408(b)(8). These exemptions 

are affirmative defenses on which Defendants bear the burden 

of proof. Howard v. Shay, 100 F.3d 1484, 1488-89 (9th Cir. 

1996). Thus, Dorman “need not plead the absence of 

exemptions to prohibited transactions” and a motion to 

dismiss may not be granted on this basis unless the defense 

is obvious from the face of the pleadings. See Allen v. 

GreatBanc Tr. Co., 835 F.3d 670, 676 (7th Cir. 2016). 

Defendants assert that “PTE 77-3 expressly permits 
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retirement plans to invest in affiliated funds registered 

under the Investment Company Act of 1940, provided the plan 

pays no commissions or other extraneous fees, and the 

investments are offered on the best available terms.” 

Motion at 22. Defendants assert that all conditions of PTE 

77-3 are met; however, they provide no evidence that the 

Plan pays no commissions or other extraneous fees and that 

the investments are offered on the best available terms. 

Second, they contend that ERISA § 408(b)(8) provides an 

exemption for a transaction between a plan and a collective 

trust fund. Id. While this is true, several conditions 

must be met for the statutory exemption to apply, including 

that the bank receive “not more than reasonable 

compensation.” ERISA § 408(b)(8)(B). Defendants do not 

provide any evidence that the bank receives “not more than 

reasonable compensation.” The Court cannot accept 

Defendants’ blanket assertion that the § 408(b)(8) 

conditions are met. Defendants have not satisfied their 

burden of proving that the statutory exemptions are obvious 

from the face of the complaint. Thus, these issues are more 

properly considered on a motion for summary judgment. 

III. Duty to monitor claim 

Defendants argue that Dorman’s duty to monitor claim is not 

properly pled. “To state a claim for failure to monitor under 

ERISA, the plaintiff must allege that the defendant failed to 

review the performance of its appointees at reasonable intervals 

in such a manner as may be reasonably expected to ensure 

compliance with the terms of the plan and statutory 
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standards.” Fernandez v. Franklin Res., Inc., No. 17-CV-06409-

CW, 2018 WL 1697089, at *7 (N.D. Cal. Apr. 6, 2018) (citation 

omitted). The FAC alleges that the Board of Director Defendants 

failed to review and remove EBAC members who committed the 

alleged breaches of fiduciary duties. FAC ¶¶ 125-129. The duty 

to monitor claim is essentially derivative of the breach of 

fiduciary duty claim. Because the breach of fiduciary duty cause 

of action fails to state a claim, this cause of action does as 

well. 

IV. Defendants other than EBAC 

Defendants next contend that the claims against all 

Defendants other than the EBAC members should be dismissed 

because only they were fiduciaries with authority to choose Plan 

investments, which is the conduct targeted by the FAC. Dorman 

alleges that the Entity Defendants and the Board of Director 

Defendants are vicariously liable for the EBAC members’ actions. 

He alleges that the Entity Defendants and the Board of Director 

Defendants delegated responsibilities to the EBAC members, who 

acted under their direction. Dorman’s vicarious liability claim 

passes muster. Thus, claims against the other entities will not 

be dismissed. 

CONCLUSION 

The motion to dismiss is GRANTED with respect to the breach 

of fiduciary duty claim and the duty to monitor claim (Counts I, 

III and IV). The Court grants Dorman leave to amend with respect 

to these claims, except with respect to PCRA. The motion to 

dismiss is DENIED with respect to the prohibited transaction 

claim (Count II). The motion to dismiss is also DENIED with 
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United States District Court 

Northern District of California 

respect to Defendants’ argument that claims against all 

Defendants other than EBAC should be dismissed (Count V). 

Any amended complaint shall be filed within twenty-one days. 

IT IS SO ORDERED. 

Dated: September 20, 2018 

CLAUDIA WILKEN 

United States District Judge