United States Court of Appeals

For the Eighth Circuit

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No. 17-2397

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John Meiners, on behalf of a class of all persons similarly situated, and on behalf

of the Wells Fargo & Company 401(k) Plan

lllllllllllllllllllllPlaintiff - Appellant

v.

Wells Fargo & Company; Human Resources Committee of the Wells Fargo Board

of Directors; Wells Fargo Employee Benefits Review Committee; Hope Hardison;

Justin Thornton; Patricia Callahan; Michael Heid; Timothy Sloan; Lloyd Dean;

John Chen; Susan Engel; Donald James; Stephen Sanger

lllllllllllllllllllllDefendants - Appellees

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Securities Industry and Financial Markets Association; American Benefits

Council;ChamberofCommerceoftheUnitedStatesofAmerica;ERISAIndustryCommittee

lllllllllllllllllllllAmici on Behalf of Appellees

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Appeal from United States District Court 

for the District of Minnesota

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Submitted: June 13, 2018

Filed: August 3, 2018

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Before GRUENDER, ERICKSON, and GRASZ, Circuit Judges.
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GRASZ, Circuit Judge.

John Meiners (“Meiners”) appeals from the district court’s order dismissing 1

his Complaint for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). 

Meiners claimed that his former employer, Wells Fargo & Company (“Wells Fargo”),

and an assortment of Wells Fargo executives and entities (collectively, the “Wells

Fargo Defendants”) breached their fiduciary duty under the Employment Retirement

Income Security Act (“ERISA”). He alleged two breaches: (1) retaining Wells

Fargo’s proprietary investment funds as options for Wells Fargo employees’ 401(k)

retirement plan (the “Plan”), and (2) defaulting to these proprietary investment funds

for Plan participants who did not elect other options.

I. Background

Meiners sued the Wells Fargo Defendants for breach of fiduciary duty under

ERISA on behalf of the Plan and on behalf of a purported class of similarly situated

Plan participants. During the relevant time period, the Plan allegedly offered more

than two dozen investment options, twelve of which were Wells Fargo Dow Jones

Target Date Funds (“Wells Fargo TDFs”). These Wells Fargo funds were allegedly

more expensive (due to higher fees) than comparable Vanguard and Fidelity funds

and also underperformed the Vanguard funds.

In his Complaint, Meiners pled three counts against the Wells Fargo

Defendants: (I) Breach of Duty of Loyalty and Prudence Against the Benefit

Committee; (II) Breach of Co-Fiduciary Duty Against Defendants Human Resources

The Honorable David S. Doty, United States District Judge for the District of 1

Minnesota.

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Committee, Hardison, and Thornton; and (III) Knowing Participation in Breach of

Fiduciary Duty Against Wells Fargo. All three counts relied on Meiners’s claim that

the Wells Fargo Defendants breached their fiduciary duties when they failed to

remove their inordinately expensive and underperforming funds from the Plan’s

options. Meiners further alleged that the breach occurred because the Wells Fargo

Defendants were maximizing their own profits, selecting their funds as a default out

of improper financial motives to generate fees and “seed” (provide financial support

for) the underperforming funds.

The Wells Fargo Defendants moved to dismiss the Complaint under Fed. R.

Civ. P. 12(b)(6), and the district court granted the motion. Meiners timely appealed. 

We affirm.

II. Standard of Review

We review de novo a grant of a motion to dismiss under Fed R. Civ. P.

12(b)(6). Adams v. Am. Family Mut. Ins. Co., 813 F.3d 1151, 1154 (8th Cir. 2016). 

We accept the well-pled allegations in the complaint as true and draw all reasonable

inferences in the plaintiff’s favor. Schriener v. Quicken Loans, Inc., 774 F.3d 442,

444 (8th Cir. 2014). “To survive a motion to dismiss, a complaint must contain

sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible

on its face.’” Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “A claim has

facial plausibility when the plaintiff pleads factual content that allows the court to

draw the reasonable inference that the defendant isliable for the misconduct alleged.”

Iqbal, 556 U.S. at 678. If the pled facts are merely consistent with liable acts, the

complaint “stops short of the line between possibility and plausibility.” Id. (quoting

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)). In deciding or reviewing

motions to dismiss, courts may also consider those materials that are necessarily

embraced by the pleadings. See Schriener, 774 F.3d at 444.

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III. Analysis

ERISA imposes two primary duties on fiduciaries: loyalty and prudence. 

Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 595 (8th Cir. 2009). “[A] fiduciary

shall discharge his duties with respect to a plan solely in the interest of the

participants and beneficiaries . . . .” 29 U.S.C. § 1104(a)(1). The fiduciary shall also

discharge its duties “with the care, skill, prudence, and diligence under the

circumstancesthen 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.” Id. To state a claim for breach of fiduciary duty, “a plaintiff must

make a prima facie showing that the defendant acted as a fiduciary, breached its

fiduciary duties, and thereby caused a lossto the Plan.” Braden, 588 F.3d at 594. See

29 U.S.C. § 1109. 

ERISA plaintiffs claiming a breach of fiduciary duty have a challenging

pleading burden because of their different levels of knowledge regarding what

investment choices a plan fiduciary made as compared to how a plan fiduciary made

those choices. See Pension Benefit Guar. Corp. ex rel. St. Vincent Catholic Med.

Centers Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 718–19 (2d Cir.

2013). ERISA plaintiffs typically have extensive information regarding the selected

funds because of ERISA’s disclosure requirements. See id. at 719–20. In contrast,

they typically lack extensive information regarding the fiduciary’s “methods and

actual knowledge” because those details “tend to be ‘in the sole possession of [that

fiduciary].’” Id. at 719 (alteration in original) (quoting Braden, 588 F.3d at 598). As

a result, the challenge for ERISA plaintiffs is to use the data about the selected funds

and some circumstantial allegations about methods to show that “a prudent fiduciary

in like circumstances would have acted differently.” Id. at 720. See also 29 U.S.C.

§ 1104(a)(1)(B).

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To show that “a prudent fiduciary in like circumstances” would have selected

a different fund based on the cost or performance of the selected fund, a plaintiff must

provide a sound basis for comparison — a meaningful benchmark. For example, in

Braden, the plaintiff alleged the market index and other shares of the same fund. Id.

at 595–96. However, while recognizing that Braden stated a claim, we cautioned that

“our ultimate conclusions rest on the totality of the specific allegations in this case”

and that “we do not suggest that a claim is stated by a bare allegation that cheaper

alternative investments exist in the marketplace.” Id. at 596 n.7. Because of the

benchmark allegations, we concluded the plaintiff was not “required to describe

directly the ways in which appellees breached their fiduciary duties.” Id. at 595. The

critical inquiry, then, is whether the missing factual allegations are facts about the

funds themselves, which ERISA plaintiffs can research, or facts about the fiduciary’s

internal processes, which ERISA plaintiffs generally lack. 

A. Whether the Wells Fargo TDFs Were an Imprudent Choice

With these standards in mind, we conclude Meiners’s Complaint fails to state

a plausible claim because it lacks “sufficient factual matter, accepted as true,” to

demonstrate that the Wells Fargo TDFs were an imprudent choice. Iqbal, 556 U.S.

at 678. 

Specifically, Meiners did not plead facts showing the Wells Fargo TDFs were

underperforming funds. He only pled that one Vanguard fund, which he alleges is

comparable, performed better than the Wells Fargo TDFs. The fact that one fund

with a different investment strategy ultimately performed better does not establish

2

anything about whether the Wells Fargo TDFs were an imprudent choice at the outset. 

As the district court noted, “Wells Fargo funds have a higher allocation of 2

bond[s] than Vanguard funds.”

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See Tussey v. ABB, Inc., 850 F.3d 951, 960 & n.8 (8th Cir. 2017). No authority

3

requires a fiduciary to pick the best performing fund. Cf. Braden, 588 F.3d at 596 n.7

(stating that fiduciaries are not required by ERISA to select “the cheapest possible

fund” available in the market) (quoting Hecker v. Deere & Co., 556 F.3d 575, 586

(7th Cir. 2009)).

We recognize the district court determined that the Vanguard fund’s

performance was not a meaningful benchmark by considering prospectuses not

attached to the Complaint. This was not improper. The district court, like this Court,

is allowed to look at matters outside the pleadings if those matters are necessarily

embraced by the pleadings. Mattes v. ABC Plastics, Inc., 323 F.3d 695, 697 n.4 (8th

Cir. 2003).4

We are also unpersuaded by Meiners’s argument that the Wells Fargo TDFs

were too expensive due to their fees. The argument expands application of Braden

in exactly the way we warned against. See Braden, 588 F.3d at 596 n.7. We found

that different shares of the same fund were a meaningful benchmark, but Meiners

does not match that benchmark by alleging that cheaper alternative investments with

some similarities exist in the marketplace. Such an expansion of Braden is

While Meiners is correct that Tussey addressed a specific damages issue, not

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pleadings, we find its reasoning on this particular point equally applicable here: the

choice of a particular fund is not flawed merely because of the existence of one fund

that ended up performing better.

Meiners may be correct that certain factual findings made by the district court

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regarding Vanguard were improper at this stage. However, the district court was

correct to recognize a potential pattern of plaintiffs trying to convert failure to invest

in Vanguard, without more, into a breach of fiduciary duty. See, e.g., Amron v.

Morgan Stanley Inv. Advisors Inc., 464 F.3d 338, 345 (2d Cir. 2006). Because the

other findings regarding Vanguard were unnecessary to the district court’s decision,

we do not reach them.

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inappropriate because it permits plaintiffs to dodge the requirement for a meaningful

benchmark by merely finding a less expensive alternative fund or two with some

similarity.5

A few district court opinions appear to support Meiners’s argument, but we do

not find them persuasive. We disagree with the rationale of these cases because we

believe the existence of a cheaper fund does not mean that a particular fund is too

expensive in the market generally or that it is otherwise an imprudent choice. Any

other conclusion would exempt ERISA plaintiffs both from pleading benchmarks for

the funds and from pleading internal processes about selecting funds. An ERISA

plaintiff must offer more than “labels and conclusions” about the fees before a

complaint states a claim. See Twombly, 550 U.S. at 555. We decline to follow the

district court opinions that concluded otherwise.

We hold that Meiners has failed to allege sufficient facts to demonstrate that

the Wells Fargo TDFs were an imprudent choice.

B. Whether the Wells Fargo Defendants Engaged in Unlawful Conduct

Absent any well-pled factual allegations that the Wells Fargo funds were an

imprudent choice, no inference can be reasonably drawn that the Wells Fargo

Defendants retained those funds (or made them default investments) out of improper

motives. We cannot reasonably infer they acted out of a motive to seed

underperforming or inordinately expensive funds if Meiners has not plausibly pled

that those funds were, in fact, underperforming or inordinately expensive. See

Meiners’s alternative pleading that “effectively” assessing “double charges”

5

makes an investment fee too expensive is also unpersuasive. It is “[t]he total fee, not

the internal, post-collection distribution of the fee” that is the material figure for

assessing the reasonableness of a fee. Hecker v. Deere &Co., 556 F.3d 575, 586 (7th

Cir. 2009). 

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Braden, 588 F.3d at 597 (“An inference pressed by the plaintiff is not plausible if the

facts he points to are precisely the result one would expect from lawful conduct in

which the defendant is known to have engaged.”). While plaintiffs need not rebut

every possible lawful reason for retaining a particular investment option, id. at

596–97, theymust establish that a fund is an imprudent choice before they are entitled

to an inference supporting their allegations of unlawful reasons for retaining it. 

Because Meiners has failed to establish an imprudent choice, his conclusory

allegations of bad conduct do not save his Complaint from its deficient pleading

regarding the Wells Fargo TDFs.

C. Viewing the Complaint as a Whole

Finally, we see no merit in Meiners’s accusation that the district court failed

to consider the Complaint as a whole. The district court's summary statement is

exactly right: “Taken as a whole, the complaint merely supports an inference that

Wells Fargo continued to invest in affiliated target date funds when its rate of return

was lower than Vanguard, which had a different investment strategy, and that was

more expensive than Vanguard and Fidelity funds.” Add. at 9–10. Consequently,

“These allegations do not give rise to an inference of a breach of fiduciary duty, and

as a result, that claim must be dismissed.” Id.

Furthermore, it is clear the district court read the Complaint as a whole when

it required Meiners to pair allegations of self-interest with allegations of an

imprudently chosen fund in order to survive a motion to dismiss. When both lawful

and unlawful conduct would have resulted in the same decision, a plaintiff does not

survive a motion to dismiss by baldly asserting that unlawful conduct occurred. See

Pension Benefit Guar. Corp., 712 F.3d at 719 (“[T]he price of entry, even to

discovery, is for the plaintiff to allege a factual predicate concrete enough to warrant

further proceedings, which may be costly and burdensome.”(quoting DM Research,

Inc. v. Coll. of Am. Pathologists, 170 F.3d 53, 55 (1st Cir. 1999))).

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Because the Complaintfailed to plausibly allege a breach offiduciary duty, and

because all of the claims in this case relied on such a breach, the Complaint failed to

state a claim upon which relief can be granted.

IV. Conclusion

The district court correctly determined that Meiners’s omission of any

meaningful benchmark in his Complaint meant that he failed to allege any facts

showing the Wells Fargo TDFs were an imprudent choice. As a result, Meiners’s

Complaint failed to state a claim for relief under ERISA and we affirm its dismissal.

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