Opinion ID: 2737435
Heading Depth: 4
Heading Rank: 3

Heading: he has any discretionary

Text: authority or discretionary responsibility in the administration of such plan. Such term includes any person designated under section 1105(c)(1)(B) of this title. 29 U.S.C. § 1002(21)(A). To be a fiduciary within the meaning of § 1002(21)(A), a person must “act[] in the capacity of manager, administrator, or financial advisor to a ‘plan.’” Pegram v. Herdrich, 530 U.S. 211, 222 (2000). This so-called “functional” fiduciary duty is contextual – it arises “only to the extent” a person acts in an administrative, managerial, or advisory capacity to an employee benefits plan. Id. at 225-26 (internal quotation marks omitted). “Because an entity is only a fiduciary to the extent it possesses authority or discretionary control over the plan, we ‘must ask whether [the entity] is a fiduciary with respect to the particular activity in question.’” Renfro v. Unisys Corp., 671 F.3d 314, 321 (3d Cir. 2011) (emphasis added) (internal citations omitted) (quoting Srein, 323 F.3d at 221; and citing 29 U.S.C. § 11 1002(21)(A); In re Unisys Corp. Retiree Med. Benefits ERISA Litig., 579 F.3d 220, 228 (3d Cir. 2009)). Thus, “the threshold question is not whether the actions of some person employed to provide services under a plan adversely affected a plan beneficiary’s interest, but whether that person was acting as a fiduciary (that is, performing a fiduciary function) when taking the action subject to complaint.” Pegram, 530 U.S. at 226. Before proceeding too deeply into our analysis, it is necessary first to clarify precisely what Participants claim in this case. Each Count that Participants levy against John Hancock alleges the charging of excessive fees in breach of fiduciary duty. See Participants’ Br. at 12.1 Counts I and II of the Complaint challenge payment of the S&S fees, alleging: (1) that contrary to John Hancock’s claim that the S&S fees were used to pay for services by third parties, the S&S fees were in fact revenue for John Hancock; and (2) that the S&S fees were excessive because they were in excess of, and duplicative of, the underlying funds’ 12b-1 fees. Counts III and IV allege that John Hancock breached its fiduciary responsibility by selecting for the Big Menu investment options that charged 12b-1 fees, claiming that John Hancock 1 Counts VI and VII alleged, respectively, that John Hancock wrongly included funds on the Big Menu that paid it revenue sharing, and that John Hancock breached its fiduciary duty by selecting a particular fund for inclusion on the Big Menu that allegedly carried high fees with low returns. At oral argument, counsel for Participants stated that while it was “not withdrawing these two counts,” it was “limiting [them] to claims of excessive fees.” Oral Arg. Rec. at 1:20-2:00. Accordingly, we consider forfeited any claims of wrongdoing other than the charging of excessive fees. 12 should have negotiated with the underlying funds for access to a share class that did not impose these fees. Count V alleges that John Hancock’s Big Menu should not have included funds that paid certain advisor fees that Participants allege were excessive. Participants state that “[t]he alleged breach of fiduciary duty consists solely of John Hancock charging excessive fees for the performance of its fiduciary functions.” Reply Br. at 7. But this is not quite correct: the question in this case is not whether John Hancock acted as a fiduciary to the Plans at some point and in some manner and then charged an excessive fee for that fiduciary service; rather, the question is whether John Hancock acted as a fiduciary to the Plans with respect to the fees that it set. With that in mind, we now turn to the parties’ arguments.2