Court Opinion

ID: 2709436
Source: CourtListenerOpinion
Date Created: 2014-08-05 15:15:40.968646+00
Date Added: 2024-06-11T10:01:25.652790
License: Public Domain

In the

     United States Court of Appeals
              For the Seventh Circuit
No. 12-3736

ANTHONY ABBOTT, et al.,
                                       Plaintiffs-Appellants,

                             v.

LOCKHEED MARTIN CORPORATION
and LOCKHEED MARTIN
INVESTMENT MANAGEMENT
COMPANY,
                                       Defendants-Appellees.

        Appeal from the United States District Court
              for the Southern District of Illinois.
       No. 06-cv-0701-MJR — Michael J. Reagan, Judge.

   ARGUED MAY 29, 2013 — DECIDED AUGUST 7, 2013

   Before BAUER, WOOD, and TINDER, Circuit Judges.

   WOOD, Circuit Judge. In Spano v. Boeing Co., 633 F.3d
574 (7th Cir. 2011), we confronted for the first time the
question whether an action for breach of fiduciary duty
under Section 502(a)(2) of the Employee Retirement
Income Security Act of 1974 (ERISA), 29 U.S.C.
§ 1132(a)(2), may be maintained as a class action when a
2                                              No. 12-3736

defined-contribution retirement savings plan is at issue.
We concluded in Spano that the answer was “maybe.” The
proposed classes before us in that case, however, were too
broad to meet the certification requirements of Federal
Rule of Civil Procedure 23. Spano thus left for another day
the resolution of many questions concerning the use of the
class-action device for a Section 502(a)(2) claim about a
defined-contribution plan.
    This case requires us to take the next step. It involves
a proposed class of plaintiffs who are participants in two
defined-contribution plans run by Lockheed Martin. The
class is more focused than those we rejected in Spano, and
it reflects Spano’s guidance about how to define a certifi-
able Section 502(a)(2) class. Notwithstanding these
improvements, the district court thought that it still came
up short, and so the court declined to certify the class. We
granted Plaintiffs’ petition under Federal Rule of Civil
Procedure 23(f) to appeal that ruling. We now reverse,
and we hope that our explanation for doing so will further
refine the discussion we began in Spano.
                               I
                              A
    Plaintiffs have brought a number of claims against
Lockheed Martin Corporation and Lockheed Martin
Investment Management Company (collectively, Lock-
heed) regarding the management of Lockheed’s two
retirement savings plans, the Salaried Savings Plan and the
Hourly Savings Plan. (The two plans are indistinguishable
for purposes of this appeal, and we refer to them collec-
No. 12-3736                                                 3

tively as the “Plan” from here on unless the distinction is
relevant.) In general they allege that Lockheed breached its
fiduciary duty to the Plan in a number of ways, in violation
of Sections 409 and 502 of ERISA, 29 U.S.C. §§ 1109(a),
1132(a)(2)-(3). The Plan is a defined-contribution plan,
often referred to as a 401(k), which allows employees to
direct a portion of their earnings to a tax-deferred retire-
ment savings account; the employee’s contribution is often
augmented by the employer. These plans offer a range of
investment options to participants, who are permitted to
allocate the funds in their accounts as they choose.
Defined-contribution plans are common in this country,
and they “play a vital role in the retirement planning of
millions of Americans.” Spano, 633 F.3d at 576.
    Among the investment options Lockheed offered Plan
participants was something called the “stable-value fund”
(SVF). SVFs are recognized investment vehicles that are
available only through employer-sponsored retirement
plans and some college-savings plans. See, e.g., Adam Zoll,
For Safety-First Savers, Stable-Value Funds Are Tough to Beat,
http://news.morningstar.com/articlenet/
article.aspx?id=592164 (last visited Aug. 5, 2013). They
typically invest in a mix of short- and intermediate-term
securities, such as Treasury securities, corporate bonds,
and mortgage-backed securities. Because they hold
longer-duration instruments, SVFs generally outperform
money market funds, which invest exclusively in short-
term securities. Id. To provide the stability advertised in
the name, SVFs are provided through “wrap” contracts
with banks or insurance companies that guarantee the
4                                               No. 12-3736

fund’s principal and shield it from interest-rate volatility.
Id.; see also Paul J. Donahue, Plan Sponsor Fiduciary Duty
for the Selection of Options in Participant-Directed Defined
Contribution Plans and the Choice Between Stable Value and
Money Market, 39 AKRON L. REV. 9, 20-22 (2006).
     Plaintiffs allege that the SVF that Lockheed offered
through its Plan failed to conform to this general descrip-
tion. Rather than containing a mix of short- and inter-
mediate-term investments, Lockheed’s SVF was heavily
invested in short-term money market investments. This
resulted in a low rate of return, such that in Lockheed’s
own words, the SVF did “not beat inflation by a sufficient
margin to provide a meaningful retirement asset.” Plain-
tiffs contend that structuring the SVF in this manner
amounted to imprudent management and violated Lock-
heed’s duty to manage the Plan “with [] care, skill, pru-
dence, and diligence under the circumstances.” 29 U.S.C.
§ 1104(a)(1)(B).
                                B
    Plaintiffs filed this suit in 2006. Lockheed eventually
moved for summary judgment, and in March 2009 the
district court granted the motion with respect to some
claims and denied it for others. The SVF claim is one that
survived. Several days later, the district court certified two
classes under Federal Rule of Civil Procedure 23(b)(1)(A)
and (B), one for the Salaried Savings Plan and one for the
Hourly Savings Plan. Each class was certified for all claims.
The Salaried Savings Plan class was defined as:
      All persons, excluding from the class defendants
No. 12-3736                                                   5

   and/or other individuals who are or may be liable for
   the conduct described in the First Amended Com-
   plaint, who were or are participants or beneficiaries
   of the Salaried Plan and who were or may have been
   affected by the conduct set forth in the First
   Amended Complaint, as modified by subsequent
   court orders, as well as those who will become
   participants or beneficiaries of the Plan in the future.
The Hourly Savings Plan class definition was materially
identical. Lockheed petitioned for permission to appeal the
certification orders under Rule 23(f), which permits the
courts of appeals to accept an interlocutory review of the
grant or denial of class certification. We held the petition
pending our decision in Spano. After Spano was issued, we
vacated the district court’s certification order and re-
manded for further proceedings.
    On remand, Plaintiffs moved to modify the class
definitions and to amend their complaint to add additional
named plaintiffs to serve as class representatives. To
conform to our statement in Spano that “a class representa-
tive in a defined-contribution case would at a minimum
need to have invested in the same funds as the class
members,” id. at 586, Plaintiffs proposed separate classes
for each of their remaining claims, with class membership
in each one limited to those Plan participants who invested
in the relevant funds during the class period. To conform
to Spano’s warning that the class must not be “defined so
broadly that some members will actually be harmed” by
the relief sought, id. at 587, Plaintiffs limited their defini-
6                                              No. 12-3736

tion of the SVF class to those who suffered damages as a
result of Lockheed’s purportedly imprudent management
of the fund. To achieve this latter result, Plaintiffs pro-
posed to use as a benchmark for class certification pur-
poses the Hueler FirstSource Universe index (Hueler
Index). That index tracks the performance of a variety of
stable value funds over time—as relevant here, throughout
the class period. By providing a reference point for how an
average, prudently managed stable value fund would have
performed throughout the class period, Plaintiffs reasoned
that the Hueler Index offered a reasonable counterfactual
estimate of how Lockheed’s SVF would have performed if
not for Lockheed’s imprudence. By limiting the SVF class
to only those Plan participants who suffered harm under
this measure, Plaintiffs further reasoned that they had
avoided including anyone in the class who may have
benefited from Lockheed’s conduct. The new proposed
class was as follows:
       All participants and beneficiaries of the [Salaried
    and Hourly Savings Plans] whose accounts held
    units of the [SVF] from September 11, 2000 through
    September 30, 2006 and whose SVF units under-
    performed relative to the Hueler FirstSource Index.
    Excluded from this class are the Defendants, other
    [Lockheed] employees with responsibility for the
    Plans’ investment or administrative functions, and
    members of the Lockheed Martin Board of Directors.
   The district court was still not satisfied with this
narrowed class definition. It acknowledged that the class
No. 12-3736                                                  7

was “better-defined and more targeted” than both the
previous class certified in the case and the classes in Spano,
but it found that the SVF claim was “not suitable for class
treatment” nevertheless. In the district court’s view,
including the Hueler Index in the class definition was an
improper attempt to “use class certification to ‘back door’
a resolution of this contested issue [i.e., the proper measure
of loss] in [Plaintiffs’] favor.” The court concluded that
Plaintiffs’ SVF claims were not “typical” of those of the
class, as required by Rule 23(a)(3). The district court also
declined to certify the class provisionally under Rule
23(c)(1)(C), which enables the district court to alter or
amend any class definition at any point prior to final
judgment. It took the position that certifying a class
containing a reference to the Hueler Index was not an
“inherently tentative” decision amenable to later modifica-
tion.
    Plaintiffs petitioned for permission to appeal under
Rule 23(f). We granted permission with respect to the SVF
claims. For the reasons discussed below, we now reverse
and remand for further proceedings.
                                II
    At the outset, we must address standing. Lockheed
insists that the district court lacked subject-matter jurisdic-
tion over the SVF claim because none of the original
named plaintiffs had Article III standing to bring the
action. Only one of the original named plaintiffs, Lloyd
DeMartini, invested in the SVF at any point during the
class period, and Lockheed asserts that he cannot show he
8                                                No. 12-3736

was injured by his investment. Without injury, there can be
no Article III standing, which requires a plaintiff to show
an injury-in-fact that is fairly traceable to the defendant’s
conduct and that could likely be redressed by a favorable
court decision. See, e.g., Lujan v. Defenders of Wildlife, 504
U.S. 555, 560-61 (1992); United States v. 5 S. 351 Tuthill Rd.,
Naperville, Ill., 233 F.3d 1017, 1022 (7th Cir. 2000). Because
we reject Lockheed’s contention that DeMartini cannot
show injury, we conclude that the district court’s jurisdic-
tion was proper. (In light of this conclusion, we need not,
and do not, address Plaintiffs’ argument that the later
addition of David Ketterer, another SVF investor who
indisputably has standing, as a named plaintiff cures any
standing defect that may have existed at the outset of the
case, nor do we explore the possibility that Article III
standing is satisfied by Section 502(a)(2)’s express authori-
zation of suit by any Plan member on behalf of the Plan.)
   Lockheed bases its argument that DeMartini lacks
standing on Plaintiffs’ use of the Hueler Index to measure
damages and define the SVF class. If damages are mea-
sured exclusively by the Hueler Index, DeMartini does not
appear to have suffered any damages, since he invested in
the SVF during a brief and apparently unusual period
during which the Hueler Index did not outperform the
SVF. Seizing on this, Lockheed concludes that DeMartini
must be incapable of showing injury under any measure of
damages. But this does not follow. As Plaintiffs emphasize
throughout their briefs, the Hueler Index is intended only
as a provisional estimate of damages, useful only as a
mechanism to ensure that the class meets the requirements
No. 12-3736                                                    9

of Rule 23; by the time all is said and done, the damages
measure will likely become more refined, and it is possible
that DeMartini will be entitled to damages under whatever
measure is used. This is just one of many instances in
which we must resist the urge to make a preliminary
question depend on the final resolution of the merits. See
Payton v. Cnty. of Kane, 308 F.3d 673, 677 (7th Cir. 2002).
Injury-in-fact for standing purposes is not the same thing
as the ultimate measure of recovery. The fact that a
plaintiff may have difficulty proving damages does not
mean that he cannot have been harmed. DeMartini’s lack
of damages as measured by the Hueler Index suggests that
he may have a problem proving the degree of his injury,
but Lockheed overreads both Article III’s injury-in-fact
requirement and the facts in this case when it interprets the
absence of damages under the Hueler Index as dispositive
proof that DeMartini was not injured. (It is possible, for
instance, that if the Plan had been managed prudently, it
might have outperformed the Hueler Index at all times,
and thus DeMartini would have done even better. All of
that remains to be shown.)
    It is often the case in class litigation that by the time the
remedial phase is reached, some of the original plaintiffs
will not be entitled to recover, either because they lost on
the merits or because they cannot show damages. Some-
times the reason a particular plaintiff cannot recover may
be related to one of the three Article III standing require-
ments: the plaintiff may not have shown that the defen-
dant caused her injury (in which case, we could also say
that her injury was not “fairly traceable” to the defendant),
10                                                No. 12-3736

or she might have failed to show that she suffered an
injury at all. But in such cases, the plaintiff has lost on the
merits; we do not reach back in time and enter a judgment
dismissing the case for want of an Article III case or
controversy. Yet that is effectively what Lockheed is asking
us to do here; it wants us to use the hindsight acquired as
the claims in this case have evolved to find that there was
never jurisdiction over the case to begin with. We have
previously rejected this unworkable view of Article III
standing, and we do so again here. See, e.g., Kohen v. Pac.
Inv. Mgmt. Co., 571 F.3d 672, 677 (7th Cir. 2009) (“Jurisdic-
tion established at the pleading stage by a claim of injury
that is not successfully challenged at that stage is not lost
when at trial the plaintiff fails to substantiate the allegation
of injury; instead the suit is dismissed on the merits.”);
Bruggeman ex rel. Bruggeman v. Blagojevich, 324 F.3d 906, 909
(7th Cir. 2003) (“[I]f [a plaintiff’s] claim has no merit, then
he has not been injured by any wrongful conduct of the
defendant; but if the consequence were that he lacked
standing, then every decision in favor of a defendant
would be a decision that the court lacked jurisdiction,
entitling the plaintiff to start over in another court.”).
    Finally, Lockheed harps on the point that it is Plaintiffs’
burden to show standing. That is true but irrelevant:
Plaintiffs have satisfied that burden. Their complaint
alleged that they were harmed by Lockheed’s mismanage-
ment of the SVF. This was sufficient to establish in-
jury-in-fact for pleading purposes. See Lujan, 504 U.S. at
561 (“general factual allegations of injury resulting from
the defendant’s conduct may suffice” to establish standing
No. 12-3736                                                 11

at the pleading stage); Alliant Energy Corp. v. Bie, 277 F.3d
916, 919-20 (7th Cir. 2002). Lockheed first challenged
subject-matter jurisdiction in relation to the SVF claim in its
motion for summary judgment, but it argued only that no
plaintiff had shown that he was invested in the SVF at any
point during the class period. This was incorrect, as
Plaintiffs had already demonstrated through evidence that
they attached to their motion for class certification; that
evidence showed that DeMartini was invested in the SVF
during the relevant period. This was all that was required
to refute Lockheed’s standing objection. See Lujan, 504 U.S.
at 561 (plaintiff can satisfy burden to show standing at
summary judgment by providing “specific facts” that
support standing, which are accepted as true for purposes
of summary judgment). At every step in the litigation,
Plaintiffs have met their burden of demonstrating standing
“in the same way as any other matter on which the plain-
tiff bears the burden of proof … with the manner and
degree of evidence required at the successive stages of the
litigation.” Id.
                                III
                                A
   Turning to the heart of the appeal, Plaintiffs ask us to
reverse the district court’s denial of class certification on
the SVF claim. They argue that the proposed class, in
accordance with our decisions in Spano, 633 F.3d 574 (7th
Cir. 2011), and Ross v. RBS Citizens, N.A., 667 F.3d 900 (7th
Cir. 2012), vacated on other grounds, 133 S. Ct. 1722 (2013), is
precisely defined and carefully tailored to ensure that no
12                                              No. 12-3736

plaintiff who may actually have benefited from Lockheed’s
management of the SVF will be swept into a class that
seeks relief in which he has no interest (or may actively
oppose). The district court did not necessarily disagree
with this description. It was concerned instead that the
reference in the class definition to the Hueler Index
improperly prejudged the merits of the SVF claim. We
review a denial of a motion for class certification for an
abuse of discretion. Messner v. Northshore Univ. Health Sys.,
669 F.3d 802, 811 (7th Cir. 2012).
    In concluding that the reference to the Hueler Index
prejudged the merits of the SVF claim, the district court
appears to have assumed that accepting the class definition
also required him to accept the conclusion that the SVF
was mismanaged because it underperformed relative to
the Hueler Index. Any such assumption would be mis-
taken. It misunderstands both the nature of the SVF claim
and the relation between the class definition and the
merits. Plaintiffs are not arguing that the SVF was impru-
dently managed in violation of ERISA because it did not
match or outperform the Hueler Index; rather, Plaintiffs
allege that the SVF was imprudently managed because its
mix of investments was not structured to allow the fund to
beat inflation and therefore that it could not serve as a
prudent retirement investment for Lockheed employees.
If Plaintiffs prevail on this theory, they may offer the
Hueler Index as one basis for calculating damages. For
now, however, the reference to the Hueler Index in the
class definition in no way binds the district court to the use
of the Hueler Index as the damages measure should
No. 12-3736                                                13

Plaintiffs prevail. If the court concludes that a different
measure would be better, it is free to use one.
     A decision on a class definition should not, in principle,
influence the merits of the case. All class definitions allude
to the merits, in that they assume either implicitly or
explicitly that the defendant’s conduct has adversely
affected the defined group of people. Compare Ross, 667
F.3d at 903 (approving a class defined as “[a]ll current and
former non-exempt employees of [defendant] who have
worked at [one of defendant’s] retail branch locations in
Illinois at any time during the last three years, who were
subject to [defendant’s] unlawful compensation policies of
failing to pay overtime compensation for all hours worked
in excess of forty per work week”), and Messner, 669 F.3d
at 810 (proposed class of “[a]ll persons or entities … who
purchased or paid for inpatient hospital services or
hospital-based outpatient services directly from North-
shore … its wholly-owned hospitals, predecessors, subsid-
iaries, or affiliates … from at least as early as January 1,
2000 to the present”) (omissions in original). We do not
worry that certifying a class in such cases somehow
prevents the defendant from proving that it is not liable for
unlawful conduct. The class definition is a tool of case
management. It settles the question who the adversaries
are, and so it enables the defendant to gauge the extent of
its exposure to liability and it alerts excluded parties to
consider whether they need to undertake separate actions
in order to protect their rights. See Payton, 308 F.3d at 678.
What it does not tell us is who will win the case. Cf.
Messner, 669 F.3d at 823 (whether some class members’
14                                                No. 12-3736

claims will fail on the merits is “a fact generally irrelevant
to the district court’s decision on class certification”);
Schleicher v. Wendt, 618 F.3d 679, 687 (7th Cir. 2010) (“The
chance, even the certainty, that a class will lose on the
merits does not prevent its certification.”) There is no cause
for concern that certifying a particular class will bind the
court when it comes time to resolve the case.
                                 B
    On the merits, Lockheed argues that the real problem
with the proposed class definition is that it attempts to
sneak into the case a theory of liability that was rejected at
summary judgment. Lockheed contends that Plaintiffs are
precluded from raising any claim that the SVF was impru-
dently managed. As it sees things, the sole theory still in
the case rests on misrepresentation through omission:
namely, that Lockheed allegedly inadequately disclosed
the nature of the SVF to Plan participants. Because many
misrepresentation claims are poorly suited to class treat-
ment, accord Spano, 633 F.3d at 589, Lockheed urges us to
find that the SVF claim is unsuitable for class treatment no
matter how the class is defined. This argument fails on
several levels.
    First, Lockheed distorts Plaintiffs’ SVF claim when it
characterizes their theory as one in which the SVF was
imprudently managed because it deviated from the mix of
investments held by other funds bearing the “stable value”
label. Plaintiffs’ claim is not so narrow. Plaintiffs allege that
the SVF was an imprudent investment, full stop. They aim
to show that the SVF was not structured to beat inflation,
No. 12-3736                                                   15

that it did not conform to its own Plan documents, and that
Lockheed failed to alter the SVF’s investment portfolio
even after members of its own pension committee voiced
concerns that the SVF was not structured to provide a
suitable retirement asset. The fact that the SVF’s invest-
ment mix apparently deviated from that of other, similarly
named funds may be relevant evidence on which Plaintiffs
will rely, but it does not exhaust their theory of impru-
dence.
    From the First Amended Complaint through this
appeal, Plaintiffs have made clear that they believe Lock-
heed’s management of the SVF violated ERISA because “it
was an imprudent investment for participants.” This
allegation appears, among other places, in the First
Amended Complaint, the original motion for class certifi-
cation, Plaintiffs’ opposition to summary judgment, the
Second Amended Complaint, Plaintiffs’ amended motion
for class certification, and finally Plaintiffs’ appellate briefs.
They allude rarely, if at all, to misrepresentation.
    Most importantly, Lockheed’s argument that the
district court rejected Plaintiffs’ imprudent management
claim at summary judgment is belied by the record. The
district court’s order denying summary judgment on the
SVF claim reads in its entirety: “Defendants’ motion is
DENIED as to their claim that the Stable Value Fund was
properly disclosed to Plan participants and was a prudent
investment option for them.” All this order says is that the
imprudent management claim survives. (Lest there be any
doubt, the district court referred again to the imprudent
16                                            No. 12-3736

management claim in its class certification decision when
it stated that among Plaintiffs’ surviving claims was the
question “whether the Stable Value Fund [] was properly
disclosed to Plan participants and was a prudent invest-
ment option for them.”)
    Lockheed ignores this language and instead points to
isolated statements from the court’s summary judgment
memorandum to support its contention that the court
implicitly foreclosed the imprudent management claim. It
leans heavily on the district court’s discussion of DeBruyne
v. Equitable Life Assurance Society, 920 F.2d 457 (7th Cir.
1990), reasoning that the district court’s acknowledgment
of DeBruyne’s holding can only mean that it rejected a
theory of imprudent management that relies on evidence
that other stable value funds had a different mix of invest-
ments from the SVF. This interpretation stretches both the
district court’s order and DeBruyne beyond what either can
bear.
    DeBruyne arose out of the “Black Monday” stock
market crash of 1987. Id. at 461. The plaintiffs were inves-
tors in an American Bar Association-sponsored retirement
fund known as the “Balanced Fund,” which purported to
offer a balanced mix of low- and high-risk investments. Id.
at 460. After losing money in the 1987 crash, the plaintiffs
sued, claiming that the Balanced Fund did not contain the
mixture of investments advertised in the plan documents
and was not prudently managed. Id. at 462. Their sole
evidence backing up these assertions was an expert report
that included: (a) a comparison of the Balanced Fund’s
No. 12-3736                                               17

losses with those of other, similarly named funds; (b) a
calculation of the Balance Fund’s investment risk for
several years in the 1980s (though not for 1987, the critical
year in the case); and (c) an unsupported claim that the
Balanced Fund was not constituted in the way a “typical”
balanced fund would have been managed in 1987. Id. at
462-63. Unswayed by this submission, the district court
granted summary judgment to the defendants.
    This court affirmed. We noted that the plaintiffs could
not show that the Balanced Fund was improperly man-
aged based only on an expert’s say-so. Id. at 464. We also
observed that the defendants did not “on using the term
‘balanced,’ become wed to a pre-established definition that
could not be changed by disclosure.” Id. The expert’s
statement about what a “typical” fund manager would
have done in 1987, we concluded, “say[s] little about the
wisdom of [defendant’s] investments, only that [defen-
dants] may not have followed the crowd.” Id. at 465.
    These are the statements from DeBruyne to which
Lockheed clings. Even in isolation they do not carry the
day for Lockheed, and other aspects of the case show that
its holding is far narrower than Lockheed asserts. The
defendants in DeBruyne submitted evidence that their
fund’s composition was in line with several recognized
definitions of the term “balanced” used in the industry, as
well as that of many other balanced funds. Id. at 464. The
opinion discussed this evidence twice and relied on the fact
that the plaintiffs offered nothing to rebut it; their silence
indicated that the defendants’ evidence was both relevant
18                                               No. 12-3736

and probative. Id. at 464-65. In addition, it is not clear that
the expert in DeBruyne actually offered any evidence that
the Balanced Fund contained an unusual mixture of
investments relative to other “balanced” funds; the only
concrete comparison the expert offered was of such funds’
losses, but this says nothing about the composition of the
funds. Id. at 462-63. Indeed, the expert’s conclusion that the
management of the Balanced Fund was not “typical” does
not appear to have been based on any evidence whatso-
ever. Id. DeBruyne does not support Lockheed’s sweeping
and counterintuitive proposition that the makeup and
performance of similar funds is irrelevant to an imprudent
management claim.
    In any event, the district court did not hold that De-
Bruyne precludes Plaintiffs from arguing that Lockheed’s
SVF was imprudent by relying on evidence of the composi-
tion of other stable value funds. It said only that “[a]s in
DeBruyne, using the term ‘stable value’ does not ‘wed’ the
Fund to a specific mix of investments. That does not mean,
however, that the Fund need not be managed with care
and prudence.” This statement does not bar Plaintiffs from
pursuing their claim of imprudent management, nor does
it bar them from presenting their case in any particular
manner.
                                C
   Because Plaintiffs’ proposed class definition was crafted
with Spano in mind, we take a moment to explain why our
decision to uphold the class definition now before us is
consistent with that case. In Spano, the district court had
No. 12-3736                                             19

certified classes in two separate cases, Spano v. Boeing Co.
(No. 09-3001), and Beesley v. International Paper Co. (No.
09-3018); both cases involved alleged breaches of fiduciary
duty in violation of ERISA Sections 409 and 502(a)(2)-(3).
633 F.3d at 576-77. The class definitions in each case were
extraordinarily broad and essentially identical to one
another. The class in Spano was defined to include:
      All persons, excluding the Defendants and/or
  other individuals who are or may be liable for the
  conduct described in this Complaint, who are or were
  participants or beneficiaries of the Plan and who are,
  were or may have been affected by the conduct set
  forth in this Complaint, as well as those who will
  become participants or beneficiaries of the Plan in the
  future.
Id. at 577. On top of these “breathtaking[ly]” broad defini-
tions, id. at 586, the allegations in both complaints were
somewhat vague. In Spano, the plaintiffs objected to the
inclusion of certain funds in the plan, but it was unclear
exactly which ones or why. Id. Meanwhile, in Beesley, the
plaintiffs objected to various misrepresentations and
allegedly excessive administrative fees, but it was impossi-
ble to pin down how many misrepresentations the plain-
tiffs accused International Paper of making or whether the
challenged fees applied to specific investment options or to
the plan as a whole. Id. at 589-90.
   The combination of exceedingly broad class definitions
and murky claims made it difficult to assess the district
court’s certification orders. Id. at 586. Against that back-
20                                                 No. 12-3736

ground, we were certain only that the particular classes
before us could not stand. While we may have offered
some guidance for how to approach class certification in
actions under Section 502(a)(2), we emphasized that we
were deciding only the cases before us. Id. at 578 (“We are
not here to review any or all hypothetical orders that the
court might have crafted.”); id. at 588 (“Nothing we have
said should be understood as ruling out the possibility of
class treatment for one or more better-defined and
more-targeted classes.”).
    It is against this backdrop that readers must under-
stand Spano and its warnings that plaintiffs and courts
must take care to avoid certifying classes in which a
significant portion of the class may have interests adverse
to that of the class representative. See, e.g., id. at 587 (“It is
not enough to say that the named plaintiffs want relief for
the plan as a whole, if the class is defined so broadly that
some members will actually be harmed by that relief.”); id.
at 591 (“[A] fund that turns out to be an imprudent
investment over a particular time for one participant may
be a fine investment for another participant who invests in
the same fund over a slightly different period. If both are
included in the same class, a conflict will result and class
treatment will become untenable.”). Given the breadth of
the classes at issue in Spano and the vagueness surround-
ing plaintiffs’ claims, we were concerned that intra-class
conflict of the sort that defeats both the typicality and
adequacy-of-representation requirements of Rule 23(a) was
all but inevitable. In such cases, a district court should not
certify a class that fails to address that danger (say,
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through the use of subclasses or by defining the class more
narrowly). But this court has never held, and Spano did not
imply, that the mere possibility that a trivial level of
intra-class conflict may materialize as the litigation pro-
gresses forecloses class certification entirely. See, e.g.,
Johnson v. Meriter Health Servs. Emp. Ret. Plan, 702 F.3d 364,
372 (7th Cir. 2012) (“It is premature to declare the alleged
conflicts of interest an insoluble bar to the class action.”);
Kohen, 571 F.3d at 680 (“At this stage in the litigation, the
existence of such conflicts is hypothetical. If and when they
become real, the district court can certify subclasses with
separate representation of each … .”). This is as true in the
Section 502(a)(2) context as in any other area.
    The appropriateness of class treatment in a Section
502(a)(2) case (as in other class actions) depends on the
claims for which certification is sought. Here, the specifics
of the SVF claim make it unlikely that the sorts of conflicts
that concerned us in Spano will arise. Plaintiffs emphasize
that a Section 502(a)(2) action seeks only to make the
fiduciary refund to the Plan any losses caused by the
breach. 29 U.S.C. § 1109(a) (“Any person who is a fiduciary
with respect to a plan who breaches any of the responsibili-
ties, obligations, or duties imposed upon fiduciaries by this
subchapter shall be personally liable to make good to such
plan any losses to the plan resulting from each such breach
… .”). There appears to be no risk that any SVF investor
who benefited from Lockheed’s imprudent management
would have her Plan assets reduced as a result of this
lawsuit. Moreover, unlike many imprudent management
claims—in which the allegation is that fraud or undue risk
22                                              No. 12-3736

inflated the value of a fund and then caused it to crash, see,
e.g., In re Schering Plough Corp. ERISA Litig., 589 F.3d 585,
592 (3d Cir. 2009)—Plaintiffs’ allegation is that the SVF was
so low-risk that its growth was insufficient for a retirement
asset. A very low-risk fund is by nature not subject to the
wide swings in value that would enable some investors to
reap a windfall from a fund’s mismanagement. Finally, the
fact that the SVF underperformed relative to the Hueler
Index for all but a very brief portion of the class period
reinforces the intuition that few, if any, SVF investors
profited from Lockheed’s conduct. Should any of these
statements turn out to be wrong, the district court can
make further adjustments to the class definition later.
    Finally, we repeat that this class definition is consider-
ably narrower than those at issue in Spano. Plaintiffs have
taken care to limit the class to those Plan participants who
invested in the SVF during the class period. Their reference
to the Hueler Index is one reasonable way to exclude from
the class any persons who did not experience injury. These
details make all the difference. We conclude both that
Spano poses no bar to the proposed SVF class and that the
district court’s reservations about the class were un-
founded. We leave it to the district court to decide in the
first instance whether the remaining requirements for class
certification have been met.
                               IV
   We note in concluding that, to the extent the district
court had concerns that the proposed class definition
might not align with the ultimate outcome of the case, it
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may have misapprehended its authority under Rule
23(c)(1) to alter or amend its class certification order before
final judgment. The district court thought itself foreclosed
from this option because ruling on the class definition
would not be the sort of “inherently tentative” decision
amenable to later modification. But there is nothing more
permanent about this proposed class definition than any
other. As we explained above, adopting Plaintiffs’ class
definition in no way binds the district court when it comes
time to rule on the merits, and we cannot detect any other
feature of this class that removes it from eligibility for
adaptation.
    The order denying class certification for the proposed
SVF class is REVERSED and the case is REMANDED for
further proceedings.