Court Opinion

ID: 4357024
Source: CourtListenerOpinion
Date Created: 2019-01-08 22:00:47.901671+00
Date Added: 2024-06-11T14:46:34.642991
License: Public Domain

UNITED STATES DISTRICT COURT
                           FOR THE DISTRICT OF COLUMBIA
__________________________________
                                           )
DARRELL WILCOX and MICHAEL                 )
MCGUIRE, individually and as               )
representatives of a class of participants )
and beneficiaries in and on behalf of      )
the GEORGETOWN UNIVERSITY                  )
DEFINED CONTRIBUTION                       )
RETIREMENT PLAN and the                    )
GEORGETOWN UNIVERSITY                      )
VOLUNTARY CONTRIBUTION                     )
RETIREMENT PLAN,                           )
                                           )
              Plaintiffs,                  )
                                           )
       v.                                  ) Civil Action No. 18-422 (RMC)
                                           )
GEORGETOWN UNIVERSITY, et al., )
                                           )
              Defendants.                  )
_________________________________          )

                                  MEMORANDUM OPINION

               If a cat were a dog, it could bark. If a retirement plan were not based on long-

term investments in annuities, its assets would be more immediately accessed by plan

participants. These two truisms can be summarized: cats don’t bark and annuities don’t pay out

immediately.

               Darrell Wilcox and Michael McGuire work for Georgetown University. Each

man has an individual investment account in each of the two retirement plans offered by the

University. They allege that Georgetown imprudently selected and retained certain investment

options that caused excessively high administrative fees and that it failed to manage the plans’

investments prudently, in violation of the University’s fiduciary duties to the plans’ participants.

This type of lawsuit seems to have taken higher education by storm, with suits brought all over

the country. Georgetown moves to dismiss, arguing that Plaintiffs have no standing to make
                                                 1
some of their claims and that others fail to state a claim on which relief can be granted. The

motion to dismiss will be granted as to all claims.

                                            I. FACTS

               Georgetown University in Washington, D.C. provides two retirement plans for its

faculty and staff members: the Georgetown University Defined Contribution Retirement Plan

(Defined Contribution Plan) and the Georgetown University Voluntary Contribution Retirement

Plan (Voluntary Plan) (collectively “the Plans”). The Plans are defined contribution, individual

account employee pension plans governed by the Employee Retirement Income Security Act

(ERISA) 29 U.S.C. § 1001 et seq. “[A] ‘defined contribution plan’ or ‘individual account plan’

promises the participant the value of an individual account at retirement, which is largely a

function of the amounts contributed to that account and the investment performance of those

contributions.” LaRue v. DeWolff, Boberg & Assoc., Inc., 552 U.S. 248, 250 n.1 (2008) (citation

omitted). By contrast, “a ‘defined benefit plan,’ generally promises the participant a fixed level

of retirement income, which is typically based on the employee’s years of service and

compensation.” Id. (citation omitted).

               Georgetown contributes an amount up to ten percent (10%) of an employee’s

annual salary into the Defined Contribution Plan and employees can contribute, as they choose,

up to three percent (3%) more to the Voluntary Plan. Each participant has his own account in

each Plan and decides personally how to invest its funds across a wide array of investment

options, according to individual choice. Georgetown is the designated Plan Administrator for

both Plans. See 29 U.S.C. §§ 1002(2)(A), 1002(34). It manages the Plans and their assets,

including selecting, monitoring, and removing investment options.

               The Plans are organized under Section 403(b) of the Internal Revenue Code, 26

U.S.C. § 1 et seq. Titled “Taxation of employee annuities,” § 403 provides a set of rules for
                                                 2
certain plans sponsored by non-profit employers; it allows employer contributions and part of an

employee’s salary to be set aside in an individual account and then to increase in value (one

hopes) without immediate taxation to the employee. Id. § 403. This provision predates ERISA

and speaks directly to the heritage of the collegiate retirement system.

               In 1905, Andrew Carnegie endowed a $10 million gift to fund pensions at thirty

universities. 1 In 1906, Congress chartered the Carnegie Foundation for the Advancement of

Teaching to provide a system of retirement pensions for university professors. Act to

Incorporate the Carnegie Foundation for the Advancement of Teaching, ch. 636, 34 Stat. 59

(Mar. 10, 1906). When, by 1918, it became clear that Mr. Carnegie’s gift would be insufficient

to meet the need, the Carnegie Foundation founded the Teachers Insurance and Annuity

Association, now known as TIAA. TIAA developed annuity contracts with “fundamental

provisions specially designed for college retirement plans.” Greenough at 14, 17. An annuity is

essentially a long-term insurance contract that guarantees regular payments at retirement and for

the life of the holder. 2 This collegiate retirement system of annuities predated the enactment of

Internal Revenue Code § 403(b), which was adopted in 1958 to provide favorable tax treatment

for “tax-sheltered annuities,” such as those offered by the Plans. Technical Amendments Act of

1958, Pub. L. No. 85-866, § 1022(e), 88 Stat. 829, 1972 (1974) (codified as amended at 26

U.S.C. § 403(b)).

1
  Defs.’ Mem. at 3 (citing William C. Greenough, College Retirement and Insurance Plans 9
(1948)).
2
  Black’s Law Dictionary defines “annuity” in relevant part as “an obligation to pay a stated sum,
usu. monthly or annually, to a stated recipient,” and “retirement annuity” as “an annuity that
begins making payments only after the annuitant’s retirement.” See Black’s Law Dictionary
(10th ed. 2014).

                                                 3
               When adopting ERISA in 1974, Congress amended the Code so that § 403 plans

could offer mutual funds in addition to annuities. See ERISA, Pub. L. No. 93-406, § 1022(e), 88

Stat. 829, 1072 (1974) (codified as amended at 26 U.S.C. § 403(b)(7)). At that time, “the

defined benefit plan was the norm of American pension practice.” LaRue, 552 U.S. at 255

(alteration and internal quotation marks omitted). Under a defined benefit plan, an eligible

employee who has worked sufficient years receives a promised monthly pension benefit for life.

Because of the huge legacy costs of funding such plans for growing numbers of retirees, many

employers have changed to “defined contribution” plans through which an employer’s

contribution is specified and capped, no matter how long a retired employee might live. 3 In

response to this change, Congress adopted legislation by which employees can invest in various

other tax-deferred plans, such as individual § 401(k) plans. Revenue Act of 1978, Pub. L. No.

95-600, § 135(a), 92 Stat. 2763, 2785 (codified as amended at I.R.C. § 401(k) (2006)).

“[D]efined benefit plans are now largely limited to the public sector, very large employers, and

multi-employer plans of large national unions such as the Teamsters.” David Pratt, To (b) or Not

to (b): Is That the Question? Twenty-first Century Schizoid Plans Under Section 403(b) of the

Internal Revenue Code, 73 Alb. L. Rev. 139, 144 (2009).

3
  See Janice Kay McClendon, The Death Knell of Traditional Defined Benefit Plans: Avoiding a
Race to the 401(K) Bottom, 80 Temple L. Rev. 809, 813-19 (2007) (“Beginning in the early
1980s, a fundamental shift occurred in this scheme of traditional retirement plan sponsorship.
The 1980s and 1990s evidence a mass exodus from defined benefit plan sponsorship. While
there were once approximately 112,000 private employer-sponsored defined benefit plans, at the
end of 2005, there were only about 30,000.”) (citations omitted); see also Samuel Estreicher &
Laurence Gold, The Shift from Defined Benefit Plans to Defined Contribution Plans, 11 Lewis &
Clark L. Rev. 331 (2007); Alicia H. Munnell & Pamela Perun, An Update on Private Pensions,
An Issue in Brief 1, 4 (Ctr. for Ret. Research at Boston C., Aug. 2006),
http://crr.bc.edu/images/stories/Briefs/ib_ 50.pdf (noting dramatic rise in popularity of 401(k)
plans within world of defined contributions).

                                                4
               Defendants Christopher Augustini and Geoff Chatas have served as Georgetown’s

Senior Vice President and Chief Administrative Officer, and as fiduciaries to the Plans, until

May 2017 and from February 30, 2018 through to the present, respectively. They, and

Georgetown, are sued for alleged breaches of their fiduciary duties to the Plans’ participants.

               Plaintiffs Darrell Wilcox and Michael McGuire are participants in both Plans.

They filed this lawsuit on February 23, 2018 and challenge the expenses of the Plans, which they

say are detrimental to the interests of the Participants, wasteful, and breach the fiduciary duties

of the Plans’ fiduciaries. See Compl. [Dkt. 1]. Specifically, Plaintiffs attack the expense of

separate recordkeeping services that maintain the Plans; the expense of some of the investment

options that are available; the number of investment options that are offered; and the inclusion in

the Plans of certain investment options.

               The University and Messrs. Augustini and Chatas (collectively, Georgetown)

deny that they violated any duty to the Plans’ Participants and move to dismiss the Complaint.

               Description of the Plans

               Each of the Georgetown Plans provides individual accounts for all Participants.

Georgetown contributes an amount equal to 5% of each Participant’s salary into his account in

the Defined Contribution Plan. Participants may, but are not required to, voluntarily contribute

an additional three percent (3%) of their salaries to the Defined Contribution Plan; if a

Participant does so, Georgetown matches these contributions at a little more than one-and-one-

half for each dollar contributed, i.e., 1.67-to-1. As a result, a Participant who voluntarily

contributes the entire allowed-amount of 3% of his salary into the Defined Contribution Plan

receives a 5% match of funds from the University.

               In each Plan, the Participant directs how his funds are invested from a broad set of

choices that includes fixed and variable annuities offered by TIAA and mutual funds offered by
                                                  5
TIAA, Vanguard, and Fidelity. 4 The three investment platforms charge certain fees to Plan

Participants, which are fully disclosed but which Plaintiffs assert are more expensive than need

be.

               1. Fidelity Investment Options

               Plaintiffs do not complain about investment options offered by Fidelity and they

will not be further discussed.

               2.   Vanguard Investment Options

               Plaintiffs complain that Georgetown “used more expensive funds . . . than

investments that were available to the Plans.” Compl. ¶ 131. Specifically, they challenge the

particular share classes of Vanguard funds that were available to Participants. Neither Plaintiff,

however, invested in the Vanguard funds or alleges that he intended or intends to do so.

               3.   TIAA Investment Options

               TIAA offers a variety of investment options. The Court describes only those

options that are challenged by Plaintiffs.

                       a. TIAA Traditional Annuity

               The TIAA Traditional Annuity is a fixed annuity. “Under a classic fixed annuity,

the purchaser pays a sum certain and, in exchange, the issuer makes periodic payments

throughout, but not beyond, the life of the purchaser.” NationsBank of N.C., N.A. v. Variable

Annuity Life Ins. Co., 513 U.S. 251, 262 (1995). When a Georgetown Plan Participant elects to

invest in the TIAA Traditional Annuity, he enters into a direct contractual relationship with

4
  In the past, Participants could also invest in funds provided by AXA, but those funds have
stopped accepting additional contributions. Compl. ¶ 29.

                                                 6
TIAA concerning its terms. Mem. of Law in Supp. of Defs.’ Mot. to Dismiss (Defs.’ Mem.)

[Dkt. 18-1] at 6. The University is not a party to that contract.

               The TIAA Traditional Annuity is available to Participants through either the

Defined Contribution Plan or the Voluntary Plan but with important differences. A Participant

who invests his money from the Defined Contribution Plan into the TIAA Traditional Annuity

will earn greater interest (typically, an additional 0.75% a year) than the same investment from

the Voluntary Plan. The difference in earning power is inversely reflected in the difference in

the accessibility of the invested monies: a Participant who elects the TIAA Traditional Annuity

through the Voluntary Plan may withdraw his funds at any time without penalty but a Participant

who elects the TIAA Traditional Annuity through the Defined Contribution Plan may not

withdraw his funds until he leaves his employment with Georgetown or, if he wishes to re-direct

his investments, in ten annual installments. Upon his departure from employment, such a

Participant can leave his funds invested in the TIAA Traditional Annuity for the long term and

receive a monthly pension payment whenever he qualifies, or withdraw his funds immediately.

If he elects to withdraw his funds immediately from the Defined Contribution plan, he will

receive a lump-sum payout but must pay a 2.5% surrender charge.

               Plaintiffs complain about both limiting features of the TIAA Traditional Annuity:

first, that it “prohibits participants from re-directing their investment into other investment

options during their employment except in ten annual installments,” and second, that it “prohibits

participants from receiving a lump sum distribution after termination of employment unless the

participant pays a 2.5% surrender charge,” both of which “violate ERISA’s prohibition on the

imposition of a penalty for early termination of a contract.” Pls.’ Mem. of Law in Opp’n to

Defs.’s Mot. to Dismiss Pls.’s Compl. (Opp’n) [Dkt. 24] at 10 (citing Compl. ¶¶ 99, 103, 108).

                                                  7
               Georgetown contends that Plaintiffs have shown no injury-in-fact related to the

TIAA Traditional Annuity because any claim they may present is not ripe. Neither alleges that

he has left or plans to leave Georgetown or that he wishes to re-direct his investments.

                      b. CREF Stock Account

               The CREF Stock Account is a variable-annuity investment fund. CREF stands

for College Retirement Equities Fund, which TIAA established in 1952. Defs.’ Mem. at 7 n.13.

As it advises investors through its prospectus, the CREF Stock Account seeks to achieve “[a]

favorable long-term rate of return through capital appreciation and investment income by

investing primarily in a broadly diversified portfolio of common stocks.” 5 The Stock Account is

globally diversified and “seeks to maintain the weightings of its holdings as approximately 65-

75% domestic equities and 25-35% foreign equities.” Id. at 27 (citing 2017 CREF Prospectus).

As a result, the Stock Account advises investors:

               The benchmark for the Stock Account is a composite index
               composed of two unmanaged indices: the Russell 3000® Index and
               the MSCI All Country World ex USA Investable Market Index
               (“MSCI ACWI ex USA IMI”). The weights in the composite index
               change to reflect the relative sizes of the domestic and foreign
               segments of the Account and to maintain its consistency with the
               Account’s investment strategies.

Id. at 7 (citing 2017 CREF Prospectus).

5
  College Retirement Equities Fund Prospectus 27 (May 1, 2017) (2017 CREF Prospectus),
https://www.tiaa.org/public/pdf/cref_prospectus.pdf (last visited Dec. 11, 2018). As referenced
above, the Court takes judicial notice of various Plan documents in this Memorandum Opinion.
See Abraha v. Colonial Parking, Inc., 243 F. Supp. 3d 179, 192 (D.D.C. 2017). The Court also
takes judicial notice of publicly available definitions and information on the various funds
available through Morningstar, a well-respected investment research firm. See Fed. R. Evid.
201(c); see also Washington Post v. Robinson, 935 F.2d 282 (D.C. Cir. 1991) (taking judicial
notice of newspaper articles in the Washington, D.C. area); Agee v. Muskie, 629 F.2d 80, 81 n.1,
90 (D.C. Cir. 1980) (taking judicial notice of facts generally known because of newspaper
articles).

                                                 8
               The Georgetown Plans assert that the global investments undertaken by the CREF

Stock Account are not fully accounted for by federal regulations that control Fiduciary

Requirements for Disclosure in Participant-Directed Individual Account Plans. 29 C.F.R. §

2230-404a-5(d)(1)(iii); see also 75 Fed. Reg. 64,910, 64,916 (Oct. 20, 2010) (disallowing the use

of composite benchmarks). Because it is a composite fund but cannot use composite

benchmarks in certain disclosures, the CREF Stock Account references only the domestic

Russell 3000 benchmark in some materials although its prospectus advises that the influence of

foreign investments is reported only by the MSCI All Country World ex USA Investable Market

Index and that a true benchmark for the Stock Account is both the Russell 3000 and the MSCI

All Country World ex USA Investable Market indices. 2017 CREF Prospectus at 27 n.3. The

Plans have advised investors that an independent analyst, Morningstar, “rate[d] the CREF Stock

as a 5-star investment option” at year-end 2017. 6

               Plaintiffs confusingly describe the CREF Stock Account as “a domestic equity

investment in the large cap blend Morningstar category.” Opp’n. at 9; Compl. ¶ 72 (emphasis

added). They assert that the CREF Stock Account represents approximately 16% of the Plans’

assets but has “perennially underperformed its stated benchmark” (Russell 3000, a domestic

index) in the last one-, five- and ten-year periods ending December 31, 2016. Opp’n at 9. “The

Complaint alleges similar dismal results for the same performance periods ending Dec. 31, 2014,

¶ 79, and Dec. 31, 2009. ¶80 [sic].” Id.

6
 See CREF Stock Account, Class R3 (Dec. 31, 2017),
https://www.tiaa.org/public/pdf/realestate_prosp.pdf (last visited Dec. 11, 2018).

                                                 9
                       c. TIAA Real Estate Account

               The TIAA Real Estate Account is a variable annuity account that “seeks favorable

long-term returns primarily through rental income and appreciation of real estate and real estate-

related investments.” 7 The TIAA Real Estate Account invests primarily in commercial real

estate, which it advises Participants is an asset class not widely available to retail investors in a

variable annuity or mutual fund. TIAA Real Estate Account Prospectus at 37. Its prospectus

distinguishes the TIAA Real Estate Account from Real Estate Investment Trusts (REITs), which

“are securities and generally publicly traded” and therefore “may be exposed to market risk and

potentially significant price volatility due to changing conditions in the financial markets and, in

particular, changes in overall interest rates.” Id. at 28. In contrast, the returns on the TIAA Real

Estate Account are driven by the “fair value” of the real property it holds and the income those

properties generate. Id. at 3. The TIAA Real Estate Account invests directly in real properties—

unlike REITs, which invest in property management companies. See Defs.’ Mem. at 30.

               Plaintiffs also complain that the TIAA Real Estate Account has “far higher fees

than are reasonable and has historically and continually underperformed comparable real estate

investment alternatives.” Opp’n at 9 (citing Compl. ¶ 86).

               The Complaint

               Plaintiff Wilcox has invested in the TIAA Traditional Annuity, the CREF Bond

Account, and eleven of the TIAA mutual funds. Compl. ¶ 20. Plaintiff McGuire is invested in

the CREF Stock Account, the CREF Equity Index Account, the TIAA Real Estate Account, the

7
 See TIAA Real Estate Account Prospectus at 3 (May 1, 2017),
https://www.tiaa.org/public/pdf/realestate_prosp.pdf (last visited Dec. 11, 2018).

                                                  10
CREF Inflation-Linked Bond Fund Account, the CREF Bond Market Account, and the TIAA-

CREF Growth and Income Account. Id. ¶ 21.

               Count I of the Complaint alleges that Georgetown breached its duty of prudence

by selecting and retaining investment options and services without engaging in a prudent process

to avoid inappropriately high administrative fees and expenses charged to the Plans. Id. ¶¶ 119-

25. Count II alleges that Georgetown breached its duty of prudence by failing to manage

prudently the Plans’ investment portfolios. Id. ¶¶ 126-37.

               Georgetown counters these general allegations and their more specific

subparagraphs by summarizing Plaintiffs’ complaint as alleging that it “improperly allowed

TIAA-CREF, Vanguard and Fidelity separately to provide recordkeeping services for their own

respective investments”; “offered investment options that were more expensive than other

investment options that could have been offered”; “should have eliminated the [CREF] Stock

Account . . . because of its underperformance relative to the Russell 3000 index”; “should have

removed the Real Estate Account in favor of the Vanguard REIT Index (Institutional) mutual

fund”; and unreasonably maintained the TIAA Traditional Annuity despite its 2.5% surrender

charge. Defs.’ Mem. at 8-9. Plaintiffs summarize their allegations thusly: “Defendants have

retained not one, but three separate recordkeepers,” i.e., “bookkeepers,” that “charge asset-based

fees,” Opp’n at 2; “Defendants ignored the abysmal historical investment performance” of the

CREF Stock Account and the TIAA Real Estate Account; Defendants offered “an overwhelming

300 investment options” 8; “Defendants failed to provide accurate reporting . . . in reports filed

8
  Plaintiffs allege that “[i]t is well known in the defined contribution retirement plan industry that
plans with dozens of choices . . . ‘fail’” because the choices are overwhelming and “studies show
that when people are given too many choices of anything, they lose confidence or make no
decision.” Compl. ¶ 42 (citation omitted). However, Plaintiffs provide no evidence that they
were confused or overwhelmed by the available investment options or that they were unable to
                                                 11
with the DOL”; “Defendants approved a loan program that . . . violated federal regulations”; and

the TIAA Traditional Annuity violates regulations “that all contracts be terminable on reasonably

short notice without penalty.” Id. at 2-3.

                                     II. LEGAL STANDARD

                Jurisdiction

                Federal courts, as established by Article III of the Constitution, are courts of

limited jurisdiction. U.S. Const. art. III, § 2. As relevant here, federal courts have jurisdiction

over cases involving federal statutes, 28 U.S.C. § 1331, and where, in the Constitution's words,

there is a “Case[ ]” or “Controvers[y],” U.S. Const. art. III, § 2, cl. 1; see also David v. Alphin,

704 F.3d 327, 338 (4th Cir. 2013) (noting that federal courts have “subject matter jurisdiction

over ERISA claims only where the [litigants] have both statutory and constitutional standing”).

No action of the litigants can confer subject matter jurisdiction on a federal court. Akinseye v.

District of Columbia, 339 F.3d 970, 971 (D.C. Cir. 2003).

                From a statutory perspective, ERISA explicitly authorizes participants or

beneficiaries of private employee benefit plans to bring suit in federal court, without respect to

the amount in controversy or citizenship of the parties, over ERISA-based claims. See 29 U.S.C.

§ 1132(e)(1) (“Except for actions under subsection (a)(1)(B) of this section, the district courts of

the United States shall have exclusive jurisdiction of civil actions under this subchapter brought

by the Secretary or by a participant, beneficiary, fiduciary . . .”); id. § 1132(f) (“The district

courts of the United States shall have jurisdiction, without respect to the amount in controversy

make decisions regarding those options. To the contrary, both were invested in multiple
investment options and had “access to advisors who provide valuable one-on-one retirement
planning services.” Defs.’ Mem. at 19.

                                                  12
or the citizenship of the parties, to grant the relief provided for in subsection (a) of this section in

any action.”).

                 Plaintiffs bring suit, individually and as putative representatives of a class of

participants in the Plans, under 29 U.S.C. § 1132(a)(2) and (a)(3), to enforce Messrs. Wilcox and

McGuire’s personal liability as ERISA fiduciaries under 29 U.S.C. § 1109(a). Section

1132(a)(2) allows participants or beneficiaries of plans to sue for “appropriate relief,” under §

1109, which establishes personal liability for an ERISA fiduciary for breaches of fiduciary duties

that result in losses to the plan. See 29 U.S.C. § 1109(a); id. § 1132(a)(2). Participants or

beneficiaries may also sue under § 1132(a)(3) to enjoin violations of ERISA or of the terms of an

ERISA plan, or to obtain “other appropriate equitable relief” to redress such violations or enforce

fiduciary obligations. Id. § 1132(a)(3).

                 However, statutory standing is not the end of the inquiry. Georgetown challenges

Plaintiffs’ standing to sue under Article III of the Constitution. The traditional Article III

standing inquiry is well-known:

                 a plaintiff must show (1) it has suffered an ‘injury in fact’ that is (a)
                 concrete and particularized and (b) actual or imminent, not
                 conjectural or hypothetical; (2) the injury is fairly traceable to the
                 challenged action of the defendant; and (3) it is likely, as opposed to
                 merely speculative, that the injury will be redressed by a favorable
                 decision.

Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81 (2000).

Accordingly, it is possible for a litigant to have statutory standing but not Article III standing.

                 When a defendant challenges a plaintiff’s standing to bring a lawsuit, the

defendant’s motion is properly understood as a motion to dismiss for lack of subject matter

jurisdiction under Federal Rule of Civil Procedure 12(b)(1). This is because a “defect of

standing is a defect in subject matter jurisdiction.” Haase v. Sessions, 835 F.2d 902, 906 (D.C.

                                                    13
Cir. 1987). “If plaintiffs lack Article III standing, a court has no subject matter jurisdiction to

hear their claim.” Cent. States Se. & Sw. Areas Health & Welfare Fund v. Merck-Medco

Managed Care, L.L.C., 433 F.3d 181, 198 (2nd Cir. 2005). Under Rule 12(b)(1), the party

claiming subject matter jurisdiction bears the burden of demonstrating that it has standing.

Khadr v. United States, 529 F.3d 1112, 1115 (D.C. Cir. 2008). The court reviews a complaint

liberally, giving a plaintiff the benefit of all reasonable inferences that can be derived from the

facts alleged. Barr v. Clinton, 370 F.3d 1196, 1199 (D.C. Cir. 2004). Georgetown’s motion

turns on application of this framework.

               Venue

               This District is the proper venue for this action under 29 U.S.C. §1132(e)(2) and

28 U.S.C. §1391(b) because it is the district in which the Plans are administered, where at least

one of the alleged breaches took place, and where the Defendants reside or may be found. See

29 U.S.C. §1132(e)(2) (ERISA actions of this nature “may be brought in the district where the

plan is administered, where the breach took place, or where a defendant resides or may be found,

and process may be served in any other district where a defendant resides or may be found”).

               Motion to Dismiss Under Rule 12(b)(6)

               Federal Rule of Civil Procedure 12(b)(6) requires a complaint to be sufficient “to

give the defendant fair notice of what the claim is and the grounds upon which it rests.” Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted). Although a complaint

does not need detailed factual allegations, a plaintiff’s obligation to provide the grounds of his

entitlement to relief “requires more than labels and conclusions, and a formulaic recitation of the

elements of a cause of action will not do.” Id. The facts alleged “must be enough to raise a right

to relief above the speculative level.” Id. A complaint must contain sufficient factual matter to

state a claim for relief that is “plausible on its face.” Id. at 570. When a plaintiff pleads factual

                                                  14
content that allows the court to draw the reasonable inference that the defendant is liable for the

misconduct alleged, then the claim has facial plausibility. See Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009). “The plausibility standard is not akin to a probability requirement, but it asks for

more than a sheer possibility that a defendant has acted unlawfully.” Id. at 678. A court must

treat the complaint’s factual allegations as true, “even if doubtful in fact.” Twombly, 550 U.S. at

555. But a court need not accept as true legal conclusions set forth in a complaint. See Iqbal,

556 U.S. at 678. The court may also consider documents in the public record of which the court

may take judicial notice. Abhe & Svoboda, Inc. v. Chao, 508 F.3d 1052, 1059 (D.C. Cir. 2007).

In ruling on a motion to dismiss in an ERISA action, the court “is not confined to the allegations

in the complaint, but may review the plan documents referred to in the complaint and relied on

by the plaintiff.” Abraha, 243 F. Supp. 3d at 192 (citation omitted).

               Fiduciary Duty Under ERISA

               Plaintiffs rely on ERISA § 1132(a)(2) and (3) as the basis for their breach of

fiduciary claim. Section 1132(a)(2) allows plan participants to sue a fiduciary on behalf of the

plan for “appropriate relief” under § 1109. Section 1109 establishes personal liability for

an ERISA fiduciary who breaches fiduciary duties that result in losses to the plan. See 29 U.S.C.

§ 1109(a). Section 1132(a)(3) permits plan beneficiaries or participants to sue to enjoin

violations of ERISA or of the terms of an ERISA plan, or to obtain “other appropriate equitable

relief” to redress or enforce such violations. 29 U.S.C. § 1132(a)(3). Thus, § 1132(a)(2)

provides for recovery on behalf of the Plan for breaches of fiduciary duty that cause loss to the

Plan, while § 1132(a)(3) allows for individual equitable relief to enjoin or enforce ERISA

violations.

               Under ERISA, a person or entity is a fiduciary, inter alia, when they “exercise[]

any discretionary authority or discretionary control respecting management of such plan or
                                                 15
exercise[] any authority or control respecting management or disposition of its assets . . . or

[have] any discretionary authority or discretionary responsibility in the administration of such

plan.” 29 U.S.C. § 1002(21)(A).

               As relevant here, ERISA imposes a duty of prudence on fiduciaries. Abraha, 243

F. Supp. 3d at 184. The D.C. Circuit has held that “[p]rudence under ERISA is measured

according to the objective prudent person standard developed in the common law of trusts.”

Fink v. Nat’l Sav. and Trust Co., 772 F.2d 951, 955 (D.C. Cir. 1985) (citing S. Rep. No. 93–127,

93d Cong., 2d Sess., reprinted in 1974 U.S. Code Cong. & Ad. News 4639, 4838, 4865) (“The

fiduciary responsibility section, in essence, codifies and makes applicable to these fiduciaries

certain principles developed in the evolution of the law of trusts.”). To state a claim for breach

of fiduciary duty, a plaintiff must allege: (1) the defendant(s) are plan fiduciaries; (2) the

defendants breached their fiduciary duties; and (3) the breach caused harm to the plaintiff(s).

Abraha, 243 F. Supp. at 184. “A court’s task in evaluating fiduciary compliance with this

standard is to inquire ‘whether the individual trustees, at the time they engaged in the challenged

transactions, employed the appropriate methods to investigate the merits of the investment and to

structure the investment.’” Id. (citing Donovan v. Mazzola, 716 F.2d 1226, 1232 (9th Cir. 1983),

cert. denied, 464 U.S. 1040 (1984)).

                                          III. ANALYSIS

               The Teachers Investment and Annuity Association (TIAA) was founded in 1918

with the purpose of investing in annuities to pay pensions to teachers for their lifetimes after

retirement. 9 No party disputes that annuities constitute long-term investments for anticipated

9
 See TIAA, Our History, https://www.tiaa.org/public/why-tiaa/who-we-are (last visited Dec. 11,
2018).

                                                  16
long-term benefits. But the modern world moves quickly; the stock market has reached

historically high values in recent years, which may render the intended slow and careful growth

of annuities less attractive, and Plaintiffs chafe at the limitations of access to Participant monies

in the TIAA Traditional Annuity.

               It may be that Plaintiffs want to force Georgetown to reconsider its entire strategy

behind the Plans and to have them become more like corporate plans under Internal Revenue

Code § 401 (conferring “qualified trust” status on “a trust created or organized in the United

States and forming part of a stock bonus, pension, or profit-sharing plan of an employer for the

exclusive benefit of his employees or their beneficiaries”); see also § 401(k) (extending § 401

benefits to “any arrangement which is part of a profit-sharing or stock bonus plan, a pre-ERISA

money purchase plan, or a rural cooperative plan”). However, it is not a breach of fiduciary duty

to maintain the Plans as established tax-deferred vehicles under the particular protections of

§ 403(b). Therefore, the question is whether the Complaint alleges fiduciary breaches in the

context of the § 403 Plans in question.

               Jurisdiction Over Challenges to Vanguard Mutual Funds, the TIAA Real
               Estate Account and the TIAA Traditional Annuity

               Plaintiffs complain about the available classes of stock in the Vanguard funds, the

return on the TIAA Real Estate Account, and charges from the TIAA Traditional Annuity for

early withdrawal and/or for its time constraints on changing investments. Georgetown moves to

dismiss, arguing that Plaintiffs have sustained no injury-in-fact from any of these funds: neither

invested in the Vanguard mutual funds; the TIAA Real Estate Account, in which only Mr.

McGuire invested, performed well in the relevant class period; and only Mr. Wilcox invested in

the TIAA Traditional Annuity but he does not say whether he did so under the Defined

Contribution Plan or the Voluntary Plan, which have different withdrawal (and interest)

                                                  17
provisions; nor has he attempted to withdraw funds or change his investments. Plaintiffs counter

that they bring suit under 29 U.S.C. § 1132(a)(2) and (3) and since Plaintiffs sue “on behalf of

the Plans,” they “do not need to allege injury with respect to their individual benefit payments.”

Opp’n at 24.

               Plaintiffs mistake the difference between a defined benefit plan and a defined

contribution plan. In the former, an employer contributes to a general fund from which all

promised benefits are to be paid; an injury to the value of the general fund injures the chances

that all participants will receive the promised benefits. In certain circumstances, one or more

Participants may sue on behalf of the plan itself. See LaRue, 552 U.S. at 255 (“Misconduct by

the administrators of a defined benefit plan will not affect an individual’s entitlement to a

defined benefit unless it creates or enhances the risk of default by the entire plan.”) (citing Mass.

Mut. Life Ins. Co. v. Russell, 473 U.S. 134 (1985)). In a defined contribution plan, however, an

employer contributes a defined amount to an individual employee’s individual account, and

“fiduciary misconduct need not threaten the solvency of the entire plan to reduce benefits below

the amount that participants would otherwise receive . . . . [A]lthough § 502(a)(2) does not

provide a remedy for individual injuries distinct from plan injuries, that provision does authorize

recovery for fiduciary breaches that impair the value of plan assets in a participant’s individual

account.” Id. at 256. Thus, for either Plaintiff to have standing to sue about their defined

contribution Plan, he must show fiduciary breaches that impair his individual account’s value.

               Plaintiffs rely on 29 U.S.C. § 1132(a)(2) and (3) to support their rights to sue as

Participants. These provisions of ERISA, among others, provide standing to beneficiaries to sue

fiduciaries for imprudent actions. This statutory authority to sue, however, does not

automatically satisfy constitutional standing for all claims in this case. “Article III of the

                                                  18
Constitution limits [federal courts’] jurisdiction to ‘Cases’ and ‘Controversies.’” Millennium

Pipeline Co., LLC v. Seggos, 860 F.3d 696, 699 (D.C. Cir. 2017), and Georgetown argues that

without a cognizable personal injury-in-fact, Plaintiffs present no case or controversy redressable

by court order. “Standing to sue is a doctrine rooted in the traditional understanding of a case or

controversy,” under Article III. Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016). “[T]he

irreducible constitutional minimum of standing contains three elements.” Lujan v. Defenders of

Wildlife, 504 U.S. 555, 560 (1992). The D.C. Circuit has summarized these requirements quite

clearly:

               To satisfy the case-and-controversy requirement, a [plaintiff] must
               allege (i) that it suffered an injury in fact; (ii) that a causal
               connection exists between the injury and challenged conduct; and
               (iii) that it is likely, as opposed to speculative, that the injury will be
               redressed by a favorable decision.

Millennium Pipeline, 860 F.3d at 699 (citing Lujan, 504 U.S. at 560-61)).

               In a class action, the named plaintiffs must demonstrate that they have

Constitutional standing, O’Shea v. Littleton, 414 U.S. 488, 494 (1974), measured at the time the

complaint was filed. Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 830 (1989).

Measured by these standards, Plaintiffs clearly cannot allege an individual violation of ERISA as

to the Vanguard funds, which is an investment option neither Plaintiff selected.

               Georgetown also moves to dismiss Mr. Wilcox’s complaint about the 2.5% early-

withdrawal charge from the TIAA Traditional Annuity since he fails to allege that he has

attempted such a withdrawal or intends to leave his job and withdraw his funds. It argues that

“‘[a] claim is not ripe for adjudication if its rests upon contingent future events that may not

occur as anticipated, or indeed may not occur at all.’” Pfizer, Inc. v. Shalala, 182 F.3d 975, 978

(D.C. Cir. 1999) (quoting Texas v. United States, 523 U.S. 296, 301 (1998)). Mr. Wilcox

concedes this point by not contesting it. Opp’n at 21-22. Instead, he responds that Georgetown
                                                   19
fails to address his second claim that a Participant in the TIAA Traditional Annuity cannot re-

direct his investments into other options during his employment except in ten annual

installments, which allegedly limits Mr. Wilcox in his investments. Id. at 21 (“Tellingly,

Defendants do not take issue with Plaintiffs’ standing to bring a breach of fiduciary duty claim

concerning the ten annual installments . . . .”). 10

                In reply, Georgetown presses its original point that no injury has been shown by

either Plaintiff. It adds that the ten-year period for transferring money out of the TIAA

Traditional Annuity was disclosed on the first page of Mr. Wilcox’s Group Retirement Annuity

Certificate, issued on July 1, 2013, which is long before the three-year statute of limitations for

his claim relating to it. Reply Mem. in Supp. of Defs.’ Mot. to Dismiss Pls.’ Compl. (Defs.’

Reply) [Dkt. 27] at 6. 11

                As to the TIAA Real Estate Account, in which only Mr. McGuire invested,

Georgetown argues that Mr. McGuire suffered no harm because the TIAA Real Estate Account

out-performed the Vanguard REIT Account, which Mr. McGuire would prefer, during the

alleged class period. Plaintiffs complain about the “excessive expenses” of the former, Opp’n at

17, but comparing the TIAA Real Estate Account to the Vanguard REIT, net of fees, the TIAA

Real Estate Account still performed better. 12 Plaintiffs themselves acknowledge that the

10
   Inasmuch as Mr. McGuire has not invested in the TIAA Traditional Annuity, he has no
standing to complain of any of its terms, just as Mr. Wilcox cannot complain about the TIAA
Real Estate Account in which he did not invest.
11
   The Court also notes that these features—charges for lump sum distribution and annual
withdrawal requirements—are features “inherent in a guaranteed fixed annuity fund.” See Davis
v. Washington Univ. in St. Louis, Case No. 4:17-cv-1641, 2018 WL 4684244 at *4 (E.D. Mo.
Sept. 28, 2018)
12
   Compare Morningstar, TIAA Real Estate Account (QREARX),
http://www.morningstar.com/funds/XNAS/QREARX/quote.html, with Morningstar, Vanguard
Real Estate Index Institutional (VGSNX),

                                                   20
comparison “do[es] account for management, administrative, and 12b-1 fees and other costs

automatically deducted from fund assets.” 13 Nonetheless, Plaintiffs complain that the

Morningstar data “are not load adjusted,” that is, adjusted to reflect the sales charge(s). 14 But, as

Georgetown argues, the TIAA Real Estate Account does not charge investors any “load,” and so

the comparisons between returns for the TIAA Real Estate Account and the Vanguard REIT are

accurate. 15

               Further, the Court finds that Plaintiffs’ argument that Georgetown impermissibly

relies on hindsight, Opp’n at 18, reverses the appropriate timeline by which to measure fiduciary

duties. While an unhappy participant would improperly rely on hindsight to complain that his

investments underperformed others, the question regarding appropriate prudence by a fiduciary

necessarily depends on “information available to the fiduciary at the time of each investment

decision.” PBGC ex rel. St. Vincent Catholic Med. Ctrs. Ret. Plan v. Morgan Stanley Inv.

Mgmt., Inc., 712 F.3d 705, 716 (2d Cir. 2013) (quoting In re Citigroup ERISA Litig., 662 F.3d

128, 140 (2d Cir. 2011)). More importantly in this circumstance, the question is whether Mr.

McGuire suffered an injury-in-fact. During the relevant time period, his funds remained in the

better-performing TIAA Real Estate Account rather than the Vanguard REIT Account. He

http://www.morningstar.com/funds/xnas/vgsnx/quote.html last visited Dec. 11, 2018); see Fed.
R. Evid. 201(c).
13
   Opp’n at 19 (quoting Morningstar Report: Mutual Fund Data Definitions,
http://quicktake.morningstar.com/datadefs/fundtotalreturns.html (last visited Dec. 11, 2018)).
14
   See Morningstar Investing Glossary, “Load,”
http://www.morningstar.com/InvGlossary/load_definition_what_is.aspx (last visited Dec. 11,
2018).
15
   See, Morningstar, TIAA Real Estate Account,
https://www.morningstar.com/funds/XNAS/QREARX/quote.html (“Load”: “None”) (last visited
Dec. 11, 2018).

                                                  21
therefore experienced no loss or injury from that investment. See, e.g., Brown v. Medtronic, Inc.,

628 F.3d 451, 455 (8th Cir. 2018) (holding that, in an ERISA case, “at a minimum, a plaintiff

must allege a net loss in investment value that is fairly traceable to the defendants’ challenged

actions”) (emphasis added). (Since Mr. Wilcox did not invest in the TIAA Real Estate Account,

he has no standing to complain about its performance because he too has no injury to show.)

               Therefore, dismissal will be granted on the Complaint allegations concerning the

Vanguard funds, the 2.5% withdrawal charge from the TIAA Traditional Annuity, and the TIAA

Real Estate Account. Dismissal will also be granted as to Mr. McGuire’s claims concerning the

requirement of the TIAA Traditional Annuity requirement that funds be re-allocated over a ten-

year period because Mr. McGuire has never invested in the TIAA Traditional Annuity; he

therefore also lacks standing to represent other Plan Participants who did.

               CREF Stock Account

               Plaintiffs take issue with the “excessive fees and historical underperformance” of

the CREF Stock Account, Compl. ¶ 132, in comparison to the Russell 3000 and “other, lower-

cost actively and passively managed investments that were available to the Plans.” Id. ¶ 72.

Plaintiffs allege that Defendants failed to conduct an analysis of the CREF Stock Account

performance and investments fees and “had such an analysis been conducted by Defendants, they

would have determined that the CREF Stock Account would not be expected to outperform the

large cap retirement plan investment performance index after fees.” Id. ¶¶ 75-76. This argument

is based on a false premise and fails to state a plausible claim for relief.

               Plaintiffs’ allegation that “Defendants and TIAA-CREF identified the Russell

3000 index as the appropriate benchmark to evaluate the CREF Stock Account’s investment

results,” Compl. ¶ 77, oversimplifies and misstates the facts and governing law. As Georgetown

notes, and as explained in the relevant prospectus, the CREF Stock Account is a blend of U.S.
                                                  22
and foreign assets, such that domestic indices (like the Russell 3000) are comparators to only

part of its holdings. See Defs.’ Mem at 7, 27; Defs.’ Reply at 13; 2017 CREF Prospectus at 27.

This particular account “seeks to maintain the weightings of its holdings as approximately 65-

75% domestic equities and 25-35% foreign equities,” as detailed in its Prospectus. Defs.’ Mem.

at 7 n.13 (citing 2017 CREF Prospectus). However, applicable Department of Labor regulations

do not permit the use of a composite benchmark, so Plan Participant disclosures reference only

the Russell 3000 (domestic) component of the benchmark. See 29 C.F.R. § 2550.404a-

5(d)(1)(iii); Fiduciary Requirements for Disclosure in Participant Directed Individual Account

Plans, 75 Fed. Reg. 64,910, 64,916-17 (Oct. 20, 2010)). The CREF Stock Account explains that

the appropriate benchmark is a composite of the Russell 3000 and the MSCI All Country World

ex USA Investible Market Index. With full advice and knowledge of these facts, Plaintiffs’

argument that the CREF Stock Account underperformed the Russell 3000, and that this indicates

imprudence on the part of Defendants, is without merit.

               Plaintiffs’ further argument that the fund underperformed “other, lower-cost

actively and passively managed investments that were available to the Plans” similarly is

unavailing. First, ERISA does not provide a cause of action for “underperforming funds.” See

Sweda v. Univ. of Penn., Case No. 16-cv-43292017, WL 4179752 at *10 (E.D. Pa. Sept. 21,

2017). Second, a fiduciary is not required to select the best performing fund, Meiners v. Wells

Fargo & Co., 898 F.3d 820, 823 (8th Cir. 2018), but instead to “discharge their duties with care,

skill, prudence, and diligence under the circumstances then prevailing” when they make

decisions. 29 U.S.C. § 1104(a)(1)(B). That the CREF Stock Account, with its deliberate mix of

foreign and domestic investments, may not have performed as some purely domestic accounts

with different investments does not indicate imprudence on the part of Defendants. Again,

                                               23
Plaintiffs ignore the facts of this case in apparently adopting allegations from other cases that are

unsuited to the Plans. Notably, the independent analyst Morningstar rated the CREF Stock

Account as a 5-start investment option, which also counters Plaintiffs’ allegations of imprudence.

                Recordkeeping Fees

               Much of Plaintiffs’ ire is focused on their allegations that Defendants failed to

monitor and control “duplicative, excessive, and unreasonable fees.” Opp’n at 23. They allege

that Defendants breached their fiduciary duties by allowing three recordkeepers—TIAA,

Vanguard and Fidelity—and thereby “creat[ed] needless additional expense and complexity.”

Opp’n at 29. Plaintiffs recognize that recordkeeping services are “a necessary administrative

requirement for retirement plans. A recordkeeping firm keeps track of participant accounts, and

creates an online portal where participants can view their accounts.” Id. at 22 n.14. However,

they allege that such services, if performed by a single entity, could be provided across all the

three investment platforms for a “reasonable amount of a fixed fee . . . in the range of $35” each

year for each participant. Id. at 23.

               Georgetown responds that there is no inference of fiduciary mismanagement from

the fact that TIAA, Vanguard, and Fidelity keep separate records for their own accounts.

Georgetown’s arguments distinguish between different kinds of defined contribution plans, that

is, “university plans like Georgetown’s [and] corporate 401(k) plans that look nothing like

Georgetown’s.” Defs.’ Mem. at 27. Georgetown insists that its approach to recordkeeping is

consistent with the norms of its peers’ higher-education plans, for which “‘[t]he traditional

403(b) plan has historically been implemented through a multi-provider recordkeeper platform,’”

and that “arrangement remains ‘[t]he most prevalent model by far.’” Id. at 17 (citations omitted).

Georgetown notes that ERISA requires fiduciaries to act as would a reasonable individual “in the

conduct of an enterprise of a like character and with like aims,” 29 U.S.C. § 1104(a)(1)(B), and
                                                 24
asks the Court to find that the appropriate peer group against which to measure its conduct is

fiduciaries at other private universities, not fiduciaries of corporate 401(k) plans. Plaintiffs

contend that ERISA litigation against university trustees is suddenly popular (“dozens of

lawsuits”) because university fiduciaries “ignored what was going on in the defined contribution

world” and “engaged in the same bad behavior” by ignoring recordkeeping costs. Opp’n at 28.

               Nonetheless, Plaintiffs fail to identify a single one of the “any number of

university plans [that] provide for a single recordkeeper with investment choices offered by

multiple fund managers,” Compl. ¶ 47, much less one that offers the TIAA Traditional Annuity

and other investment platforms through a single recordkeeper. To the contrary, Plaintiffs only

identify multiple cases in which district courts have found such allegations sufficient to proceed

to discovery. See Opp’n at 1 n.3-4.

               This Court finds that neither party is quite right. When it comes to recordkeeping,

the relevant difference between Georgetown’s § 403(b) plans and corporate § 401(k) plans is not

the nature of their defined contributions but the nature of the retirement investment programs

offered to their employees, i.e., long-term annuities and short-term investments. Plaintiffs allege

that recordkeeping for their TIAA annuities could and should have been consolidated with

recordkeeping for the mutual funds offered by Vanguard and Fidelity, thereby reducing such

costs by millions of dollars. The Complaint alleges that participants in the Georgetown Plans

should pay only $35/year per participant for recordkeeping services for all three investment

platforms. Compl. ¶ 53.

               While a plaintiff is entitled to the reasonable inferences that may arise from the

facts asserted in his complaint, Plaintiffs provide no factual support at all for their assertion that

the Plans should pay only $35/year per participant in recordkeeping fees. They cite no example

                                                  25
of any non-TIAA entity performing recordkeeping for TIAA annuities, which, of course, are

based on decades worth of investments. See Ex. B, Supp. Auth. Slip Op. & Order, Sacerdote v.

New York Univ., Case No. 16-cv-6284 (S.D.N.Y. July 31, 2018) [Dkt 28-2] at 49 (finding, after

trial, that “no other vendor has ever recordkept TIAA annuities[] even if it were legally possible

to have another vendor do so . . . .”).

                A claim that fiduciaries were imprudent by allowing excessive fees “must be

supported by facts that take the particular circumstances into account.” Id. at 13 (citing Young v.

Gen. Motors Inv. Mgmt. Corp., 325 Fed. App’x 31, 33 (2d Cir. 2009); Braden v. Wal-Mart

Stores, Inc., 588 F.3d 585, 601 n.7 (8th Cir. 2009) (noting that, although “a bare allegation that

cheaper alternative investments exist in the marketplace” is not sufficient to state a claim for a

breach of fiduciary duty under ERISA, a court ruling on a motion to dismiss must rest its

conclusions “on the totality of the specific allegations in [the] case”); see also Gartenberg v.

Merrill Lynch Asset Mgmt., 694 F.2d 923, 928 (2d Cir. 1982); Krinsk v. Fund Asset Mgmt., Inc.,

875 F.2d 404, 409 (2d Cir. 1989)).

                Georgetown admits that it could have materially changed the Plans and thereby

reduced recordkeeping costs: (i) it could have “abandoned annuities, which are more expensive

to administer, but . . . would have caused participants to lose important and meaningful

benefits”; (ii) it could have redesigned the Plans to take a “no-frills” approach, by which

participants would have received only federally-mandated notices and no individual investment

advice; and/or (iii) it could have dropped the TIAA annuities or the Fidelity mutual funds to

attempt to reach a cost of $35/year. Defs.’ Mem. at 18-19. Notably, Plaintiffs do not allege that

the currently available investment resources would remain available at their preferred price of

$35/year.

                                                 26
               Plaintiffs’ allegations challenge the fundamental structures of the Georgetown

Plans, not the fiduciary attentions or prudence of its Trustees. Indeed, the Plans could be

transformed from what they are to something else. But Plaintiffs provide no evidence that the

three entirely different current investment platforms—TIAA, Vanguard, and Fidelity—would

agree to continue the same offerings at a lesser, or combined, recordkeeping price; nor have they

identified any college or university that has accomplished that feat. Plaintiffs allege that the

value of Georgetown’s two Plans gives it sufficient bargaining power to accomplish such a

merger, but that is not the legal question presented by their Complaint. A fiduciary may carry

out his duties in different ways but whether he violates his duty of prudence requires that “the

advisor-manager must charge a fee that is so disproportionately large that it bears no reasonable

relationship to the services rendered and could not have been the product of arm’s-length

bargaining.” Gartenburg, 694 F.2d at 929. Plaintiffs’ allegations fail to meet this standard.

               Plaintiffs do not allege self-dealing between the Plans’ trustees and the

recordkeepers. See Laboy v. Bd. of Trustees of Bldg Serv. 32 BJ SRSP, 513 Fed. App’x. 78, 80

(2d Cir. 2013). At most, they allege that the Trustees have not altered the Plans’ recordkeepers

(and, perhaps, its investment strategies) to lower costs to their preferred price. The mere

allegation that Georgetown could continue to offer the same Plans and the same associated

services for $35/year has no factual support, is entirely speculative, contrary to caselaw and

common sense, and does not warrant discovery.

                                                 27
                                    IV. CONCLUSION

              For the aforementioned reasons, Defendants’ Motion to Dismiss, Dkt. 18, will be

granted. A memorializing Order accompanies this Memorandum Opinion.

Date: January 8, 2019
                                                  ROSEMARY M. COLLYER
                                                  United States District Judge

                                             28