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United States Court of Appeals for the Seventh Circuit
October 19, 2010, Argued; April 11, 2011, Decided
[*788] Adelman, District Judge. Plaintiffs, current and former employee-participants in the Section 401(k) plan (the "Plan") of Kraft Foods Global, Inc. ("Kraft") brought this class action against various individuals and entities associated with the Plan, alleging that they breached their fiduciary duties under the Employee Retirement Income Security Act of 1974 ("ERISA") by imprudently allowing the Plan to incur excessive expenses and generate insufficient returns. 2 The [**2] district court certified a plaintiff class composed of Plan participants but ultimately granted summary judgment to defendants. 3 Plaintiffs appeal this grant of summary judgment along with two of the district court's procedural rulings—its order denying plaintiffs' motion for leave to file an amended complaint and its order excluding the testimony of one of plaintiffs' expert witnesses, Dr. Edward O'Neal. We affirm the procedural rulings and affirm in part and reverse in part the grant of summary judgment.
The Kraft Plan was a defined contribution plan within the meaning of ERISA, see 29 U.S.C. § 1002(34), and was structured as a typical Section 401(k) plan. The Plan established an account for each participant, and participants were allowed to [**3] contribute up to a specified amount of their wages to that account. To an extent, Kraft made matching contributions on behalf of its employees. Upon retirement, a participant had whatever the account had accumulated through contributions and investment earnings.
Between 2000 and 2006, the Plan had between 37,000 and 55,000 participants and between $2.7 billion and $5.4 billion in assets. Participants were able to direct their contributions into one or more mutual funds, and during the relevant time the Plan allowed participants to choose from a menu of seven to nine different funds. Two of these funds were company stock funds ("CSFs"), which invested almost exclusively in the common stock of Kraft and Kraft's then-parent company, Altria Group, Inc. (formerly Philip Morris). 4 The Plan also offered various multi-stock funds, two of which are relevant to this case, the Growth Equity Fund and the Balanced Fund.
In connection with their administration of the Plan, the Plan fiduciaries hired various service providers, including a recordkeeper, Hewitt Associates ("Hewitt"), and a trustee, State Street Bank & Trust Company ("State Street"). [**4] Hewitt's job was to keep track of the various accounts and transactions associated with the Plan and to assist Plan participants in managing their accounts. State Street's job was to hold and manage the Plan's assets. The fees of both Hewitt and State Street were paid out of Plan assets.
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641 F.3d 786 *; 2011 U.S. App. LEXIS 7404 **; 50 Employee Benefits Cas. (BNA) 2761; 79 Fed. R. Serv. 3d (Callaghan) 526
GERALD GEORGE, et al., Plaintiffs-Appellants, v. KRAFT FOODS GLOBAL, INCORPORATED, et al., Defendants-Appellees.
Subsequent History: Class certification granted by, Settled by George v. Kraft Foods Global, Inc., 2012 U.S. Dist. LEXIS 26536 (N.D. Ill., Feb. 29, 2012)
Prior History: [**1] Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 07 C 01713—Sidney I. Schenkier, Magistrate Judge.
George v. Kraft Foods Global, Inc., 684 F. Supp. 2d 992, 2010 U.S. Dist. LEXIS 6674 (N.D. Ill., 2010)
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Business & Corporate Compliance, Fiduciaries, Fiduciary Responsibilities, Duty of Prudence, Civil Procedure, Judicial Officers, Judges, Discretionary Powers, Pleadings, Amendment of Pleadings, Leave of Court, Appeals, Standards of Review, Abuse of Discretion, De Novo Review, Summary Judgment, Appellate Review, Standards of Review, Judgments, Evidentiary Considerations, Entitlement as Matter of Law, General Overview, Trials, Judgment as Matter of Law