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Rozo v. Principal Life Ins. Co.

United States District Court for the Southern District of Iowa, Central Division

May 12, 2017, Decided; May 12, 2017, Filed

No. 4:14-CV-000463-JAJ-CFB



This case arises from Plaintiff Frederick Rozo's three-count first amended complaint, filed October 15, 2015, alleging that Defendant Principal Life Insurance breached its fiduciary duty of loyalty under [*2]  the Employee Retirement Income Security Act ("ERISA") sections 502(a)(2) and 502(a)(3) (29 U.S.C. §§ 1132(a)(2), (3)) and engaged in ERISA-prohibited transactions, or, in the alternative, that Defendant engaged in ERISA-prohibited transactions as a party in interest. [Dkt. No. 67 (This complaint was amended after one of the original defendants was dismissed.)] On November 22, 2016, Plaintiff filed a Motion to Certify Class and requested oral argument. [Dkt. No. 101] On January 6, 2017, Defendant resisted. [Dkt. No. 108] On February 3, 2017, Plaintiff replied. [Dkt. No. 116] The Court held a motion hearing on April 27, 2017. [Dkt. 123] The parties dispute whether Plaintiff's proposed class meets the class certification criteria pursuant to Federal Rule of Civil Procedure Rule 23(a), 23(b)(1), and 23(b)(3). For the reasons that follow, Plaintiff's motion to certify class is GRANTED.


A. Plaintiff and the Proposed Class

Plaintiff Frederick Rozo ("Rozo") and the proposed class members are or were retirement plan participants who invested in Defendant Principal Life Insurance Company's ("Principal") Principal Fixed Income Option ("PFIO") plan. Plan participants' ERISA plans entered into a contract ("Contract") with Principal. The terms of the Contract were uniform and did not vary among [*3]  the proposed class members. Rozo defines the proposed class as, "all participants in and beneficiaries of defined contribution employee pension benefit plans within the meaning of ERISA § 3(2)(A), 29 U.S.C. § 1002(2)(A), who had funds invested in the PFIO contract CGF01 from six years before the filing of this action until the time of trial." Rozo was invested in the PFIO through his employer-sponsored 401(k) plan from 2008 through 2013. Other members of the class participated through 401(a) and 457 plans (in addition to 401(k) plans).

Plan participants contributed funds to the PFIO, which Principal invested in fixed-income securities, mostly bonds.1 These investments produced a return; Principal retained some of the return and distributed some to participants. Under the Contract, Principal determined plan participants' return on investment in the PFIO every six months using a Composite Credit Rate ("CCR"). The amount retained by Principal after paying the CCR to plan participants and paying its actual expenses is called the "margin." On average, the margin here was 2.69%. Rozo alleges, on behalf of himself and a proposed class of similarly situated individuals, that: (1) Principal's discretionary control of the CCR renders [*4]  it a functional fiduciary over participants' plan assets; and (2) Principal violated ERISA by retaining compensation (the margin) it was not entitled to as a fiduciary. Rozo argues that this case is well-suited for class-wise resolution because the CCR and the process for setting the CCR were uniform across the class; thus, all members of the proposed class would recover in direct proportion to their investments in the PFIO. Principal's arguments against certification are detailed below.

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2017 U.S. Dist. LEXIS 82183 *; 62 Employee Benefits Cas. (BNA) 2681

FREDERICK ROZO, individually and on behalf of all others similarly situated, Plaintiff, vs. PRINCIPAL LIFE INSURANCE COMPANY, Defendant.

Prior History: Rozo v. Principal Life Fin. Ins. Co., 2015 U.S. Dist. LEXIS 175630 (S.D. Iowa, Sept. 21, 2015)


proposed class, plan participant, class member, calculating, damages, certification, class action, fiduciary, formulaic, deducts, argues, individualized, deposit, pricing, class certification, adjudications, invested, certify, monetary relief, question of law, class period, decisions, parties

Civil Procedure, Justiciability, Standing, Injury in Fact, Constitutional Law, Case or Controversy, Elements, Special Proceedings, Class Actions, Certification of Classes, Prerequisites for Class Action, Prerequisites for Class Action, Adequacy of Representation, Commonality, Typicality, Maintainability, Pensions & Benefits Law, Civil Litigation, Causes of Action, Breach of Fiduciary Duty, ERISA, Class Actions, Evidence, Inferences & Presumptions, Presumptions, Creation