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Tracey v. MIT

United States District Court for the District of Massachusetts

October 19, 2018, Decided; October 19, 2018, Filed

Civil Action No. 16-11620-NMG

Opinion

MEMORANDUM & ORDER

GORTON, J.

This case involves an alleged breach of fiduciary duty by Massachusetts Institute of Technology ("MIT" or "defendants") with respect to the supervision of its employee-sponsored defined contribution plan under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1109. Plaintiffs seek to certify a class of all MIT employees who participated in the subject retirement plan, excluding defendants, from August 9, 2010, to the date of judgment. The named plaintiffs are four current or former employees of MIT who did just that.

The underlying claims are for alleged excessive recordkeeping fees and imprudent investment lineups. Defendants do not oppose [*3]  plaintiffs' request for class treatment regarding plaintiffs' claim for excessive recordkeeping fees but they do oppose class certification for the separate claims that the investment lineup of the retirement plan should be altered in various ways. The legal analysis that follows addresses only the latter dispute regarding the Plan's investments.

I. Background

A. Factual Background

Massachusetts Institute of Technology ("MIT") is a non-profit educational and research institution that offers its employees an employer-sponsored defined contribution plan ("the Plan"). The Plan is funded through employee contributions and matching contributions from MIT. Under ERISA, the Plan's assets are held in a single trust for the exclusive benefit of the Plan's participants. 29 U.S.C. § 1103(a). MIT serves as the Plan's administrator and named fiduciary with the ultimate responsibility for the management and operation of the Plan. MIT has delegated its investment-related duties to the MIT Supplemental 401(k) Plan Oversight Committee. That committee determines the available investment options in which participants may invest their accounts.

In 1999, MIT contracted with Fidelity Investments Operations Company to serve as [*4]  the Plan's recordkeeper and Fidelity Management Trust Company to serve as the Plan's Trustee. Until 2015, plaintiffs allege that the Plan consisted of over 300 investment options primarily advised by Fidelity Management & Research Company. Plaintiffs further allege that defendants agreed to include almost every Fidelity mutual fund in the Plan without vetting the funds (approximately 180 options).

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2018 U.S. Dist. LEXIS 179945 *; 2018 WL 5114167

Tracey, et al., Plaintiffs, v. MIT, et al., Defendants.

Prior History: Tracey v. Mass. Inst. of Tech., 2017 U.S. Dist. LEXIS 162806 (D. Mass., Aug. 31, 2017)

CORE TERMS

class member, plaintiffs', options, commonality, defendants', imprudent, adequacy, lineup, fiduciary duty, recordkeeping, named plaintiff, consolidation, intra-class, certify, class certification, mutual fund, funds, proposed class, deny a motion, parties, invest, oppose, prongs