Until recently, many assumed that class certification in 401(k) plan litigation involving ERISA breach of fiduciary duty claims was nearly automatic. With class certification granted at a high rate, some employers even stipulated to class certification.  However, recent decisions by the Fourth Circuit in Trauernicht v. Genworth Financial Inc. and the Ninth Circuit in Alorica, Inc. v. Munoz show that class certification is not automatic. 

Both appellate decisions reversed district court orders granting class certification in lawsuits alleging the 401(k) plan fiduciaries breached their ERISA fiduciary duties by including and retaining underperforming investment funds in the 401(k) plan along with other claims. Both decisions are based on the premise that not all participants suffered the same alleged harm and would have experienced individualized monetary losses based on their specific plan investments.  

The decisions show that employers, plan fiduciaries, and their counsel should no longer begrudgingly accept that class certification is nearly automatic in 401(k) plan litigation involving ERISA breach of fiduciary duty claims, especially in lawsuits filed within the Fourth and Ninth Circuits. At a minimum, it will be important to consider whether specific claims could be viewed as involving alleged losses that are individualized, such as those involving claims challenging specific plan investment options.