“It is entirely possible that a particular individual happened to invest in Tier III funds that outgained an alternative, prudent lineup of funds. Take a far-fetched hypothetical: assume an individual invested in a particular Tier III fund that increased by 10,000 percent. That would unquestionably be a superior return to an otherwise alternative, prudent lineup. Because the Class 1 definition might include these hypothetical individuals who actually benefited from investing in Tier III funds, the Shell Defendants argue that class certification is improper.”  However: “Although a class certainly should not be certified if it is apparent that it contains a great many persons who have suffered no injury at the hands of the defendant, I cannot presently make that assessment. The Shell Defendants cursorily assert that not all Tier III participants might have suffered harm. What I do know from the class certification submissions is that Plaintiffs believe the Plan lost over $70 million due to the utilization of Tier III investments. Once a class is certified, Plaintiffs will have to conduct the necessary damage calculations, plaintiff by plaintiff, to determine whether each class member who invested in Tier III suffered damages. The Shell Defendants might very well offer their own damage calculations. At some time in the course of the litigation the district court will have to determine whether each of the absent class members has standing before they could be granted any relief. This just does not need to be done at the initial class certification stage.”

With respect to the adequacy issue: “If Shell were continuing to charge all fees to Tier III only, there could be antagonism between participants who wished to continue this arrangement and those who desired change. But that is not the situation at hand. At the end of September 2020, Shell eliminated Tier III and the practice of charging only Tier III investors for recordkeeping and administrative fees incurred by all Plan participants. Thus, the relief sought, recovery from Shell of excessive fees previously paid, cannot possibly harm any class member. Adequacy is only defeated when there is a ‘fundamental’ conflict ‘going to the specific issues in controversy.’ It is clear that there is no fundamental conflict that prohibits Lawrence or Coble from representing the class. The economic interests and objectives of Lawrence and Coble do not differ significantly from the economic interests and objectives of unnamed class members. Notably, the Shell Defendants fail to articulate how the relief sought by Plaintiffs from the Shell Defendants could possibly harm putative class members. No class member faces the risk of having to disgorge any money to the Plan.”

With respect to the (b)(1) certification, the Magistrate Judge agreed with plaintiffs that “allowing thousands of individuals to pursue separate actions on behalf of the Plan could result in varying adjudications on numerous issues, resulting in conflicting and incompatible standards of conduct for the Shell Defendants. For example, Plaintiffs seek to remove the fiduciaries who have breached their fiduciary duties and enjoin them from future ERISA violations. As the Fifth Circuit posited in Langbecker, a judgment removing the fiduciaries in one lawsuit would be inconsistent with a judgment in another permitting them to stay. Plaintiffs also ask the Court to reform the Plan to obtain bids for recordkeeping and to pay only reasonable recordkeeping expenses and reform the Plan to obtain bids for managed account services and to pay only reasonable managed account service fees.  A judgment that reforms the Plan in one case would be inconsistent with a judgment in another case not requiring reformation. Accordingly, I find that certification under Rule 23(b)(1)(A) is warranted to avoid contradictory rulings and inconsistent dispositions that would prejudice the Shell Defendants.”

 

Harmon v. Shell Oil, No.20-0021, 2023 WL 5758889, 2023 U.S.Dist.LEXIS 157163 (S.D.Tex. Sept. 6, 2023).