Schissler v. Janus Henderson US (Holdings) Inc. et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 1:22-cv-02326-RM-SBP
SANDRA SCHISSLER, KARLY SISSEL, and
DERRICK HITTSON, individually and as a
representative of a class of similarly situated
persons, and on behalf of the Janus 401(k)
and Employee Stock Ownership Plan,
Plaintiffs,
v.
JANUS HENDERSON US (HOLDINGS) INC.,
JANUS HENDERSON ADVISORY COMMITTEE, and
JOHN and JANE DOES 1-30,
Defendants.
RECOMMENDATION TO GRANT IN PART AND DENY IN PART
DEFENDANTS’ MOTION TO DISMISS
Susan Prose, United States Magistrate Judge
This matter is before this court on the motion to dismiss of Defendants Janus Henderson
US (Holdings) Inc. (“Janus”) and Janus Henderson Advisory Committee (the “Committee”).
ECF No. 39 (“Motion to Dismiss” or “Motion”). Janus and the Committee move to dismiss the
amended putative class action complaint of Plaintiffs Sandra Schissler, Karly Sissel, and Derrick
Hittson. ECF No. 31 (Am. Complt.). The motion is referred to this court for a recommendation
under 28 U.S.C. § 636(b)(1)(B). ECF No. 4 (Order Referring Case), ECF No. 41
(Memorandum). As explained below, this court concludes that nearly all of Plaintiffs’ claims are
plausible. The court accordingly RECOMMENDS largely denying the motion to dismiss and
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
1 of 53

2
granting it only with respect to part of the breach of fiduciary duty claim against Janus.
BACKGROUND
I. 	Plaintiffs’ claims
Plaintiffs bring claims on behalf of themselves, a putative class of similarly situated
persons, and the Janus 401(k) and Employee Stock Ownership Plan (the “Plan”) under the
Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001, et seq.
(“ERISA”). Plaintiffs sue Defendants Janus, the Committee, and John and Jane Does 1-30 (“Doe
Defendants”) as fiduciaries of the Plan.1 This court takes the following fact allegations from the
Amended Complaint.
The Plan is a defined contribution plan. “A defined contribution plan ‘provides for an
individual account for each participant and for benefits based solely upon the amount contributed
to the participant’s account.’” Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 439 (1999)
(quoting 29 U.S.C. § 1002(34)). Defendants attach excerpts of the Plan to the Declaration of Sara
Bussiere in support of their motion. ECF No. 40-1.2
Plaintiffs have each participated in the Plan during the time period at issue. They allege
that “[a]t the expense of the Plan and its participants and beneficiaries, Defendants breached their
fiduciary duties with respect to the Plan in violation of ERISA. Defendants applied a disloyal and
imprudent preference for Janus Henderson proprietary funds within the Plan (‘JH Funds’),
1 The Doe Defendants were or are members of the Committee during the relevant time period.
ECF No. 31 (Am. Complt.). The motion to dismiss does not address the Doe Defendants.
2 Plaintiffs refer to the Plan throughout the Amended Complaint; it is central to the claims.
Plaintiffs do not dispute the authenticity of the excerpts filed at ECF No. 40-1. Accordingly, the
court considers the excerpts of the Plan without converting the motion to summary judgment
under Rule 12(d). Gee v. Pacheco, 627 F.3d 1178, 1186 (10th Cir. 2010).
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
2 of 53

3
despite their poor performance and high costs.” Am. Complt. ¶ 1. They further allege that
“Defendants’ disloyalty and imprudence [in doing so] has cost plan participants millions of
dollars over the putative class period,” which begins on September 9, 2016 Id. ¶ 1 n.1. Plaintiffs
each invested in several of the JH Funds during the putative class period. Am. Complt. ¶¶ 11-13.
Plaintiffs further allege that “[f]or investment management companies (like Janus
Henderson), the potential for disloyal and imprudent conduct is especially high because the
plan’s fiduciaries can benefit the company by stocking the plan’s investment menu with
proprietary funds that a non-conflicted and objective fiduciary would not choose.” Id. ¶ 4.
Plaintiffs allege that is what happened here: instead of acting in the participants’ interest, as
ERISA requires for actions taken in the role of a fiduciary, Defendants allegedly “used the Plan
to promote Janus Henderson’s proprietary investments and earn profits for Janus Henderson.” Id.
¶ 6.
Plaintiffs allege that Defendants acted in the interest of Janus and not in the interest of the
Plan’s beneficiaries in several ways. First, Defendants included all JH Funds in the Plan without
analyzing those funds’ relative strength or weakness as investment options, and they did not
voluntarily remove any of them during the putative class period:
[f]rom 2016 until 2021, certain [JH] Funds were eliminated from the Plan’s menu
due to liquidations or mergers. But Defendants did not choose to remove a single
proprietary Janus Henderson investment from the Plan’s menu during that time. In
fact, they often added new proprietary [JH] Funds shortly after each fund’s
creation. So, by the end of 2021, the Plan’s menu consisted of 50 investments,
including 40 proprietary [JH] Funds.
Am. Complt. ¶ 18 (emphasis added, note omitted).3 In fact, by Janus’s design, the written Plan
3 The number of JH Funds in the Plan varied somewhat over the putative class period. Plaintiffs
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
3 of 53

4
itself expressly provides that “the Janus [Henderson] Funds may be removed as investment
options under the Plan only by amendment of the Plan by [Janus].” Id. ¶ 19 (emphasis added).
“The Plan’s terms also provide Janus Henderson with (1) the ‘right at any time to amend’ the
Plan; and (2) the right to remove the [JH] Funds from the Plan’s menu.” Id. ¶ 25. Janus did not
amend the Plan to remove any JH Funds during the class period.
Second, Plaintiffs allege the JH Funds were the only actively managed, non-money
market or non-inflation protected investment options throughout the putative class period.4 Id.
¶ 43. They allege that no other ERISA plan offers exclusively JH Funds for this category of
investment option. Id.
Third, Plaintiffs allege the JH Funds had above-average expenses (fees to the
participants) compared to their benchmarks and did not have commensurate, above-average
performance. See, e.g., Am. Complt. ¶¶ 1, 6, 44. Plaintiffs allege that even small differences in
expense ratios generate significant differences in performance over time for participants. Id. ¶ 40
allege that “[a]s of the end of 2016, the Plan’s investment menu included 53 investments,
including 44 proprietary [JH] Funds.” Am. Complt. ¶ 18 (note omitted). “The Plan’s proprietary
investments include those managed by Janus Henderson and its subsidiaries, including Intech
Investment Management LLC and Perkins Investment Management.” Id. ¶ 18 n.4. “The Plan’s
target-date series (managed by Fidelity) was added to the Plan in 2018 and is counted as a single
investment option.” Id. at n.5.
4 Plaintiffs do not take issue with the nonproprietary, low-cost or passively managed investment
options that Janus included in the Plan. Those investment options included:
low-cost index funds managed by Vanguard and Fidelity with expense ratios
between 0.02% to 0.11%, a passively managed target-date fund series managed by
Fidelity with expense ratios between 0.07% and 0.12%, an actively managed
inflation-protected securities fund managed by Vanguard at an expense ratio of
0.07%, and money market funds managed by Fidelity with expense ratios between
0.15% to 0.32%.
Am. Complt. at 14 n.11.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
4 of 53

5
n.8. They allege the high expense ratios combined with the average (or below average)
performance of the JH Funds has cost Plaintiffs in earning less on their investments than they
would have if Defendants had properly exercised their fiduciary duties. Id. ¶ 6. Specifically,
Plaintiffs allege that “[a]n objective and prudent review of comparable investments in the
marketplace would have revealed numerous available investments that were less costly and
superior to the [JH] Funds that Defendants selected and retained in the Plan.” Id.
Meanwhile, the Plan had significant assets under management during the putative class
period––approximately $246 million to $512 million in assets. Id. ¶ 17. This size allowed Janus
to “seed” the new proprietary mutual funds that it developed during the class period, and
otherwise to support Janus’s ongoing mutual funds. Id. ¶ 65. “While Defendants’ disloyal and
imprudent conduct generated significant profits for Janus Henderson, it has cost participants
millions of dollars in excessive fees and lost investment returns since the start of the putative
class period.” Id. ¶ 6.
After the above overview of their claims, Plaintiffs allege fourteen pages of facts to state
more specifically how and why they believe Defendants’ “process for selecting and monitoring
investments was disloyal and imprudent.” Am. Complt. at 13. Plaintiffs begin this section by
noting they are not asserting that “including proprietary funds in a plan’s investment menu” is a
breach of fiduciary duty in itself. Id. ¶ 42. Rather, Plaintiffs allege Defendants failed to exercise
loyalty and prudence in (1) automatically including all JH Funds in the Plan’s menu by the
express terms of the Plan, such that (2) the JH Funds were the only actively managed investment
options in the Plan (other than a mutual fund focused on inflation-protected securities),
(3) several of the JH Funds were added to the menu soon after their inceptions and therefore with
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
5 of 53

6
no performance history by which to assess their likely future performance, and (4) the JH Funds
had higher fees than their benchmarks without commensurate outperformance thereof.
Plaintiffs allege that Defendants failed to analyze the JH Funds when they were
introduced in the Plan and failed to monitor them for these issues thereafter. Am. Complt. ¶¶ 42-
66. Plaintiffs include several tables comparing various JH Funds’ expense ratios and
performance against benchmarks and averages. Plaintiffs include several footnotes alleging
further details of the benchmarks and performance data on which Plaintiffs rely. They allege that
a loyal fiduciary (i.e., one who was focused solely on the participants’ interests) would not have
included all JH Funds in the investment menu because of the high fees without commensurate
performance. They further allege that a prudent fiduciary likewise would not have done so.
Based on these allegations, Plaintiffs assert claims (on their own behalf, that of the Plan,
and a putative class of similarly situated persons elsewhere defined in the Amended Complaint):
Count One, against all Defendants for a breach of the fiduciary duties of loyalty and prudence
under 29 U.S.C. §§ 1104(a)(1)(A)-(B), Am. Complt. ¶¶ 77-82; and Count Two, against Janus for
failure to monitor the Committee, id. ¶¶ 83-87. They further claim that each Defendant is “also
subject to co-fiduciary liability under 29 U.S.C. § 1105(a)(1)-(3) because they enabled other
fiduciaries to commit breaches of fiduciary duties, failed to comply with 29 U.S.C. § 1104(a)(1)
in the administration of their duties, and/or failed to remedy other fiduciaries’ breaches of their
duties, despite having knowledge of the breaches.” Am. Complt. ¶ 34.5
II. 	Defendants’ Motion to Dismiss
Defendants move to dismiss the Amended Complaint for lack of subject matter
5 The court will address additional fact allegations, as appropriate, in the analysis below.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
6 of 53

7
jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1), arguing that Plaintiffs lack
standing to challenge the inclusion in the Plan of JH Funds in which they did not personally
invest. Motion at 7-8. Defendants further argue that the Amended Complaint should be
dismissed in its entirety pursuant to Federal Rule of Civil Procedure 12(b)(6) because Plaintiffs
have failed to plausibly allege an ERISA violation. Id. at 8-20.
LEGAL STANDARDS
I. 	Motions to Dismiss for Lack of Subject Matter Jurisdiction Under Rule 12(b)(1)
Federal courts are courts of limited jurisdiction and, as such, “are duty bound to examine
facts and law in every lawsuit before them to ensure that they possess subject matter
jurisdiction.” Wilderness Soc. v. Kane Cnty., 632 F.3d 1162, 1179 n.3 (10th Cir. 2011) (Gorsuch,
J., concurring); see also Cellport Sys., Inc. v. Peiker Acustic GMBH & Co. KG, 762 F.3d 1016,
1029 (10th Cir. 2014) (explaining courts have an independent obligation to ensure subject matter
jurisdiction exists). Pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, a party
may bring either a facial or factual attack on subject matter jurisdiction, and a court must dismiss
a complaint if it lacks subject matter jurisdiction. See Pueblo of Jemez v. United States, 790 F.3d
1143, 1147 n.4 (10th Cir. 2015). As relevant here, where the alleged jurisdictional defect is
standing, the party invoking federal jurisdiction bears the burden of establishing standing. Lujan
v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). The burden of establishing jurisdiction rests
with the party asserting jurisdiction. See Kline v. Biles, 861 F.3d 1177, 1180 (10th Cir. 2017).
II. 	Motions to Dismiss for Failure to State a Claim Under Rule 12(b)(6)
Under Federal Rule of Civil Procedure 12(b)(6), Defendants can move to dismiss for
“failure to state a claim upon which relief can be granted.” In deciding a motion under Rule
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
7 of 53

8
12(b)(6), the court must “accept as true all well-pleaded factual allegations . . . and view these
allegations in the light most favorable to the plaintiff.” Casanova v. Ulibarri, 595 F.3d 1120,
1124-25 (10th Cir. 2010) (quoting Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009)).
Nevertheless, a plaintiff may not rely on mere labels or conclusions, “and a formulaic recitation
of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007) (internal citation omitted). “Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). To survive a motion to dismiss, “a complaint must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on its face.” Id. (internal quotation
marks omitted). That is, the complaint must include well-pleaded facts that, taken as true,
“allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Id.
The Twombly/Iqbal pleading standard first requires the court to identify which allegations
“are not entitled to the assumption of truth” because, for example, they state legal conclusions or
merely recite the elements of a claim. Id. at 679. It next requires the court to assume the truth of
the well-pleaded factual allegations “and then determine whether they plausibly give rise to an
entitlement to relief.” Id. In this analysis, courts “disregard conclusory statements and look only
to whether the remaining factual allegations plausibly suggest the defendant is liable.” Khalik v.
United Air Lines, 671 F.3d 1188, 1191 (10th Cir. 2012). Additionally, “factual allegations that
contradict . . . a properly considered document are not well-pleaded facts that the court must
accept as true.” Peterson v. Martinez, 707 F.3d 1197, 1206 (10th Cir. 2013) (internal citation
omitted). The ultimate duty of the court is to “determine whether the complaint sufficiently
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
8 of 53

9
alleges facts supporting all the elements necessary to establish an entitlement to relief under the
legal theory proposed.” Forest Guardians v. Forsgren, 478 F.3d 1149, 1160 (10th Cir. 2007).
Both sides argue specific pleading or Rule 12(b)(6) standards for ERISA cases. But the
usual Twombly/Iqbal pleading standard applies to ERISA cases. Hughes v. Northwestern Univ.,
142 S. Ct. 737, 742 (2022). As for any type of case, this inquiry requires “careful, context-
sensitive scrutiny of a complaint’s allegations.” Fifth Third Bancorp v. Dudenhoeffer, 573 U.S.
409, 425 (2014) (cited in Hughes, 142 S. Ct. at 742). Ultimately, though “[t]here is a low bar for
surviving a motion to dismiss.” Clinton v. Sec. Benefit Life Ins. Co., 63 F.4th 1264, 1276 (10th
Cir. 2023) (internal quotation marks omitted). “[A] well-pleaded complaint may proceed even if
it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very
remote and unlikely.” Id. at 1276 (internal quotation marks omitted, quoting Twombly, 550 U.S.
at 556).
III. 	Matters Presented in Documents Outside the Complaint
As briefly noted above, “[g]enerally, the sufficiency of a complaint must rest on its
contents alone.” Gee v. Pacheco, 627 F.3d 1178, 1186 (10th Cir. 2010). the court is generally
limited to the allegations of the complaint on Rule 12(b)(6) motions. Fed. R. Civ. P. 12(d).
However, there are limited exceptions to this rule for:
(1) documents that the complaint incorporates by reference . . . (2) documents
referred to in the complaint if the documents are central to the plaintiff’s claim and
the parties do not dispute the documents’ authenticity . . . and (3) matters of which
a court may take judicial notice.
Id. (internal quotation marks omitted, citing inter alia Tellabs, Inc. v. Makor Issues & Rights,
Ltd., 551 U.S. 308, 322 (2007); Jacobsen v. Deseret Book Co., 287 F.3d 936, 941 (10th Cir.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
9 of 53

10
2002)); see also Fed. R. Evid. 201(b) (defining the types of facts that may be judicially noticed).
Here, Defendants ask the court to consider eight documents. Plaintiffs do not appear to
address whether the court can or should consider any of them. As to Defendants’ Exhibit 1, as
noted above, the court will consider the Plan excerpts (ECF No. 40-1) as a document referenced
in and central to the Amended Complaint.
As to Defendants’ Exhibit 2, Forms 5500 Annual Return/Report of the Plan on file with
the U.S. Department of Labor (“DOL”) and publicly available through the Department’s website,
and Exhibits 6-8, several Form 497K summary prospectuses for JH Funds, publicly filed with the
Securities and Exchange Commission (“SEC”), these are publicly filed documents at the DOL
and SEC. The court takes judicial notice of these documents. See, e.g., Winzler v. Toyota Motor
Sales U.S.A., Inc., 681 F.3d 1208, 1212-13 (10th Cir. 2012) (taking judicial notice of the
existence of “documents filed with [an agency] and now available on the agency’s public
website”).6
Defendants’ Exhibit 3––the Investment Policy Statement for the Plan–– is not a public
record, but Plaintiffs refer to it in a paragraph of the Amended Complaint. Am. Complt. ¶ 28.
Although reference in a single paragraph of a pleading does not always make a document central
to the claims, in this case the document is part of Plaintiffs’ basis for alleging the Committee is a
plan fiduciary. The Committee’s role as a fiduciary is key to the claim against it. As Plaintiffs do
not object to the document’s authenticity or the court’s consideration of it, the court will consider
6 The summary prospectuses are also referenced in and central to the Amended Complaint.
Plaintiffs rely on the benchmarks identified in the prospectuses to allege inadequate performance
for the above-average fees. See, e.g., Am. Complt. ¶¶ 53, 56, 59 n.19, 65. Prospectus benchmarks
are the comparators that Janus identified for investors’ evaluation of the JH Funds.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
10 of 53

11
the Investment Policy Statement.
Defendants’ Exhibit 4, an appellate amicus brief by the Investment Company Institute
(“ICI”), the court will not consider. While this brief is apparently publicly filed in a pending
docket at the Tenth Circuit, Plaintiffs do not allege, refer to, or rely upon the ICI’s amicus brief
in the Amended Complaint. Defendants ask the court to consider the amicus brief for ICI’s view
that its average expense ratios for investment categories are not proper benchmarking measures
for 401(k) plans because expense ratios may vary depending on whether a fund is actively or
passively managed. Motion at 27 n.14. Defendants thus rely on the amicus brief to challenge the
plausibility of Plaintiffs’ allegations. Judicial notice is only appropriate for facts that are “not
subject to reasonable dispute” because they are “accurately and readily determined from sources
whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). Defendants instead ask
the court to weigh ICI’s opinion against Plaintiffs’ allegations. This is a factual dispute
inappropriate for judicial notice, particularly on a Rule 12(b)(6) motion.
As to Defendants’ Exhibit 5–– a 2021 study analyzing the total plan costs for 401(k)
plans in 2018 by BrightScope and the Investment Company Institute (referred to hereafter as the
“BrightScope/ICI Study”)–– the Amended Complaint expressly refers to this study as the source
of the average 401(k) fund expense ratios to which Plaintiffs compare the JH Funds. Am.
Complt. ¶ 47 nn.12, 13. Based on those comparisons, Plaintiffs allege throughout the Amended
Complaint that the JH Funds had higher than average expenses for similar mutual funds held in
401(k) plans of similar size. Although Plaintiffs do not expressly cite the BrightScope/ICI Study
in each paragraph and table in which they allege that expense ratio, they also do not allege any
other source for those facts. Because this study is referenced in and central to Plaintiffs’ claims,
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
11 of 53

12
and Plaintiffs do not object to the authenticity of the copy that Defendants attach, the court will
consider the BrightScope/ICI Study.7
ANALYSIS
“Nothing in ERISA requires employers to establish employee benefits plans. Nor does
ERISA mandate what kind of benefits employers must provide if they choose to have such a
plan.” Lockheed Corp. v. Spink, 517 U.S. 882, 887 (1996) (internal citations omitted). However,
if an employer offers an ERISA plan, the statute imposes fiduciary duties on those persons who
administer or manage that plan. A plan’s fiduciaries must:
discharge their duties “with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise of a like
character and with like aims.”
Hughes, 142 S. Ct. 739 (quoting 29 U.S.C. § 1104(a)(1)(B)). This is the ERISA duty of
prudence. The statute also imposes a duty of loyalty:
a fiduciary shall discharge his duties with respect to a plan solely in the interest of
the 	participants 	and 	beneficiaries 	and-- 	(A) 	for 	the 	exclusive 	purpose 	of:
(i) providing benefits to participants and their beneficiaries; and (ii) defraying
reasonable expenses of administering the plan.
29 U.S.C. § 1104(a)(1)(A).
In this case, the parties disagree whether Defendants acted as fiduciaries, and if so,
whether Plaintiffs’ claims that they breached their duties of loyalty and prudence are plausible.
They also dispute whether, if the claims are otherwise actionable, the named Plaintiffs have
7 In their response, Plaintiffs also refer to two additional public records referenced in but not
attached to the Amended Complaint: a DOL webpage and an SEC Investor Bulletin. Defendants
do not appear to dispute that the court can consider these documents.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
12 of 53

13
standing to seek relief with respect to JH Funds in which they did not individually invest. The
court addresses these arguments in turn, beginning with Plaintiffs’ standing.
I. 	Do Plaintiffs Lack Standing as to the JH Funds in which They Did Not Invest?
The crux of Defendants’ jurisdictional argument is that “Plaintiffs’ claims must be
dismissed under Rule 12(b)(1) to the extent they relate to Janus Funds in which they did not
invest.” Motion at 8. The court respectfully finds that Plaintiffs have met their burden to
establish standing to pursue all claims they have brought in this lawsuit. See Lujan, 504 U.S. at
561.
Federal Rule of Civil Procedure 12(b)(1) permits Defendants to move to dismiss for lack
of subject-matter jurisdiction, including a lack of standing. A lack of standing deprives a court of
subject-matter jurisdiction because the judicial power of the federal courts extends only to cases
or controversies. U.S. Const. art. III, § 2. Under longstanding judicial doctrines, a case or
controversy requires a plaintiff with standing:
To establish standing under Article III of the Constitution, a plaintiff must
demonstrate (1) that he or she suffered an injury in fact that is concrete,
particularized, and actual or imminent, (2) that the injury was caused by the
defendant, and (3) that the injury would likely be redressed by the requested judicial
relief.
Thole v. U. S. Bank N.A, 140 S. Ct. 1615, 1618 (2020). If an ERISA plaintiff does not allege that
they suffered a monetary injury from the conduct of which they complain ––for instance in a
defined-benefit plan, that they were not paid the defined benefit––then the plaintiff lacks any
“concrete stake in [the] lawsuit,” and therefore lacks constitutional standing to bring suit. Id. at
1619.
Moreover, “[t]o bring a suit under ERISA, a plaintiff must show both constitutional
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
13 of 53

14
standing and a cause of action (statutory standing) under the ERISA statute.” Kurtz v. Vail Corp.,
511 F. Supp. 3d 1185, 1192 (D. Colo. 2021) (citing Am. Psychiatric Ass’n v. Anthem Health
Plans, Inc., 821 F.3d 352, 359 (2d Cir. 2016)).
In this case, Plaintiffs bring claims (i) on their own behalf for losses they incurred in their
accounts in the Plan, (ii) on behalf of the Plan, and (iii) on behalf of similarly situated
participants under 29 U.S.C. §§ 1132(a)(2) and 1109. Am. Complt. ¶ 1. These statutes provide
that “[a] civil action may be brought * * * by the Secretary, or by a participant, beneficiary or
fiduciary for appropriate relief under section 1109 of this title.” 29 U.S.C. § 1132(a)(2). Section
1109 provides in relevant part:
Any person who is a fiduciary with respect to a plan who breaches any of the
responsibilities, obligations, or duties imposed upon fiduciaries by this subchapter
shall be personally liable to make good to such plan any losses to the plan resulting
from each such breach, and to restore to such plan any profits of such fiduciary
which have been made through use of assets of the plan by the fiduciary, and shall
be subject to such other equitable or remedial relief as the court may deem
appropriate[.]
29 U.S.C. § 1109(a) (emphasis added).8
Section 1132(a) “does not provide a remedy for individual injuries distinct from plan
injuries, [but] that provision does authorize recovery for fiduciary breaches that impair the value
of plan assets in a participant’s individual account.” LaRue v. DeWolff Boberg & Assocs., Inc.,
552 U.S. 248, 256 (2008). See also Intel Corp. Inv. Policy Comm. v. Sulyma, 140 S. Ct. 768, 773
(2020) (“Fiduciaries who breach these duties are personally liable to the plan for any resulting
losses . . . [and] ERISA authorizes participants . . . to sue for that relief”). Further:
8 Section 1109(a) further provides that “[a] fiduciary may also be removed for a violation of
section 1111 of this title,” but Plaintiffs do not appear to seek this relief.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
14 of 53

15
§ 1132(a)(2) authorizes the [Department of Labor], as well as plan participants (and
beneficiaries and fiduciaries), to file suit and obtain the forms of relief outlined
therein. Regardless of who brings suit under § 1132(a)(2), however, the fact
remains, as the Supreme Court has made clear, that the suit is “on behalf of [the]
plan” itself, and the precise same statutory remedies are available regardless of the
named plaintiff.
Harrison v. Envision Mgmt. Holding, Inc. Bd. of Directors, 59 F.4th 1090, 1111–12 (10th Cir.
2023) (footnote omitted, quoting LaRue, 552 U.S. at 253), petition for cert. pending sub nom.
Argent Trust Co. v. Harrison, U.S. Supreme Court Case No. 23-30. Thus, “[s]ome courts have
noted that actions brought under § 1132(a)(2) are derivative in nature—they focus on the injury
to the Plan instead of to the individual Plan participants.” Kurtz, 511 F. Supp. 3d at 1192.
In a single paragraph of their motion, however, Defendants argue that Plaintiffs lack
standing to sue as to any JH Funds in which they did not personally invest because they suffered
no harm from those funds being in the Plan. Motion at 8. Defendants point to two ERISA cases
as so holding: Wilcox v. Georgetown Univ., CV 18-422 (RMC), 2019 WL 132281, at *9 (D.D.C.
Jan. 8, 2019), and Singh v. Deloitte LLP, -- F. Supp. 3d --, 21-cv-8458 (JGK), 2023 WL 186679,
at *2-3 (S.D.N.Y. Jan. 13, 2023). 9
Plaintiffs respond that the majority position rejects this argument and finds plan
participants have standing under ERISA to seek relief on behalf of all plan participants even for
investment options in which the named plaintiffs did not invest. ECF No. 45 (“Resp.”) at 6-7
(citing primarily Anderson v. Coca-Cola Bottlers’ Ass’n, Case No. 21-2054-JWL, 2022 WL
9 Plaintiffs do not argue they have standing based on representing the putative class action;
accordingly, the court need not address Defendants’ citation to Donelson v. Dep’t of Interior,
730 F. App’x 597, 601 (10th Cir. 2018).
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
15 of 53

16
951218, at *3 (D. Kan. Mar. 30, 2022); 29 U.S.C. §§ 1132(a)(2), 1109; and LaRue, 552 U.S. at
256).10
In reply, Defendants devote only a footnote to this issue. ECF No. 46 at 10 n.11.
Defendants assert that numerous courts reject the notion that named ERISA plaintiffs have
standing as to “any losses to the plan” so long as they allege losses on their own investments in
the plan. Id. (citing Singh and Locascio v. Fluor Corp., 3:22-cv-0154-X, 2023 WL 320000, at *3
(N.D. Tex. Jan. 18, 2023); Brown-Davis v. Walgreen Co., 1:19-cv-05392, 2020 WL 8921399, at
*3 (N.D. Ill. Mar. 16, 2020)).
The court finds Defendants’ argument is not unpersuasive. In the ERISA context, once
the plan participant alleges they suffered a loss in their plan account, that suffices for
constitutional standing. This court agrees with its sister court in Anderson that the Supreme
Court’s reasoning in Thole suggests that “if a[n ERISA] plaintiff has suffered an injury in fact
and has standing (by virtue of his investment in some plan funds at issue), he is entitled to
represent the interests of other injured participants in a derivative capacity.” Anderson, 2022 WL
951218, at *4 (citing Thole, 140 S. Ct. at 1618, 1620, 1622). In Thole, the plaintiffs asserted they
had “standing as representatives of the plan itself.” 140 S. Ct. at 1620. The Court rejected this
argument only because the plaintiffs in that case did not allege they suffered a loss of promised
benefits under the defined-benefit plan, or otherwise suffered a monetary loss. The Court did not
take issue with the more general principle that ERISA plan participants who suffer a loss
10 In a footnote, Plaintiffs also cite numerous opinions of district courts outside the Tenth Circuit
on this issue, Resp. at 6 n.3, which this court does not address but which do not appear to alter
the court’s analysis here.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
16 of 53

17
themselves in a plan have standing to sue on behalf of the plan. See also id. at 1623 (Thomas, J.,
and Gorsuch, J., concurring) (“The fiduciary duties created by ERISA are owed to the plan, not
petitioners.”).
As for statutory standing, although it appears the Tenth Circuit has not addressed this
specific issue, the Tenth Circuit recognizes under LaRue that “the precise same statutory
remedies are available regardless” of whether the Department of Labor or a plan participant
brings the claims. Harrison, 59 F. 4th at 1111-12. Section 1109 expressly extends the cause of
action to “any losses to the plan.” Moreover, even before Harrison, one judge of this District
concluded that claims alleging (1) a defined-contribution plan’s fees were excessive compared to
other, similar 401(k) plans and (2) the plan paid excessive fees for investments that did not
outperform lower-cost funds were most like the cases finding that plaintiffs had standing to sue
as to all of the plan’s investment options, once they alleged they had invested in some of them
and suffered a loss. Kurtz, 511 F. Supp. 3d at 1192-93 (citing inter alia, Braden v. Wal-Mart
Stores, Inc., 588 F.3d 585, 589 (8th Cir. 2009)). See also Jones v. DISH Network Corp., 22-cv-
00167-CMA-STV, 2023 WL 2644081, at *3 (D. Colo. Mar. 27, 2023) (“The majority of courts
have held that Article III does not prevent named plaintiffs in a class action suit from
representing parties who invested in funds that were allegedly imprudent due to the same
decisions or courses of conduct, even if the named plaintiffs did not invest in those funds,”
emphasis original, internal quotation marks omitted).
So too this court concludes that Plaintiffs’ claims seek relief for harm to not only their
own investments in the Plan but also for the harm to the entire Plan from including all JH Funds.
Much as in Kurtz, Plaintiffs here “bring[] a single claim for mismanagement of the entire Plan.”
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
17 of 53

18
Kurtz, 511 F. Supp. 3d at 1192. They allege that not only did they pay excessive fees on JH
Funds they held in their individual investment accounts, but also that any participant in the Plan
who invested in any of the JH Funds paid excessive fees. As a sister court held in Anderson:
Plaintiffs have alleged a unitary claim of breach because of an overarching process
by which defendants chose imprudent options for the Plan. In light of that claim,
the Court is persuaded by the majority of courts to have considered the issue that
Plaintiffs may assert claims on behalf of the Plan based on allegedly excessive-fee
funds in which they did not invest.
Anderson, 2022 WL 951218, at *3 (cleaned up).
Meanwhile, the cases on which Defendants rely for this issue are not from within the
Tenth Circuit. This in itself is reason enough to not follow them. In addition, Defendants’ cases
do not discuss Thole and also do not appear to discuss why––given that ERISA creates a cause of
action for plan participants only on behalf of the plan––a plaintiff who asserts a unitary harm to
the entire plan has not shown concrete harm as to the entire plan sufficient for constitutional
standing. See, e.g., Wilcox, 2019 WL 132281, at *8-9; Brown-Davis, 2020 WL 8921399, at *3;
Singh, 2023 WL 186679; Locascio, 2023 WL 320000, at *3.
In conclusion, the court finds that Plaintiffs have met their burden to establish standing.
The court respectfully recommends that Defendants’ Motion to Dismiss Plaintiffs’ claims
pursuant to Rule 12(b)(1) “to the extent they relate to Janus Funds in which [Plaintiffs] did not
invest,” see Motion at 8, be denied.
II. 	Do the Well-Pleaded Facts Show that Defendants Are ERISA Fiduciaries With Respect to
the JH Funds in the Plan?
The court now turns to Defendants’ arguments for dismissal for failure to state a plausible
claim for relief under Rule 12(b)(6). Defendants’ arguments for dismissal of Count One, a claim
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
18 of 53

19
for breach of fiduciary duty, rests on several legal theories. The court analyzes these in order,
beginning with the argument that Defendants did not act in a fiduciary capacity with respect to
offering the JH Funds. See Motion at 8-11. The court concludes Plaintiffs have plausibly alleged
that Defendants acted in their fiduciary capacities with respect to virtually all of the JH Funds in
the Plan, but that the allegations concerning Janus’s design of the Plan and failure to amend it do
not support such a claim as a matter of law.
A. 	Janus
Although the claim is not expressly organized in a chronological or functional sequence,
Plaintiffs appear to premise their breach of fiduciary duty claim against Janus on (1) its writing
the JH Funds into the Plan itself (to which Plaintiffs refer in their response brief as “hardwiring”
the JH Funds as investment options in the Plan); (2) its failure to amend the Plan to remove any
of the JH Funds from the Plan; (3) its failure to otherwise remove any of the JH Funds (i.e., to
override the Plan’s mandate when necessary); and (4) its failure to use a prudent and loyal
process to select the investment options in the Plan because the JH Funds have above-average
expenses without commensurate performance. See, e.g., Am. Complt. ¶¶ 1, 4, 6, 18-19, 25-26,
31, 42-44. Janus argues that its so-called “hardwiring” the Funds in the Plan and failing to amend
the Plan to remove any of them were actions analogous to that of a settlor of a trust under
Lockheed Corp. v. Spink, 517 U.S. 882, 890 (1996), and thus were not fiduciary functions. Id. at
8-9.
For the reasons that follow, the court concludes that the only portion of this claim that
regards settlor functions is Janus’s “hardwiring” of the JH Funds into the Plan and failing to
amend the Plan to remove any of those funds.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
19 of 53

20
1. 	“Fiduciaries” Under ERISA
“ERISA . . . defines ‘fiduciary’ not in terms of formal trusteeship, but in functional terms
of control and authority over the plan.” Mertens v. Hewitt Assocs., 508 U.S. 248, 262 (1993)
(emphasis original). Specifically, the statute provides:
[A] person is a fiduciary with respect to a plan to the extent (i) he exercises any
discretionary authority or discretionary control respecting management of such
plan or exercises any authority or control respecting management or disposition of
its assets … or (iii) he has any discretionary authority or discretionary responsibility
in the administration of such plan.
29 U.S.C. § 1002(21)(A)(i), (iii) (in relevant part). Thus, the keynotes for an ERISA fiduciary
are (a) discretion in (b) “management” or “administration” of the Plan. “[F]iduciary status
requires authority or responsibility that is discretionary, which entails ‘the freedom to decide
what should be done in a particular situation.’” Lebahn v. Nat’l Farmers Union Uniform Pension
Plan, 828 F.3d 1180, 1184 (10th Cir. 2016) (citing “Discretion,” New Oxford American
Dictionary (3d ed. 2010)).
“An employer can wear two hats: one as a fiduciary administering a . . . plan and the
other as the drafter of a plan’s terms.” Averhart v. US WEST Mgmt. Pension Plan, 46 F.3d 1480,
1488 (10th Cir. 1994) (quotation omitted). When an employer has such “dual roles as plan
sponsor and plan administrator . . . an employer’s fiduciary duties under ERISA are implicated
only when it acts in the latter capacity.” Beck v. PACE Int’l Union, 551 U.S. 96, 101 (2007).
“In every case charging breach of ERISA fiduciary duty, then, the threshold question is
not whether the actions of some person . . . adversely affected a plan beneficiary’s interest, but
whether that person was acting as a fiduciary (that is, was performing a fiduciary function) when
taking the action subject to complaint.” Pegram v. Herdrich, 530 U.S. 211, 226 (2000). “Which
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
20 of 53

21
hat the employer is proverbially wearing depends upon the nature of the function performed and
is an inquiry that is aided by the common law of trusts which serves as ERISA’s backdrop.”
Beck, 551 U.S. at 101 (internal citation omitted; citing Hughes Aircraft Co. v. Jacobson, 525
U.S. 432, 444 (1999); Pegram, 530 U.S. at 224; Lockheed, 517 U.S. at 890).
In this case, Janus has dual roles because it is both the “plan sponsor” and plan
“administrator.” Am. Complt. ¶¶ 23-25. ERISA defines a “plan sponsor” in terms of the
employer that “established or maintained” the plan. 29 U.S.C. § 1002(16)(B). In contrast, by its
very title, the “administrator” is defined in terms of administering the plan. 29 U.S.C.
§ 1002(16)(A). “Plan sponsors . . . do not fall into the category of fiduciaries” when they “adopt,
modify or terminate . . . plans.” Lockheed, 517 U.S. at 890. “When employers undertake those
actions, they do not act as fiduciaries … but are analogous to the settlors of a trust.” Id. (internal
citation omitted).
2. 	The Parties’ Arguments11
Plaintiffs assert, however, that “[t]o the extent that Janus Henderson mandated inclusion
of the [JH] Funds in the Plan’s investment menu, that is an investment decision that Janus
Henderson had fiduciary responsibility for.” Am. Complt. ¶ 26. Janus disagrees. It argues that in
structuring the Plan to mandate offering JH Funds, it acted as the “settlor,” not as a fiduciary.
Motion at 15-16 (citing Lockheed, 517 U.S. at 890; Hughes Aircraft, 525 U.S. at 444). Janus
further argues that its decision to not amend the Plan to remove the Funds is likewise in its role
11 The parties cite to an unusually large number of cases in their briefing, much of which the
court deems appropriate to analyze in detail here. However, the court does not believe it
necessary to address every case that the parties cite, particularly when those cases are outside of
the Tenth Circuit.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
21 of 53

22
as settlor. Id. at 16 (citing In re Sprint Corp. ERISA Litig., 388 F. Supp. 2d 1207, 1219 (D. Kan.
2004); In re CMS Energy ERISA Litig., 312 F. Supp. 2d 898, 907-08 (E.D. Mich. 2004)).
Plaintiffs oppose this argument, noting that ERISA itself recognizes that a person who
“exercises any authority or control respecting management or disposition of [a plan’s] assets” is
acting as a fiduciary. Resp. at 9 (emphasis added, quoting 29 U.S.C. § 1002(21)(A)(i)). Plaintiffs
cite “congressional concern” to prevent “misuse and mismanagement of plan assets by plan
administrators” in the future. Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 140 n.8 (1985).
They cite ERISA’s fiduciary duties of loyalty and prudence as “the highest known to the law.”
Donovan v. Bierwirth, 680 F.2d 263, 272 n.8 (2d Cir. 1982). Plaintiffs note that those duties
include “exercis[ing] prudence in selecting investments” and a “continuing duty to monitor
investments and remove imprudent ones.” Tibble v. Edison Int’l, 575 U.S. 523, 530 (2015).
Russell, however, did not involve an issue of whether the employer acts in its fiduciary or
settlor role in writing (“hardwiring,” as Plaintiffs refer to it in briefing) its proprietary funds into
a plan itself as required offerings. The issue in Russell was instead whether an ERISA plan
beneficiary could bring a claim outside the terms of the plan for alleged improper delay and
processing of her benefits claim. The Court held that she could not. Russell, 473 U.S. at 148. The
opinion does not address any issue of distinguishing between settlor and fiduciary functions. The
same is true of Donovan, where there was no question that the plan’s trustees acted in their
fiduciary role when responding to a tender offer for the company’s shares held in the plan.
Donovan, 680 F.2d at 272-76. Likewise, Tibble does not involve any issue of settlor versus
fiduciary roles. The question was whether the defendants’ “allegedly imprudent retention of an
investment is an ‘action’ or ‘omission’ that triggers the running of the 6-year limitations period.”
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
22 of 53

23
See 575 U.S. at 525.
Plaintiffs further point to a Second Circuit opinion holding that “fiduciary functions
include . . . selecting investments, exchanging one instrument or asset for another, and so on.”
Resp. at 9 (quoting Coulter v. Morgan Stanley & Co., Inc., 753 F.3d 361, 367 (2d Cir. 2014)).
However, the issue in Coulter was that the employer “elected, pursuant to its express authority
under the Plans, to make its employer contributions to the Plans in the form of” company stock.
Id. at 364. The court held that this was not fiduciary conduct because it was not an act
“undertaken with respect to plan management or administration.” Id. at 367. “[F]iduciary status
turns on ERISA’s plain language and does not exist simply because an employer’s business
decision proves detrimental to a covered plan or its beneficiaries.” Id.
Plaintiffs further note that “even in a defined-contribution plan [such as the Plan in this
case] where participants choose their investments, plan fiduciaries are required to conduct their
own independent evaluation to determine which investments may be prudently included in the
plan’s menu of options.” Hughes, 142 S. Ct. at 742. However, in Hughes, the Court refers to all
of the respondents as persons “who administer the Plans.” Id. at 740 (emphasis added). There
was no issue of allegedly imprudent investment options required by the terms of the plans and
failure to amend the plans to remove those investment options, such as Plaintiffs allege here.
Plaintiffs also cite opinions of the Seventh and Fourth Circuits. Plaintiffs quote from
Howell v. Motorola, Inc., 633 F.3d 552 (7th Cir. 2011), that “[t]he choice of which investments
will be presented in the menu that the plan sponsor adopts is a core decision relating to the
administration of the plan” and therefore “the selection of plan investment options . . . are acts to
which fiduciary duties attach.” Id. at 567. In that case, the “Plan’s governing documents allowed,
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
23 of 53

24
but did not require, the Plan to offer the Motorola Stock Fund as one option.” Id. at 557.
Although Howell analyzes whether the employer was a plan fiduciary by appointing plan
administrators and “assume[s] for the sake of argument” that it was a fiduciary, id. at 562-64,
Howell does not analyze whether the employer acted as a fiduciary in authoring the plan that
allowed the company stock fund in the plan.
The passage in Howell on which Plaintiffs rely arose in the context of analyzing whether
ERISA’s Section 404(c) “safe harbor” for fiduciaries on participants’ self-directed accounts
applied to the fiduciaries’ selection of investment options. Id. at 567-68. In that analysis, the
court does not address the employer specifically but rather asks whether the safe harbor applies
to any plan fiduciaries’ selection of investment options. This passage does not support the
conclusion that an employer acts as a fiduciary in writing its company stock fund in the plan
itself. Later, Howell also notes:
The plaintiffs theory is that these individual defendants, along with Motorola and
the Committee, violated their fiduciary duties by including the Motorola Stock
Fund as one of the Plan’s investment options. It is unclear whether they believe that
the breach of duty arose at the very moment that the Motorola Stock Fund was
designated for the Plan, or if they are arguing that the decision not to revise the Plan
and withdraw this as an option was the violation. (The latter theory seems more
likely.)
Howell, 633 F.3d at 568. But in the end, the Seventh Circuit did not reach whether the
employer’s act of including the company stock fund in the plan document itself (or failure to
revise the plan to remove that fund) could support a breach of fiduciary duty. The court instead
affirmed summary judgment for the defendants based on plaintiffs’ failure to come forward with
sufficient evidence to show a material fact dispute that the defendant’s “stock was an imprudent
option for a retirement plan[.]” Id. (observing that the evidence plaintiffs’ presented on summary
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
24 of 53

25
judgment was “fatally thin”). Thus, Howell does not support Plaintiffs’ position that Janus acted
as a fiduciary in “hardwiring” the JH Funds in the Plan.
Plaintiffs also quote Tatum v. RJR Pension Investment Committee, 761 F.3d 346 (4th Cir.
2014), for the principle that “ERISA imposes high standards of fiduciary duty on those
responsible for . . . the investment and disposal of plan assets.” Id. at 355. However, the full
sentence reads: “ERISA imposes high standards of fiduciary duty on those responsible for the
administration of employee benefit plans and the investment and disposal of plan assets.” Id.
(emphasis added). The plaintiffs’ claims in Tatum were based on complex actions and omissions
the employer and other defendants undertook after splitting their tobacco and food businesses.
Among the complex assertions, it appears that at trial and on appeal, the courts assumed that the
employer’s failure to consider amending the plan at one point (and perhaps improperly amending
it later) were fiduciary acts. Id. at 351-55. However, the parties do not appear to have raised the
issue, as the opinion does not once discuss whether that conduct was instead in the settlor role.
And if the plaintiffs originally claimed a breach in the employer’s act of writing its stock fund
into the plan itself, it appears they dropped that theory before trial. In the end, then, because the
court only assumed that plan amendment and failure to amend is a fiduciary act, Tatum does not
support Plaintiffs’ position either.
Plaintiffs also point to a Tenth Circuit opinion describing the “relationship of trust [that]
is established when one acquires possession of another’s property with the understanding that it
is to be used for the owner’s benefit.” Resp. at 9 (quoting David P. Coldesina, D.D.S. v. Est. of
Simper, 407 F.3d 1126, 1134 (10th Cir. 2005)). But this says nothing of how the employer’s
“hardwiring” of its proprietary funds in an ERISA plan is akin to receiving possession of
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
25 of 53

26
another’s property. Writing the Plan (and later failing to amend the Plan) was not a step at which
Janus received its employees’ funds. Coldesina also does not appear to involve an investment
option that was written into the plan itself, but rather concerns who might be held responsible for
theft from a plan.
In a footnote in their Response, Plaintiffs quote from the Department of Labor’s general
preamble to the safe-harbor regulation: “the act of limiting or designating investment options
which are intended to constitute all or part of the investment universe of an ERISA 404(c) plan is
a fiduciary function . . . whether achieved through fiduciary designation or express plan
language.” Resp. at 9 n.4 (quoting Final Regulation Regarding Participant Directed Individual
Account Plans (ERISA Section 404(c) Plans), 57 Fed. Reg. 46906, at *46924-25 n.27 (Oct. 13,
1992) (emphasis added)). Giving this passage more of its context, it reads:
The proposal [for the safe-harbor regulation] stated that a fiduciary is relieved of
responsibility only for the direct and necessary consequences of a participant’s
exercise of control. [n.27]
[n.27] In this regard, the Department points out that the act of limiting or
designating investment options which are intended to constitute all or part
of the investment universe of an ERISA 404(c) plan is a fiduciary function
which, whether achieved through fiduciary designation or express plan
language, is not a direct or necessary result of any participant direction of
such plan. . . . In those situations where the ERISA section 404(c) plan by
its own provisions limits the investment universe by designating specific
investment alternatives . . . the plan fiduciary must comply with the
requirements of ERISA section 404(a)(1)(D).
57 Fed. Reg. 46906, at *46924 n.27 (emphasis added).
This footnote is the closest Plaintiffs come to supporting their theory that hardwiring an
investment option in a plan is a fiduciary function. But “arguments that are . . . mentioned only in
a footnote[] [of the party’s brief] are generally deemed waived.” Swan Glob. Invs., LLC v.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
26 of 53

27
Young, 18-cv-03124-CMA-NRN, 2021 WL 3164242, at *2 (D. Colo. July 27, 2021). Plaintiffs
do not argue what level of judicial deference to the DOL regulation, if any, is required; nor do
they attempt to explain how the DOL could logically distinguish a “fiduciary designation” from
“express plan language” but nonetheless refer to both as fiduciary functions. Plaintiffs also do
not address the significance of the final regulation’s more limited definition of a “designated
investment alternative” as “a specific investment identified by a plan fiduciary as an available
investment alternative under the plan.” Id. at 46936 (emphasis added; see 29 C.F.R. § 2550.404c-
1(e)(4)). I.e., consistent with being a safe-harbor only for fiduciaries, the regulation only
concerns designations of investment alternatives by fiduciaries. Plaintiffs also do not point the
court to any cases construing this footnote.12 Thus, Plaintiffs’ argument regarding the preamble
footnote is too perfunctory to resolve. See, e.g., San Juan Citizens Alliance v. Stiles, 654 F.3d
1038, 1056 (10th Cir. 2011) (declining to construct a persuasive case for a party that raised an
issue only in a footnote).
Plaintiffs next argue that if hardwiring investment options in a plan is a settlor function,
this would permit employers to effectively nullify the duties of prudence and loyalty. Resp. at 10.
They argue that ERISA requires fiduciaries to follow plan documents only “insofar as such
documents . . . are consistent with the provisions of [ERISA].” 29 U.S.C. § 1104(a)(1)(D). They
further argue that ERISA makes void “any provision in an agreement or instrument which
12 A case that Defendants cite on other issues, Hecker v. Deere & Co., 556 F.3d 575 (7th Cir.
2009), notes that this footnote “was never embodied in the final regulations” but does not
otherwise address it. Id. at 589. On a different but related question (whether the safe-harbor
defense applies to breach of duty claims), another circuit found the footnote is not a reasonable
interpretation of the statute. Langbecker v. Elec. Data Sys. Corp., 476 F.3d 299, 310 (5th Cir.
2007).
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
27 of 53

28
purports to relieve a fiduciary from responsibility . . . for any . . . duty under this part.” Id.
§ 1110(a). These statutes, they argue, defeat the “hardwiring defense” by “mak[ing] clear that the
duty of prudence trumps the instructions of a plan document, such as an instruction to invest
exclusively in employer stock even if financial goals demand the contrary.” Fifth Third Bancorp
v. Dudenhoeffer, 573 U.S. 409, 421 (2014).
Plaintiffs also take issue with Defendants’ application of Lockheed, Hughes Aircraft,
CMS Energy, and Sprint to Plaintiffs’ claims. Plaintiffs note that the plan amendments discussed
in Lockheed and Hughes Aircraft did not concern investment options designated in the plans. As
for CMS Energy and Sprint, Plaintiffs note that in both cases the “motions to dismiss were
denied in substantial part.” Resp. at 11. Plaintiffs appear to recognize, though, that as discussed
further below, CMS Energy and Sprint concluded the designation of an employer’s stock in the
plan (and failing to amend the plan) were not fiduciary functions.
Finally, Plaintiffs point to Brotherston v. Putnam Investments, LLC, 907 F.3d 17, 23-24
(1st Cir. 2018), as involving a “similar plan mandate to include essentially all of the sponsor’s
proprietary funds.” Resp. at 12. In that case, the defendants conceded that the plan’s “instruction
[to offer the proprietary funds] does not immunize defendants from potential liability based on
the duty of prudence in selecting investment offerings under the Plan.” Brotherston, 907 F.3d at
23-24 (citing Dudenhoeffer, 573 U.S. at 421, “the duty of prudence trumps the instructions of a
plan document”). Brotherston discusses the plaintiffs’ claims as based on the overriding statutory
duty of prudence in selecting investments, without focusing on the employer’s decision to
include the instruction in the plan itself or the employer’s continuing decision to not amend the
plan to remove that instruction. The case does not support Plaintiffs’ claim based on Janus’s
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
28 of 53

29
design of the Plan or the failure to amend it, but like Sprint does support Plaintiffs’ claim to the
extent it is premised on Janus’s failure to do anything else about the offering of the JH Funds.
The same is true of the last case that Plaintiffs cite on this issue, Feinberg v. T. Rowe
Price Grp., Inc., MJG-17-0427, 2018 WL 3970470, at *6 (D. Md. Aug. 20, 2018). In that case,
the court did not disagree with the defendants that the design of the plan (which required
proprietary funds as investment options) was a settlor function. The court understood the claim,
however, as one asserting that the employer and other defendants failed to meet the overriding
statutory duty of prudence in selecting investments. Essentially, Feinberg understood the claim
to not focus on the instruction in the plan itself but rather on the failure to override that
instruction to the extent it was inconsistent with ERISA’s duty of prudence in administering the
plan once it was in place.
In reply, Janus argues that Plaintiffs “do not meaningfully challenge” that it is the design
of the Plan to include JH Funds, and that the design or amendment of the Plan are settlor
functions. Because it thus was not “performing a fiduciary function,” Pegram, 530 U.S. at 226,
Janus argues it is not subject to a claim for breach of fiduciary duty for including the JH Funds in
the Plan. It further argues that Dudenhoeffer did not involve the threshold issue of settlor versus
fiduciary functions because that case does not concern the employer’s inclusion of its stock in
the express language of the plan. Rather, the case concerns the employer’s (and other defendants)
later continuing to buy and hold the employer’s stock in the plan when the defendants allegedly
knew it was overvalued and excessively risky. Dudenhoeffer, 573 U.S. at 413, 426-29 (analyzing
this task as a fiduciary function).
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
29 of 53

30
3. 	Recommendation
Plaintiffs are correct that ERISA defines a plan’s fiduciary in relevant part as one who
“exercises any authority or control respecting management … of its assets.” 29 U.S.C.
§ 1002(21)(A)(i) (emphasis added). But this only begs the question of whether “hardwiring” an
investment option in the Plan constitutes “management … of its assets.” As noted above,
Plaintiffs do not cite any cases that directly address that question in their favor. They concede
that under Lockheed and Hughes Aircraft, the design and amendment of a plan are generally
settlor functions. Resp. at 10. Plaintiffs contend that is not true when the plan instructs fiduciaries
to offer a proprietary fund.
Although neither Lockheed nor Hughes Aircraft involve plans (or plan amendments, or
the lack thereof) that “hardwire” an employer’s stock or proprietary funds as investment options,
these cases also do not recognize any exceptions to the general rule that design or amendment of
plans are settlor functions. In Hughes Aircraft, the Supreme Court noted:
In general, an employer’s decision to amend a pension plan concerns the
composition or design of the plan itself and does not implicate the employer’s
fiduciary duties which consist of such actions as the administration of the plan’s
assets.
Hughes Aircraft, 525 U.S. at 444 (emphasis added).
In Sprint, the District of Kansas held that the employer acted in its settlor not fiduciary
function when it did not amend its plan to remove the employer’s “Company Stock Fund” as one
of the investment options. Therefore, to the extent the participants’ claim for breach of fiduciary
duty could “fairly be read to suggest that defendants should have amended the plan documents,”
that part of the claim was dismissed. Sprint, 388 F. Supp. 2d at 1219. But much as Plaintiffs
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
30 of 53

31
argue, the court also held that the defendants (including the employer) acted as fiduciaries in not
overriding the terms of the plans to stop investment in the company’s stock once they were
allegedly aware of facts making it an imprudent investment. Id. at 1221-24.
In CMS Energy, the Eastern District of Michigan similarly held that the alleged failure to
amend the plan to remove the employer’s stock from its investment options was not a fiduciary
function, citing Hughes Aircraft; Akers v. Palmer, 71 F.3d 226, 230 (6th Cir. 1995); and In re
McKesson HBOC, Inc. ERISA Lit., C00-20030, 2002 WL 31431588, at *8 n.8 (N.D. Cal. 2002).
Akers noted that “[n]ot every decision affecting a benefits plan is subject to ERISA’s fiduciary
rules,” and specifically held that a board decision to initially fund a plan with newly issued
company stock was not fiduciary conduct. Akers, 71 F.3d at 230. McKesson HBOC held that the
failure to amend a plan is not a fiduciary act and dismissed the breach of fiduciary duty claim to
the extent it was based on such. McKesson HBOC, 2002 WL 31431588, at *8 n.8. CMS Energy
declined to dismiss the breach of fiduciary duty claim as to the plan’s fiduciaries only because
the claim:
does not solely complain of a lack of Plan amendment … [but r]ather, plaintiffs
complain of the lack of any action taken by Plan fiduciaries, which might include
other measures to protect participants’ assets, such as a suspension of investment
in CMS stock funds, or requiring investments in the ESOP to be held in cash until
an assessment of the prudence of CMS stock investment could be made.
CMS Energy, 312 F. Supp. 2d at 907-08.
As noted above, Plaintiffs premise their breach of fiduciary duty claim against Janus on
(1) its hardwiring the JH Funds into the Plan itself, (2) its failure to amend the Plan to remove
any of the JH Funds from the Plan, (3) its failure to otherwise remove any of the JH Funds (i.e.,
to override the Plan’s mandate when necessary), and (4) its failure to use a prudent and loyal
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
31 of 53

32
process to select the investment options in the Plan.
The court concludes that Janus has the better argument with respect to the first two
portions of the claim: designing the Plan to mandate offering all JH Funds and not amending the
Plan to remove that mandate. Under the case law discussed above, the well-pleaded facts show
that Janus acted in its settlor role––not as a fiduciary––in that conduct. While Plaintiffs resist this
conclusion, they do not point to any case law that supports their position. Their argument
regarding the Department of Labor’s footnote in issuing the safe-harbor regulation referring to
designation of investment options in express plan language is too slender a hook on which to
hang Plaintiffs’ legal theory, given that the regulation itself does not include that key phrase.
Therefore, the court respectfully recommends that the portion of Plaintiffs’ Count I against
Janus, alleging that it breached its duties to the Plan in writing the JH Funds into the Plan and
failing to amend the Plan, be dismissed. See, e.g., Sprint, 388 F. Supp. 2d at 1212; CMS Energy,
312 F. Supp. 2d at 907 (dismissing similar portions of ERISA breach of fiduciary duty claims)
However, the third and fourth aspects of the claim against Janus (the failure to otherwise
remove the JH Funds or override the Plan, and the failure to use a loyal and prudent selection
process) should not be dismissed. The facts the court can consider on a motion to dismiss show
that Janus was a fiduciary with respect to that conduct because, once the Plan was in place,
ERISA’s statutory duties of loyalty and prudence in selecting investments controlled over the
Plan’s instruction to offer all JH Funds.
B. 	The Committee
Plaintiffs allege several facts to support that the Committee acts as a fiduciary with
respect to administering and managing the Plan’s investment options:
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
32 of 53

33
The Committee assists Janus Henderson with administration of the Plan. The
Committee is responsible for overseeing and monitoring the Plan’s investments.
The Committee is also generally responsible for: (A) Promulgating the Plan’s
Investment Policy Statement; (B) Selecting the core funds available under the Plan;
(C) Reviewing the funds for compliance with the Investment Policy Statement; (D)
Making revisions to the Investment Policy Statement to reflect changing conditions
within the Plan, the investment environment, or as the Committee sees fit.
In performance of its duties, the Committee exercises “authority or control
respecting management or disposition of the Plan’s assets” and is therefore a
fiduciary under 29 U.S.C. § 1002(21)(A). The Plan’s terms also identify the
Committee as a named fiduciary of the Plan.
Am. Complt. ¶¶ 28-30 (certain paragraph breaks omitted).
The Committee argues that because the Plan itself mandates including the JH Funds, and
the Committee does not have the power to amend the Plan, it has no discretion to remove any of
the JH Funds and therefore is not a fiduciary with respect to that issue. ECF. No. 39 at 4.
Plaintiffs do not appear to dispute that the Committee lacked power to amend the Plan. The
Amended Complaint alleges Janus had that power but appears to be silent on whether the
Committee also had that power. The Plan states: “The JNS Fund and the Janus Mutual Funds
may be removed as investment options under the Plan only by amendment of the Plan by the
Employer.” ECF No. 40-1, § 5.5. Plaintiffs do not dispute this in their response brief.
Regardless that the Committee did not have the power to amend the Plan to remove the
JH Funds, the Committee had discretion over the selection of investment options for the same
reason Janus did: ERISA’s statutory duties override the Plan’s mandate to offer all JH Funds. 29
U.S.C. §§ 1104(a)(1)(D), 1110(a). Defendants cite several cases for the proposition that when a
person lacks discretion to act concerning a subject, they cannot be held liable as a fiduciary for
conduct relating to it: Teets v. Great-West Life & Annuity Ins. Co., 921 F.3d 1200, 1206-07 (10th
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
33 of 53

34
Cir. 2019); In re Bear Stearns Cos. Sec., Derivative, & ERISA Litig., 763 F. Supp. 2d 423, 566-
67 (S.D.N.Y. 2011); on recon., 07 Civ. 10453, 2011 WL 4072027 (S.D.N.Y. Sept. 13, 2011), and
on recon., 2011 WL 4357166 (S.D.N.Y. Sept. 13, 2011); In re Am. Exp. Co. ERISA Lit., 762 F.
Supp. 2d 614, 626 (S.D.N.Y. 2010); and Smith v. Delta Air Lines, Inc., 422 F. Supp. 2d 1310,
1326 (N.D. Ga. 2006). But none of those cases expressly allow a named fiduciary who generally
has discretion over investment management to avoid their statutory duty of prudence based on
plan documents that purport to carve out some investments. 13 None of these cases discuss
whether, despite a plan document purporting to limit investment discretion, 29 U.S.C.
§§ 1104(a)(1)(D) or 1110(a) nonetheless imposed a duty of prudence as to those matters. See,
e.g., Teets, 921 F.3d at 1205 (defendant was also not a named fiduciary but only an investment
fund manager whose obligations as a “functional fiduciary” were limited to the plan’s documents
or contract); Bear Stearns, 763 F. Supp. 2d at 566-67; Am. Ex., 762 F. Supp. 2d at 626; Delta Air
Lines, 422 F. Supp. 2d at 1326.
In sum, this court thus concludes that the facts the court can consider on a motion to
dismiss show that the Committee was a fiduciary with respect to offering the JH Funds,
regardless that the Plan and related documents said those funds were outside the Committee’s
discretion. Accordingly, the court recommends that Defendants’ arguments concerning their
fiduciary status should be granted only with respect to Janus’s “hardwiring” the JH Funds in the
design of the Plan and decision to not amend the Plan, and otherwise denied.
13 The same is true of the cases Defendants cite in a footnote on this issue: Renfro v. Unisys
Corp., 671 F.3d 314, 323-29 (3d Cir. 2011); Rosen v. Prudential Ret. Ins. & Annuity Co., 2016
WL 7494320, at *6-8 (D. Conn. Dec. 30, 2016); Hecker v. Deere & Co., 556 F.3d 575, 583-84
(7th Cir. 2009). None of these cases appear to discuss 29 U.S.C. §§ 1104(a)(1)(D) or 1110.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
34 of 53

35
III. 	Breach of Prudence Claim
Plaintiffs allege that Janus and the Committee breached the fiduciary duty of prudence in
not analyzing and monitoring the JH Funds for whether they were prudent investments to include
in the Plan. They allege that there was in fact no process for reviewing the prudence of
continuing to offer the JH Funds, which they infer from (1) the Plan itself requiring all JH Funds
to be offered, (2) the Plan expressly prohibiting the removal of JH Funds except by Janus
amending the Plan, and (3) the fact that no JH Funds were ever removed from the Plan except
when terminated or merged into another fund.
Plaintiffs further allege that even if these “direct” fact allegations were lacking, they have
compared the JH Funds to their respective prospectus benchmarks’ expense ratios and
performance. They allege the Plan’s overall expense ratio was higher than average for similar
sized 401(k) plans and that this was due to the expense ratios of the JH Funds being higher than
average for similar mutual funds (which they define as actively managed, non-inflation protected
mutual funds). Plaintiffs further allege that the higher expense fees did not come with a
commensurately higher performance than the benchmarks. Thus, Plaintiffs allege that the
process Janus and the Committee employed (to the extent there was one) for reviewing the
prudence of continuing to offer the JH Funds is flawed because they did not remove a single JH
Fund from the Plan despite the excessive fees for the level of performance. With that overview
of the imprudence allegations in mind, the court turns to the law and Defendants’ arguments.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
35 of 53

36
A. 	ERISA’s Duty of Prudence
For fiduciary functions such as the selection and monitoring of investments, ERISA
defines the fiduciary duty of prudence as follows:
[A] fiduciary shall discharge [its] duties with respect to a plan . . . with the care,
skill, prudence, and diligence under the circumstances then prevailing that a prudent
man acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of like character and with like aims.
29 U.S.C. § 1104(a)(1)(B) (in relevant part).
To claim a breach of this duty with respect to management of investments, a plaintiff
must allege:
that a fiduciary’s “investment decisions—in the conditions prevailing at the time,
and without the benefit of hindsight—are such that a reasonably prudent fiduciary
would not have made that decision as part of a prudent, whole-portfolio,14
investment strategy that properly balances risk and reward, as well as short-term
and long-term performance.”
Kurtz v. Vail Corp., 511 F. Supp. 3d 1185, 1196 (D. Colo. 2021) (quoting Birse v. CenturyLink,
Inc., 17-cv-02872-CMA-NYW, 2019 WL 1292861, at *3 (D. Colo. Mar. 20, 2019)). See also
Matney v. Barrick Gold of N. Am., Inc., 2:20-cv-275-TC-CMR, 2022 WL 1186532, at *4 (D.
Utah Apr. 21, 2022) (citing Kurtz), appeal pending.
Because the claim regards the fiduciary’s conduct and not the results, the focus of the
claim must be that the fiduciary’s processes for investment selection and retention were flawed.
Kurtz, 511 F. Supp. 3d at 1196-97. More specifically for this case, “[a] plaintiff may allege that a
14 As the court explains below, after Hughes, the “whole-portfolio” focus for ERISA imprudence
claims does not permit dismissal simply because the allegedly imprudent investment options
constituted only some but not all options in a plan.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
36 of 53

37
fiduciary breached the duty of prudence by failing to properly monitor investments and remove
imprudent ones.” Hughes, 142 S. Ct. at 741 (quoting Tibble, 575 U.S. at 530). The Court
explained:
[E]ven in a defined-contribution plan where participants choose their investments,
plan fiduciaries are required to conduct their own independent evaluation to
determine which investments may be prudently included in the plan’s menu of
options. See [Tibble,] 575 U.S. at 529–530, 135 S. Ct. 1823. If the fiduciaries fail
to remove an imprudent investment from the plan within a reasonable time, they
breach their duty. See ibid.
Hughes, 142 S. Ct. at 742. The Supreme Court thus considers that since at least its 2015 decision
in Tibble, it is clear ERISA fiduciaries cannot obtain dismissal of imprudence claims simply by
pointing out that they offered other investment options to which the plaintiffs do not object as
imprudent. Plan fiduciaries must employ a reasonable process under the circumstances at the
time to evaluate and monitor the prudence of every investment option offered in a plan. Id.
(noting that “[a]t times, the circumstances facing an ERISA fiduciary will implicate difficult
tradeoffs, and courts must give due regard to the range of reasonable judgments a fiduciary may
make based on her experience and expertise”).
B. 	Plaintiffs’ Claims Are Plausible Despite Concerning Only a Portion of the
Available Investment Options.
Despite the Hughes decision, Defendants nonetheless point to the non-proprietary funds
offered in the Plan to show that Plaintiffs’ claims of imprudence in offering all JH Funds must
fail because they had many other options to choose from. They cite to cases from this District
that predate Hughes: Birse, 2019 WL 1292861, and Kurtz, 511 F. Supp. 3d at 1196. While these
cases remain good law on other issues––this court indeed cites Birse and Kurtz above––to the
extent these cases would support dismissing claims because there were other investment options
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
37 of 53

38
available in a plan that were not challenged as imprudent, this court respectfully concludes that
they are no longer good law after Hughes.
Defendants also cite to 29 C.F.R. § 2550.404c-1(b)(3) as only requiring a fiduciary to
offer a “broad range of investment alternatives.” But this regulation only defines what an ERISA
section 404(c) plan is. Id. § 2550.404c-1(a)(1) (“This section describes the kinds of plans that are
‘ERISA section 404(c) plans’”). It does so in terms of participant control over their individual
account and having an “opportunity to choose[] from a broad range of investment alternatives.”
Id. § 2550.404c-1(b)(1)(ii). The regulation does not purport to implement or limit ERISA’s
Section 1104 duty of prudence in selecting or managing a plan’s assets.15 Indeed, one of the
cases on which Defendants rely for other issues, Smith v. CommonSpirit Health, 37 F.4th 1160
(6th Cir. 2022) holds: “ERISA, in other words, does not allow fiduciaries merely to offer a broad
range of options and call it a day.” Id. at 1165-66. Defendants also cite the Ninth Circuit’s 2013
Tibble decision (Tibble v. Edison Int’l, 729 F.3d 1110, 1134-35 (9th Cir. 2013)), but the Supreme
Court later vacated that decision because plan fiduciaries have “a continuing duty to monitor” the
prudency of plan investments. Tibble, 575 U.S. at 529.
15 Later, Defendants relatedly assert that plan fiduciaries have broad discretion over the mix of
investments to offer, whether proprietary or non-proprietary, actively managed or passive.
Motion at 19. Defendants assert there are thousands of other funds, including actively managed
non-proprietary funds, available through the “Fidelity BrokerageLink.” Id. But Plaintiffs allege
the JH Funds were the only actively managed, non-inflation protected funds in the Plan. Even if
the court could consider Defendants’ assertion (which it cannot; see infra), it would not negate
Hughes’ holding: fiduciaries must use a reasonable process to assess and monitor the prudence of
each investment option. Here, Plaintiffs allege Defendants did not analyze the prudence of the JH
Funds in the Plan at all. While Defendants’ assertion of non-proprietary, actively managed funds
in the Plan would likely be material for summary judgment, it does not permit dismissal of this
case at the Rule 12(b)(6) phase, and neither side requests conversion of the motion.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
38 of 53

39
Defendants argue to the contrary: that Hughes does not forbid the court from dismissing
the imprudence claim based on the fact that the JH Funds are only a portion of the entire
portfolio. Defendants argue that Hughes simply requires lower courts to analyze the fiduciaries’
selection and monitoring processes in the full circumstances that existed at the time. They cite
more recent cases that, in their view, demonstrate Hughes did not do away with what this court
will call the dilution of imprudence theory––i.e., that if the imprudent funds were only a portion
of a portfolio that offered other, more prudent funds, this dilutes the imprudence to the point that
the claim is implausible. Defendants cite in particular Matney, 2022 WL 1186532, at *4
(applying Kurtz’s “whole-portfolio” language); Forman v. TriHealth, Inc., 40 F.4th 443, 449 (6th
Cir. 2022); and Albert v. Oshkosh Corp., 47 F.4th 570, 591 (7th Cir. 2022). But these cases just
stand for the continuing importance of the need for the court to consider the complete context
when ruling on motions to dismiss ERISA imprudence claims. They do not suggest that Hughes
permits courts to still find such a claim implausibly pleaded simply because participants could
choose from other options in the plan’s portfolio. Albert, for instance, alleged only that the
defendants “failed to consider materially similar and less expensive alternatives to the Plan’s
investment options,” without “more detailed allegations providing a sound basis for
comparison.” 47 F.4th at 582.
Plaintiffs meanwhile point to the Seventh Circuit’s Hughes decision after remand.
Hughes v. Northwestern Univ., 63 F. 4th 615 (7th Cir. 2023) (“Hughes II”). That opinion holds,
in relevant part, that “Hughes says providing a diverse menu of investments alone is not
dispositive that a plan fiduciary has fulfilled the duty of prudence.” Id. at 625. The court
recognized that Hughes “rejected this court’s reliance on a categorical rule that a plan fiduciary
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
39 of 53

40
may avoid liability by assembling a diverse menu of investment options that includes the types
of investments a plaintiff desires.” Id. at 626. Thus, the Seventh Circuit does not discuss Hughes
as Defendants do here, as though the Supreme Court’s opinion requires expressly addressing all
the alleged circumstances before nonetheless dismissing imprudence claims that complain about
only a subset of the investment options.
In Hughes, the Supreme Court recognizes that, of course, a fiduciary’s selection and
monitoring processes must be viewed in the factual context that existed at the time. Hughes, 142
S. Ct. at 742. But that goes to the question of whether Plaintiffs allege the fiduciary used an
unreasonable process. It does not permit the court to infer that Plaintiffs’ allegations of an
unreasonable process are implausible just because participants had other options available to
them in the Plan.
C. 	Plaintiffs’ Allegations of Above-Average Fees Without Commensurate
Performance Are Plausible.
Defendants further argue that Plaintiffs’ allegations of excessive fees are conclusory, only
concern two of the many JH Funds, use improper benchmarks, and ignore that a plan fiduciary is
not required to choose the “cheapest” funds as investment options. Motion at 12-18. Defendants
argue the imprudence claim should accordingly be dismissed as implausible.
This court disagrees. First, Plaintiffs allege that Janus and the Committee had no process
for assessing or monitoring the prudence of any of the JH Funds, and those allegations are not
conclusory.16 See, e.g., Am. Complt. ¶¶ 6, 18-19, 42-46, 49-52, 62, 63. Plaintiffs also allege
16 In their reply, Defendants argue that “[t]o suggest Janus does not ‘prudently select or monitor’
its own funds ignores the significant guardrails in place to protect investors like Plan
participants.” ECF No. 46 at 8 (citing 15 U.S.C. § 80a-15(c) as requiring directors of investment
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
40 of 53

41
damages from that lack of assessment and monitoring because JH Funds were the only actively
managed investment options in the Plan, and the JH Funds carried higher expenses than similar,
actively managed funds. Id. ¶¶ 47, 52, 59, 64, 65, 82. Plaintiffs further allege, with citation to
DOL and SEC publications, 17 that even small differences in expense ratios for investments in
retirement accounts result in significantly lower gains over time. Id. ¶ 40 n.8
Second, Plaintiffs’ comparison allegations are anything but conclusory. The Amended
Complaint goes on for several pages with detailed allegations of which benchmarks Plaintiffs
used and includes several tables setting forth the specific comparisons against those benchmarks.
As one of Defendants’ cited cases notes, Plaintiffs “cannot simply make a bare allegation that
costs are too high, or returns are too low.” Davis v. Wash. Univ. in St. Louis, 960 F.3d 478, 484
(8th Cir. 2020). They must offer “a sound basis for comparison––a meaningful benchmark.” Id.
companies to “request and evaluate” information regarding mutual funds). This is a new
argument on reply, and it is accordingly waived for purposes of the motion to dismiss. See, e.g.,
Tuft v. Indem. Insur. Co. of N. Am., No. 19-cv-01827-REB-KLM, 2021 WL 1041801, at *2 n.3
(citing United States v. Leffler, 942 F.3d 1192, 1197-98 (10th Cir. 2019)); Home Design Servs.,
Inc. v. B&B Custom Homes, 509 F. Supp. 2d 968, 971 (D. Colo. 2007)).
Even if the court were to consider the argument, it would not alter the court’s analysis
here. This is a provision of the Investment Company Act’s requiring board approval before a
registered investment company contracts for regular investment advice. Defendants do not
explain how they believe that statute applies to Janus or the Committee in their fiduciary roles
for the Plan.
17 DOL, A Look at 401(k) Plan Fees, at 1-2 (2013), available at https://www.dol.gov/sites/dolgov
/files/ebsa/about-ebsa/our-activities/resource-center/publications/a-look-at-401k-plan-fees.pdf,
(noting that a “1 percent difference in fees and expenses would reduce your account balance at
retirement by 28 percent”); SEC Investor Bulletin, How Fees and Expenses Affect Your
Investment Portfolio, SEC Pub. No. 164 at 3 (2014), available at https://www.sec.gov/investor/
alerts/ib_fees_expenses.pdf (“In 20 years, the total amount paid for a 1% annual fee adds up to
almost $28,000 for a $100,000 initial investment”).
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
41 of 53

42
The court respectfully concludes that Plaintiffs do so here.
Plaintiffs recognize that the JH Funds are actively managed funds and that expenses are
higher for such funds than those which are merely index or passively managed funds. While
Plaintiffs rely in part on the average 401(k) fund expense ratios from the ICI study, they also
compare the JH Funds to the “average actively managed expense ratios” that Morningstar
calculated for eighteen categories of actively managed funds. See, e.g., Am. Complt. at 16-19
(several tables). In a footnote, Plaintiffs explain inter alia that the actively managed average
expense ratio:
consists of the average annual report expense ratio of the least expensive share class
of the twenty largest actively managed mutual funds by assets under management
managed in a similar investment style to each Janus Henderson fund, as
represented by the Morningstar Global Category. The least expensive share class
is that which carries the lowest expense ratio for a given mutual fund and is
generally reserved for larger institutional or retirement plan investors. This
primarily includes institutional and R6 share classes. Janus Henderson’s least
expensive share class is the “N” class which, like institutional and R6 share classes,
carries the lowest expense ratio of all Janus Henderson share classes, is available
to investors with larger initial investments, and is not subject to front or deferred
loads. Averages are calculated separately for [18 categories:] Asia ex-Japan
Equity, 	Cautious 	Allocation, 	Europe 	Equity 	Large 	Cap, 	Fixed 	Income
Miscellaneous, Flexible Allocation, Global Emerging Markets Equity, Global
Equity Large Cap, Global Equity Mid/Small Cap, Global Fixed Income, Healthcare
Sector Equity, Moderate Allocation, Multialternative, Real Estate Sector Equity,
Technology Sector Equity, US Equity Large Cap, US Equity Mid Cap, US Equity
Small Cap, and US Fixed Income Morningstar Global Categories.
Am. Complt. at 16-17 n.16 (emphasis added).
Plaintiffs’ allegations thus plausibly show that they do not rely solely on average
expense ratios for 401(k) plans that include passively managed or index funds, and they do not
rely on just one, generic average expense ratio for actively managed funds. Rather, the well-
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
42 of 53

43
pleaded facts demonstrate that Plaintiffs use separately calculated averages for eighteen
categories (Morningstar Global Categories) of actively managed funds to take into account that
different types of investments tend to have higher or lower expenses associated with them within
the umbrella of actively managed funds. Id. n.16. These are similar to allegations that survived a
motion to dismiss in, for instance, Waldner v. Natixis Inv. Managers, L.P., Civil No. 21-10273-
LTS, 2021 WL 9038411, at *4 (D. Mass. Dec. 20, 2021) (noting allegations that nine proprietary
funds at issue “exceeded the average expense ratio of the twenty largest actively managed mutual
funds under a similar investment style”).
Thus, this case is not like the cases which Defendants cite in their motion, which appear
to only involve the average 401(k) plan expense ratios from the ICI study and do not discuss the
expense ratios of the Morningstar Global Categories: Riley v. Olin Corp., 4:21-cv-01328-SRC,
2022 WL 2208953, at *5 (E.D. Mo. Jun. 21, 2022); Matney, 2022 WL 1186532, at *6; Matousek
v. MidAm. Energy Co., 51 F.4th 274, 282 (8th Cir. 2022) (noting the plaintiffs compared three of
the funds at issue with their “peer groups,” but “the composition of the peer groups remains a
mystery;” the pleading did not explain for instance “what types of funds are in each group, much
less the criteria used to sort them”); and Parmer v. Land O’Lakes, Inc., 518 F. Supp. 3d 1293,
1303-04 (D. Minn. 2021).
In a footnote in their motion, Defendants claim that the average actively managed
expense ratio fails because Plaintiffs “cite no data [n]or explain why this is a meaningful
benchmark.” Motion at 15 n.16. Defendants assert that Plaintiffs’ allegation that this benchmark
reflects similar investment styles as the JH Funds is conclusory. In their reply, Defendants repeat
this assertion and cite Forman, 40 F.4th at 449. But Forman notes that “[i]mportant though the
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
43 of 53

44
‘meaningful benchmark’ hurdle may be, it is at its most salient when a beneficiary challenges an
investment choice in a vacuum. The plaintiff in that setting must do the work of showing that the
comparator investment has sufficient parallels to prove a breach of fiduciary duty.” Id. at 451
(citing CommonSpirit, 37 F.4th 1160).
This court respectfully concludes that Plaintiffs allege meaningful benchmarks in this
case. In a table spanning four pages, Plaintiffs list 45 JH Funds (in rows) with the respective
ICI/BrightScope and Morningstar Categories in which Plaintiffs allege each JH Fund belongs.
Am. Complt. at 16-19. Plaintiffs list the average actively managed expense ratio that Plaintiffs
allege should be associated with each respective JH Fund. While Plaintiffs do not “map” the
eighteen categories in the Morningstar Global Categories to the 45 JH Funds, and do not allege
that the JH Funds are among the funds that comprise each Morningstar Global Category, this is
not necessary to satisfy the requirements for notice pleading and plausibility. Plaintiffs point to
the categories that a third-party (Morningstar) defined, and how precisely Plaintiffs mapped
those to the JH Funds is a question Defendants can ask them in discovery. In short, Defendants’
disagreements with Plaintiffs’ comparisons and benchmarks present factual disputes (that are
inappropriate to resolve on a Rule 12(b)(6) motion), but those disagreements do not mean that
Plaintiffs’ claim is not plausible.
Nor is it persuasive that a fiduciary is not required to select the cheapest funds, as
Defendants claim. Motion at 12-13. Plaintiffs do not dispute that point in their response brief,
and they do not allege that Defendants failed to select the cheapest funds. Rather, they claim that
JH Funds had high fees for their relative performance compared to their benchmarks. See, e.g.,
Am. Complt. ¶¶ 1, 6, 44, 50, 52.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
44 of 53

45
Defendants further argue that a fiduciary can choose investment options “as here, to align
the economic interests of a company with its employees.” Motion at 13 (citing White v. Chevron
Corp., 2017 WL 2352137, at *11 (N.D. Cal. May 31, 2017); Pendency of Proposed Rulemaking,
Class Exemption Involving Mutual Fund In-House Plans Requested by the Investment Company
Institute, 41 Fed. Reg. 54,080, 54081 (Dec. 10, 1976) (referred to hereafter as the “DOL
Notice”); U.S. Dep’t of Labor Advisory Opinion 2006-08A, 2006 WL 2990326 (Oct. 3, 2006),
https://www.dol.gov/agencies/ebsa/aboutebsa/our-activities/resource-center/advisory-
opinions/2006-08a.18
Even assuming that Defendants are correct in their views of these authorities, the court
cannot weigh this competing goal (of aligning economic interests) against Plaintiffs’ allegations
that the JH Funds are imprudent due to excessive fees for their level of performance. To do so
would contradict the well-pleaded fact allegations, which the court must accept as true at the
Rule 12(b)(6) phase.
Moreover, Defendants’ arguments challenging the allegations of underperformance
likewise raise factual disputes that are beyond the purview of Rule 12(b)(6). Defendants cite
Birse from this court, and several out-of-circuit cases, as finding that prudent investors can retain
18 DOL Opinion No. 2006-08A notes that “[w]ithin the framework of ERISA’s prudence,
exclusive purpose and diversification requirements, the Department believes that plan fiduciaries
have broad discretion in defining investment strategies appropriate to their plans.” Id. at *3.
However, the opinion gives the DOL’s views only “on whether a fiduciary of a defined benefit
plan may, consistent with the requirements of section 404 of ERISA, consider the liability
obligations of the plan and the risks associated with such liability obligations in determining a
prudent investment strategy for the plan.” Id., 2006 WL 2990326, at *1 (emphasis added). Given
this context, it appears that Defendants cite the opinion only for the broad proposition that they
have wide discretion in defining investment strategies.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
45 of 53

46
investments despite a period of underperformance and finding that alleged underperformance
over spans of up to five years did not plausibly support that the fiduciaries were imprudent to
retain those investments in a plan. But Defendants ignore that Plaintiffs in this case do not
separately allege underperformance. Rather, they allege the JH Funds had excessive fees without
commensurate outperformance of their respective benchmarks. The allegations of high fees and
low-to-average performance combine here to make the claim plausible. See, e.g., Troudt v.
Oracle Corporation, 1:16-cv-00175-REB-CBS, 2017 WL 663060, (D. Colo. Feb. 16, 2017),
report and rec. adopted, 2017 WL 1100876 (D. Colo. Mar. 22, 2017) (finding claim of
underperformance in conjunction with high fees survived motion to dismiss).
Defendants’ cited cases, in contrast, do not discuss claims of underperformance in
conjunction with the level of fees for that relative performance. See Birse, 2019 WL 1292861, at
*1, 5 (plaintiffs alleged only underperformance, not that the funds in question had excessive fees
without commensurate outperformance);19 White v. Chevron Corp., 16-cv-0793-PJH, 2016 WL
4502808, at *17 (N.D. Cal. Aug. 29, 2016) (dismissing a claim that fiduciaries should have
removed an underperforming fund sooner because the allegations instead supported inferences
that the fiduciaries had been “attentively monitoring the fund” and removed it “while it was still
outperforming its benchmark on a long-term trailing basis”); Meiners v. Wells Fargo & Co.,
Civil No. 16-3981(DSD/FLN), 2017 WL 2303968, at *2 (D. Minn. May 25, 2017), aff’d, 898
F.3d 820 (8th Cir. 2018) (dismissing underperformance claim that compared the defendant’s
19 Defendants also appear to rely on Birse’s dismissal of underperformance claims based on the
whole portfolio (the plan) performing well, but the court respectfully concludes that Hughes
disapproves of this reasoning for Rule 12(b)(6) dismissals.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
46 of 53

47
funds against only Vanguard funds); CommonSpirit, 37 F.4th at 1166 (dismissing claim that
“mainly compare[d] the Fidelity Freedom Funds’ performance to the Fidelity Freedom Index
Funds” over a five year period); Dorman v. Charles Schwab Corp., 17-cv-00285-CW, 2019 WL
580785, at *6 (N.D. Cal. Feb. 8, 2019) (dismissing claims that did not allege facts to support the
alleged “consistent underperformance” of the ten funds at issue and instead showed that at
various times in a five year period, the funds both underperformed and outperformed their
benchmarks); Patterson v. Morgan Stanley, 16-cv-6568 (RJS), 2019 WL 4934834, at *11
(S.D.N.Y. Oct. 7, 2019) (noting that “[a]lthough the Mid Cap Fund lagged behind its alleged
comparators in 2011, 2012, and 2014, it outperformed all of Plaintiffs’ suggested alternative
investments in 2013,” and dismissing the claim because it improperly relied on hindsight).
Defendants also point out that the two particular JH Funds that Plaintiffs use as examples
to allege underperformance in greater detail outperformed their benchmarks when measured
from inception. Motion at 17. One of those funds, they point out, also outperformed its
benchmarks for the majority of years at issue––based on the benchmark data in the summary
prospectuses that Defendants submit as Exhibits 6 to 8 to their motion. See ECF Nos. 40-6 to 40-
8. Defendants further argue that “relative underperformance” is “insufficient to state a claim,”
citing Kurtz, 511 F. Supp. 3d at 1196. And Defendants also contend that the underperformance
of JH Funds is simply too small to plausibly allege imprudence. Motion at 18.
This court notes that although funds’ relative underperformance was not the precise issue
in Hughes, Defendants are proposing the same sort of bright-line thinking for ERISA fiduciaries’
duty of prudence of which Hughes disapproves. This court respectfully concludes that the ten-
year performance data (Am. Complt. at 21-23) and “long-term performance” data (id. at 24-25
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
47 of 53

48
n.19) that Plaintiffs allege with respect to fourteen JH Funds plausibly support their assertions
that (1) the JH Funds’ higher-than-average expense fees did not come with commensurate
outperformance, (2) this led to significant shortfalls in the returns that participants earned on
their holdings of JH Funds in the Plan (compared to what they would have earned from other
actively managed funds that were not in the Plan), and (3) the JH Funds were hence imprudent to
retain in the Plan.
Certainly, some of the performance shortfalls that Plaintiffs allege for JH Funds that
ultimately were liquidated or merged are small. The INTECH U.S. Core Fund (one of the JH
Funds managed by a subsidiary, Am. Complt. at 6 n.4), for instance, allegedly fell short of its
prospectus benchmark by only 0.05%. Am. Complt. at 24. The Janus Henderson Twenty Fund
similarly fell short by only 0.32%. Id. at 25. Intuitively, a difference of 0.05% or 0.32% for long-
term performance does seem very small indeed. If this were all Plaintiffs alleged to support that
the JH Funds’ expenses were excessive for their performance (or to support that Defendants did
not reasonably assess and monitor the JH Funds), the court’s assessment of the plausibility
question might be different. -.
However, Plaintiffs include that particular piece of data only for the sake of presenting
complete performance data for the fifteen JH Funds that were liquidated or merged. Id. ¶ 59.
Most of those JH Funds fell short of their benchmarks on long-term performance by far more
significant intervals, with several underperforming by between 1and 6%. Id. at 25. Again, “a
well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those
facts is improbable, and that a recovery is very remote and unlikely.” Twombly, 550 U.S. at
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
48 of 53

49
556.20 In short, the court recommends denying Defendants’ motion to dismiss the imprudence
claim.
IV. 	Do the Well-Pleaded Facts Plausibly Show that Defendants Breached the Duty of Loyalty
to Plaintiffs?
ERISA’s duty of loyalty requires that “a fiduciary shall discharge [its] duties with respect
to a plan solely in the interest of the participants and beneficiaries and— (A) for the exclusive
purpose of (i) providing benefits to participants and their beneficiaries; and (ii) defraying
reasonable expenses of administering the plan.” 29 U.S.C. § 1104(a)(1)(A). A claim for
disloyalty requires alleging more than just an incidental benefit to the fiduciary; Plaintiffs must
allege that self-benefit (or benefit to another person who was not the Plan) was the motivating
reason for the fiduciary’s action or omission. Kurtz, 511 F. Supp. 2d at 1202; see also Jones v.
DISH Network Corp., 22-cv-00167-CMA-STV, 2023 WL 2644081, *8 (D. Colo. Mar. 27, 2023)
(citing Kurtz). A disloyalty claim also cannot simply recast allegations of imprudence. Kurtz, 511
F. Supp. 2d at 1202. However, where, as here, the plaintiffs bring a single claim for disloyalty
and imprudence, the court is to read all of the allegations together in deciding whether a
disloyalty claim is plausible. See, e.g., Anderson, 2022 WL 951218, at *12.
Plaintiffs allege that Defendants breached their duty of loyalty in offering and continuing
to offer the JH Funds in the Plan to benefit Janus. Plaintiffs allege that Defendants did so to
“seed” Janus’s funds. Plaintiffs further allege that Defendants continued to offer the JH Funds so
that Janus could charge the Plan the excessively high fees of the JH Funds.
20 Defendants also repeat their argument (addressed above) that Janus did not act as a fiduciary
with respect to the continued offering of JH Funds in the Plan. The court respectfully disagrees
for the same reasons the court explains above in Section II.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
49 of 53

50
Defendants argue that this claim is duplicative or derivative of the imprudence claim.
They argue that the Plan itself states that the purpose of requiring all JH Funds in the Plan was to
align Janus’ economic interests with those of its employees. Motion at 20. The Plan states that it
is structured to “align the economic interests of [Janus] and its employees” by offering
employees “equity in [Janus].” Id. at 2 (quoting ECF No. 40-2, Plan at 1). Defendants further
argue that Janus pays the administrative costs of the Plan instead of charging those costs to the
participants. ECF No. 40-2 (Plan) § 11.11. Finally, Defendants argue that none of the allegations
of disloyalty plausibly suggest self-dealing, citing Kurtz, 511 F. Supp. 3d at 1202; DOL Notice.21
Defendants thus argue that the law allows financial companies like Janus to offer their
proprietary investment funds to employees, and it is common to do so. See, e.g., Wildman v. Am.
Century Servs., LLC, 362 F. Supp. 3d 685, 693 (W.D. Mo. 2019). So, the reasoning goes,
charging the JH Funds’ usual expense fees to the Plan like any other investor in those funds
therefore cannot be disloyal. Defendants also note that the default investment option in the Plan–
–when participants do not choose investments for themselves––is non-proprietary. ECF No. 40-3
(Investment Policy Statement) at 13 (p. 15 of pdf) (Vanguard Balanced Index Fund).
As to Janus, the court finds that Plaintiffs have the better argument on the disloyalty
claim. Even setting aside for the present the allegations of excessive fees for the JH Funds’
relative performance (as the substance of the imprudence claim), Plaintiffs allege Janus
21 In their reply, Defendants also cite ERISA Prohibited Transaction Exemption 77–3, 42 Fed.
Reg. 18734-35 (Apr. 8, 1977). The document provides notice that the proposal (permitting
investment companies to offer their funds as options in their ERISA plan without running afoul
of the statute’s prohibited transactions rules) floated in the DOL Notice has taken effect. Id. at
18734. As Defendants do not cite the court to any particular provision of the April 1977 notice,
the court does not further analyze the document.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
50 of 53

51
continued to require that all of its funds be offered in the Plan to “seed” those funds for its own
benefit. A sister court has found similar allegations support a plausible disloyalty claim, albeit
where the plaintiffs also alleged the proprietary funds were the only investment options.
Schapker v. Waddell & Reed Financial, Inc., 17-cv-2365-JAR-JPO, 2018 WL 1033277, at *9 (D.
Kan. Feb. 22, 2018). Here, Plaintiffs allege that the JH Funds were the only actively managed,
non-inflation protected funds available in the Plan. They further allege that no other 401(k) plan
similarly limits its actively managed investment options to JH Funds. While Plaintiffs do not
dispute that the Plan’s default investment option was a non-proprietary index fund, this does not
change their allegations that Janus mandated all of its funds be included in the Plan, and that
those funds were the only actively managed, non-inflation protected options. 22
Although Janus points to the Forms 5500 (ECF No. 40-2) to assert that, to the contrary,
there were thousands of non-proprietary funds––including actively managed funds––available
through the “Fidelity BrokerageLink,” these documents do not support that assertion. The Forms
5500 just disclose that the BrokerageLink investments are “participant-directed brokerage
accounts,” the number of BrokerageLink shares held in the Plan, and their current value. Id.,
passim.23 They do not disclose the number of funds available to Plan participants through that
22 In addition, in Troudt, 2017 WL 663060, a judge of this court found plausible an ERISA
disloyalty claim that arguably alleged even less motivation by the fiduciary to benefit a person
other than the plan. Id. at *1-2 n.3, 7 (claiming fiduciary was disloyal in providing an asset-based
fee to the plan’s recordkeeper and failing to monitor; as the plan’s assets grew, recordkeeping
duties did not, and thus the arrangement benefitted only the recordkeeper).
23 Defendants also point to An Advisor’s Guide to Fidelity BrokerageLink, Fidelity Institutional,
https://clearingcustody.fidelity.com/app/-proxy/content?-literatureURL=/967373.PDF. However,
the court will not consider this document, which does not come within any of the exceptions to
Rule 12(d) that the Tenth Circuit has recognized.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
51 of 53

52
service. While Defendants’ assertion, if true, may be a strong argument on summary judgment,
the court cannot consider it at the Rule 12(b)(6) phase. Neither side requests that the court
convert the motion, and the court does not see any efficiency to be gained by doing so.
Nor can the court weigh at this phase the significance of either the Plan’s stated purpose
(to align Janus’s and employees’ economic interests), or Janus’s decision to charge itself the
administrative costs of running the Plan instead of charging them to the Plan. ECF No. 40-1,
Plan § 11.11. These points present factual issues that cannot be resolved on a Rule 12(b)(6)
motion, but that does not undermine the conclusion that Plaintiffs have pleaded non-conclusory
facts which permit this court reasonably to infer that Janus breached a duty of loyalty to
Plaintiffs.
As to the Committee, neither side’s briefs specifically distinguish the disloyalty claim
between Janus and the Committee. It appears that both sides consider the same arguments to
apply to both the company and the advisory committee on this claim. The court therefore does
likewise. Because Plaintiffs allege facts that make the disloyalty claim plausible, the court
recommends denying Defendants’ motion to dismiss this claim.
V. 	Do the Well-Pleaded Facts Plausibly Show that Defendants Janus Henderson Failed to
Monitor the Committee?
Finally, Defendants’ only argument on Count II for Janus’s alleged failure to monitor the
Committee is that the claim fails for lack of a cognizable claim for breach of fiduciary duty. As
this court finds the breach of fiduciary duty claims are cognizable against both Janus and the
Committee, the court recommends denying Janus’s motion to dismiss Count II.
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
52 of 53

53
CONCLUSION
For each of the above reasons, this court RECOMMENDS granting in part and denying
in part Defendants’ motion to dismiss. The motion should be granted only with respect to the
portion of the breach of fiduciary duty claim (Count I) against Janus for writing the JH Funds
into the Plan and failing to amend the Plan thereafter to remove that requirement. This court
recommends dismissing that portion of the claim with prejudice, as it is barred by the ERISA law
discussed herein and leave to amend would therefore be futile. The court respectfully
recommends that the motion to dismiss should otherwise be denied and that all remaining claims
should proceed.24
DATED: September 7, 2023 	BY THE COURT:
Susan Prose
United States Magistrate Judge
24 Rule 72 of the Federal Rules of Civil Procedure provides that within fourteen (14) days after
service of a Magistrate Judge’s order or recommendation, any party may serve and file written
objections with the Clerk of the United States District Court for the District of Colorado. 28
U.S.C. §§ 636(b)(1)(A), (B); Fed. R. Civ. P. 72(a), (b). Failure to make any such objection will
result in a waiver of the right to appeal the Magistrate Judge’s order or recommendation. See
Sinclair Wyo. Ref. Co. v. A & B Builders, Ltd., 989 F.3d 747, 782 (10th Cir. 2021) (firm waiver
rule applies to non-dispositive orders); but see Morales-Fernandez v. INS, 418 F.3d 1116, 1119,
1122 (10th Cir. 2005) (firm waiver rule does not apply when the interests of justice require
review, including when a “pro se litigant has not been informed of the time period for objecting
and the consequences of failing to object”).
Case No. 1:22-cv-02326-RM-SBP Document 50 filed 09/07/23 USDC Colorado pg
53 of 53