In Meiners v. Wells Fargo & Company, No. 17-2397 (8th Cir. 2018), John Meiners (“Meiners”) appeals from the district court’s order dismissing his Complaint for failure to state a claim. Meiners claimed that his former employer, Wells Fargo & Company (“Wells Fargo”), and an assortment of Wells Fargo executives and entities (collectively, the “Wells Fargo Defendants”), breached their fiduciary duty under ERISA. He alleged two breaches: (1) retaining Wells Fargo’s proprietary investment funds as options for Wells Fargo employees’ 401(k) retirement plan (the “Plan”), and (2) defaulting to these proprietary investment funds for Plan participants who did not elect other options.
In this case, during the relevant time period, the Plan allegedly offered more than two dozen investment options, twelve of which were Wells Fargo Dow Jones Target Date Funds (“Wells Fargo TDFs”). These Wells Fargo funds were allegedly more expensive (due to higher fees) than comparable Vanguard and Fidelity funds and also underperformed the Vanguard funds. Meiners’s claimed that the Wells Fargo Defendants breached their fiduciary duties under ERISA when they failed to remove their inordinately expensive and underperforming funds from the Plan’s options. Meiners further alleged that the breach occurred because the Wells Fargo Defendants were maximizing their own profits, selecting their funds as a default out of improper financial motives to generate fees and “seed” (provide financial support for) the underperforming funds. The district court granted the Wells Fargo Defendant’s motion to dismiss the claim, and Meiners appealed.
Upon reviewing the case, the Eighth Circuit Court of Appeals (the “Court”) affirmed the district court’s dismissal. In this case, the Court found that Meiners’s Complaint fails to state a plausible claim because it fails to allege any facts, accepted as true, to demonstrate that the Wells Fargo TDFs were an imprudent choice. In particular, Meiners did not plead facts showing the Wells Fargo TDFs were underperforming funds. His conclusory allegations of bad conduct do not save his Complaint from its deficient pleading regarding those funds.