United States District Court, D. Nebraska
MARC J. MURI, individually and on behalf of all others similarly situated, Plaintiff,
NATIONAL INDEMNITY COMPANY, Defendants.
MEMORANDUM AND ORDER
M. Gerrard Chief United States District Judge.
plaintiff, Marc Muri, is suing his former employer, National
Indemnity Company, for allegedly breaching the fiduciary
duties owed to him, and all others similarly situated, under
the Employee Retirement Income Security Act of 1974 (ERISA),
29 U.S.C. § 1001 et seq. National Indemnity has
moved for summary judgment on Muri's claims. For the
reasons discussed below, the Court will grant National
Indemnity's motion and Muri's claims will be
Court's prior Memorandum and Order (filing 38) set forth
the background of this case in detail. Muri was employed by
National Indemnity, an insurance provider located in Omaha,
Nebraska. Filing 1 at 7. During his employment, Muri
participated in National Indemnity Company's Employee
Retirement Savings Plan ("the Plan"). Filing 1 at
2. The Plan--which is a defined contribution plan--in
essence, allows participating employees to contribute a
portion of their salary, which National Indemnity then
matches, towards individual retirement accounts. Filing 100
at 13. Participants do so by choosing from a variety of fund
options, all of which offer different investment styles and
risk profiles, in which to invest their contributions. Muri
elected to invest in the Sequoia Fund. Filing 100 at 13.
speaking, the Sequoia Fund is a non-diversified, long-term
growth, mutual fund managed by Ruane, Cunniff & Goldfarb,
Inc. Filing 100 at 37. The Sequoia Fund invests in
"common stocks it believes are undervalued at the time
of purchase and have the potential for growth." Filing 1
at 13. And it sells common stocks "when the company
shows deteriorating fundamentals . . . or its value appears
excessive relative to its expected future earnings."
Filing 1 at 11.
Muri alleges that the Sequoia Fund was, as of January 2015,
no longer a prudent investment option. Filing 1 at 4. And
Muri contends the Sequoia Fund violated its own "value
policy" by over-concentrating its investments in one,
high risk stock: Valeant Pharmaceuticals. Filing 1 at 3;
see also filing 1 at 2. In essence, Valeant's
business model is to acquire various competitors, and
products, then drastically cut research and development costs
in an effort to boost profits. Filing 1 at 16.
to Muri, Valeant's acquisition strategy, along with its
accounting practices, began raising "red flags"
around the industry. Seefiling 1 at 16-17.
Specifically, investors began questioning Valeant's
"cash earnings per share" accounting method, which
appeared to vastly overstate Valeant's net income. Filing
1 at 18. And suspicions also arose surrounding Valeant's
stock price which, at its peak, had a trade value almost
ninety-eight times higher than its previous year's
earnings. Filing 1 at 17. As a result, Valeant became the
subject of intense scrutiny by investors, analysts, and
elected officials. Seefiling 1 at 22-26. Despite
that skepticism, however, Sequoia Fund managers allegedly
refused to diminish the Fund's concentration in Valeant
stock, and instead, acquired more. Seefiling 1 at
October 2015, Valeant's stock price fell dramatically,
and by November 2015, Valeant had lost more than $65 billion
in market value. Filing 1 at 27. This, in turn, caused the
Sequoia Fund to lose approximately twenty five percent of its
value--vastly diminishing the retirement account of Muri, and
other Plan participants, who invested in the Fund.
Seefiling 1 at 27.
with that backdrop that this litigation ensued. Muri claims
that from January 1, 2015, through the date of judgment in
this action (the "Class Period"), National
Indemnity violated the fiduciary duties it owed to Muri and
other Plan participants by: (1) failing to prudently manage
the Plan by offering "shortsighted" investment
options, such as the Sequoia Fund; and (2) failing to avoid
conflicts of interest in choosing its investment options,
specifically those with close relationships to National
Indemnity's parent company, Berkshire Hathaway. Filing 1
at 34-37. National Indemnity moves for summary judgment on
both Muri's duty of prudence and duty of loyalty claims.
Seefiling 79 at 1.
judgment is proper if the movant shows that there is no
genuine dispute as to any material fact and that the movant
is entitled to judgment as a matter of law. SeeFed.
R. Civ. P. 56(a). The movant bears the initial responsibility
of informing the Court of the basis for the motion, and must
identify those portions of the record which the movant
believes demonstrate the absence of a genuine issue of
material fact. Torgerson v. City of Rochester, 643
F.3d 1031, 1042 (8th Cir. 2011) (en banc). If the movant does
so, the nonmovant must respond by submitting evidentiary
materials that set out specific facts showing that there is a
genuine issue for trial. Id.
motion for summary judgment, facts must be viewed in the
light most favorable to the nonmoving party only if there is
a genuine dispute as to those facts. Id. Credibility
determinations, the weighing of the evidence, and the drawing
of legitimate inferences from the evidence are jury
functions, not those of a judge. Id. But the
nonmovant must do more than simply show that there is some
metaphysical doubt as to the material facts. Id. In
order to show that disputed facts are material, the party
opposing summary judgment must cite to the relevant
substantive law in identifying facts that might affect the
outcome of the suit. Quinn v. St. Louis County, 653
F.3d 745, 751 (8th Cir. 2011). The mere existence of a
scintilla of evidence in support of the nonmovant's
position will be insufficient; there must be evidence on
which the jury could conceivably find for the nonmovant.
Barber v. C1 Truck Driver Training, LLC, 656 F.3d
782, 791-92 (8th Cir. 2011). Where the record taken as a
whole could not lead a rational trier of fact to find for the
nonmoving party, there is no genuine issue for trial.
Torgerson, 643 F.3d at 1042.
prevail on a claim of breach of fiduciary duty under ERISA,
the plaintiff "must make a prima facie showing that [a]
defendant acted as a fiduciary, breached [his] fiduciary
duties, and thereby caused a loss to the Plan."
Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594
(8th Cir. 2009). As explained in the Court's prior
Memorandum and Order, ERISA imposes upon fiduciaries twin
duties of loyalty and prudence. Those duties generally
require fiduciaries to act in the sole interest of plan
participants and to carry out 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.
Id. at 595.
to National Indemnity, however, the record evidence does not
contain any, much less sufficient, evidence from which a
reasonable fact finder could find that National Indemnity
acted imprudently or disloyally in its administration of the
Plan. As such, National Indemnity urges dismissal of
Muri's duty of prudence and duty of loyalty claims.
briefly noted above, the duty of prudence requires
fiduciaries to act solely in the interest of plan
participants and beneficiaries and ERISA requires fiduciaries
to carry out their duties with care, skill, prudence, and
diligence under the circumstances. Id. But that duty
requires fiduciaries to act with prudence, not prescience,
and thus, the relevant inquiry focuses on the information
available to the fiduciary at the time of the relevant
investment decision. Pension Benefit Guar. Corp. ex rel.
St. Vincent Catholic Med. Ctrs. Ret. Plan v. Morgan Stanley
Inv. Mgmt., Inc., 712 F.3d 705, 716. (2d Cir. 2013).
a plan fiduciary also has a continuing duty to monitor and
evaluate the fund options in the Plan and to remove imprudent
ones. Tibble v. Edison Int'l, 135 S.Ct. 1823,
1828 (2015). That means the fiduciaries must
"systematically consider all the investments of the
[Plan] at regular intervals to ensure that they are
appropriate." Id.But even if a fiduciary did
not adequately engage in a review process before making a
decision, that fiduciary is insulated from liability if a
hypothetical prudent ...