Santomenno v. Transamerica Life Insurance Co.

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A plan administrator is not an Employee Retirement Income Security Act (ERISA) fiduciary when negotiating its compensation with a prospective customer. The Ninth Circuit reversed the district court's order denying defendants' motion to dismiss an action alleging breach of fiduciary duties in connection with a retirement plan. The panel held that defendant was not a fiduciary with respect to its receipt of revenue sharing payments from investment managers because the payments were fully disclosed before the provider agreements were signed and did not come from plan assets. The panel agreed with other circuits and held that defendant also was not a fiduciary with respect to its withdrawal of preset fees from plan funds. The panel explained that when a service provider's definitively calculable and nondiscretionary compensation was clearly set forth in a contract with the fiduciary-employer, collection of fees out of plan funds in strict adherence to that contractual term was not a breach of the provider’s fiduciary duty. The panel vacated class certification orders and remanded with instructions to dismiss the complaint. View "Santomenno v. Transamerica Life Insurance Co." on Justia Law