Miller Shah Appeals Genentech ERISA Dismissal to Ninth Circuit

On July 16, 2024, Plaintiff Matthew Wehner filed an appellate brief in the United States Court of Appeals for the Ninth Circuit asking the Court to reverse the 2021 dismissal of his class action lawsuit against former employer Genentech, Inc. (“Genentech”) and the U.S. Roche DC Fiduciary Committee (“Committee,” and, collectively with Genentech, “Defendants”) regarding allegedly imprudent investments in the U.S. Roche 401(k) Savings Plan (the “Plan”).

The Plan is a defined contribution plan governed by the Employment Retirement Income Security Act (“ERISA”) of 1974.  As of December 2019, the Plan had over $9.4 billion in assets and had more than 55,000 participants between October 2014 and February 2024. Genentech employees who choose to participate in the Plan can set aside a portion of their income to be invested for retirement on a tax-favored basis.  As the employer and sponsor of the Plan, Genentech offers a menu of investments from which employees can select, according to their personal retirement goals and risk preferences. Employees participating in the Plan also pay account maintenance fees, recordkeeping fees, and investment management fees, which vary depending on the chosen investments.

Plaintiff specifically challenges Genentech’s inclusion of a suite of nine custom target date funds (the “Roche TDFs”) despite the investment manager’s well-known shortcomings and the Roche TDFs’ marked underperformance against both the leading benchmark and peer target date funds.  However, in a June 2021 opinion partially granting and partially denying the Defendants’ motion to dismiss the complaint, the Honorable William H. Orrick of the Northern District of California declined to let these claims move forward, faulting Plaintiff for not explaining why his benchmarks for the Roche TDFs were appropriate.

In his appeal, Plaintiff asserts that Judge Orrick failed to holistically assess the original complaint and applied an overly harsh pleading standard when reviewing the allegations made against Defendants. Plaintiff argues that “nothing in ERISA suggests that a plaintiff must identify specific benchmarks in order to state a claim.”  Similarly, although Judge Orrick focused on whether any one fund was an apt comparator for the Roche TDFs, he failed to consider that the Roche TDFs’ underperformance against all seven benchmarks Plaintiff presented supports the inference that the Committee was not sufficiently monitoring the Roche TDFs in the Plan.

The lawsuit also included claims that the Plan’s recordkeeping fees were excessive, but the parties reached agreement to settle those claims for $250,000 in January 2024.

Plaintiff is represented by Miller Shah LLP and Olivier & Schreiber LLP. The appeal is currently pending review, and updates will be posted to this blog as the matter progresses. The case caption is Wehner v. Genentech Inc. et al., No. 24-2630, filed in the U.S. Court of Appeals for the Ninth Circuit.

The legal team at Miller Shah LLP has significant experience representing ERISA matters. If you have any questions regarding this subject or this post, please contact Alec Berin (ajberin@millershah.com) or Christopher Miller (camiller@millershah.com). The firm can also be reached toll-free at (866) 540-5505.

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