                                             PRECEDENTIAL

        UNITED STATES COURT OF APPEALS
             FOR THE THIRD CIRCUIT
                     ______

                        No. 17-3244
                          ______

JENNIFER SWEDA; BENJAMIN A. WIGGINS; ROBERT
                         L. YOUNG;
FAITH PICKERING; PUSHKAR SOHONI; REBECCA N.
                           TONER,
 individually and as representatives of a class of participants
                              and
  beneficiaries on behalf of the University of Pennsylvania
                       Matching Plan,

                                Appellants

                              v.

  UNIVERSITY OF PENNSYLVANIA; INVESTMENT
          COMMITTEE; JACK HEUER
                   ______

      On Appeal from the United States District Court
         For the Eastern District of Pennsylvania
               (E.D. Pa. No. 2-16-cv-04329)
       District Judge: Honorable Gene E.K. Pratter

                          _______
              Argued October 2, 2018
 Before: SHWARTZ, ROTH, and FISHER, Circuit Judges.

               (Opinion Filed: May 2, 2019)


Jerome J. Schlichter
Sean E. Soyars
Kurt C. Struckhoff
Michael A. Wolff [ARGUED]
Schlichter Bogard & Denton
100 South 4th Street, Suite 1200
St. Louis, MO 63102
       Counsel for Appellants


Brian T. Ortelere   [ARGUED]
Morgan Lewis & Bockius
1701 Market Street
Philadelphia, PA 19103

Christopher J. Boran
Matthew A. Russell
Morgan Lewis & Bockius
77 West Wacker Drive
Chicago, IL 60601

Michael E. Kenneally
Morgan Lewis & Bockius
1111 Pennsylvania Avenue, N.W.
Suite 800 North
Washington, DC 20004
       Counsel for Appellees




                             2
Brian T. Burgess
Jaime A. Santos
Goodwin Procter
901 New York Avenue, NW
Suite 900 East
Washington, DC 20001

Alison V. Douglass
James O. Fleckner
Goodwin Procter
100 Northern Avenue
Boston, MA 02210
       Counsel for Chamber of Commerce of The United
States of America and American Benefits Council, Amicus
Appellees

Brian D. Netter
Mayer Brown
1999 K Street, N.W.
Washington, DC 20006
      Counsel for American Association of State Colleges
and Universities, American Council on Education,
Association of American Universities, Association of
Community College Trustees, Association of Public and
Land-Grant Universities, College and University
Professional Association For Human Resources, Council of
Independent Colleges, National Association of Independent
Colleges and Universities, Amicus Appellees

Lori A. Martin
WilmerHale
7 World Trade Center




                             3
250 Greenwich Street
New York, NY 10007

Seth P. Waxman
Paul R. Wolfson
WilmerHale
1875 Pennsylvania Avenue, N.W.
Washington, DC 20006
       Counsel for Teachers Insurance & Annuity
Association of America, Amicus Appellee
                          ______

                 OPINION OF THE COURT
                         ______

FISHER, Circuit Judge.
        Plaintiffs Jennifer Sweda, Benjamin Wiggins, Robert
Young, Faith Pickering, Pushkar Sohoni, and Rebecca Toner,
representing a class of participants in the University of
Pennsylvania’s 403(b) defined contribution, individual
account, employee pension benefit plan, sued Defendants, the
University of Pennsylvania and its appointed fiduciaries, for
breach of fiduciary duty, prohibited transactions, and failure to
monitor fiduciaries under the Employee Retirement Income
Security Act (ERISA), 29 U.S.C. §§ 1001-1461. Plaintiffs
(collectively, “Sweda”) alleged that Defendants (collectively,
“Penn”), among other things, failed to use prudent and loyal
decision making processes regarding investments and
administration, overpaid certain fees by up to 600%, and failed
to remove underperforming options from the retirement plan’s
offerings. The District Court dismissed Sweda’s complaint in
its entirety. We will reverse the District Court’s dismissal of
the breach of fiduciary duty claims at Counts III and V only




                               4
and remand for further proceedings.
                               I.
       Sweda and her fellow Plaintiffs-Appellants are current
and former Penn employees who participate, or participated, in
Penn’s retirement plan (the “Plan”). They sought to represent
the proposed class of Plan participants, 20,000 current and
former Penn employees who had participated in the Plan since
August 10, 2010. The Defendants are the University of
Pennsylvania, its Investment Committee, and Jack Heuer, the
University’s Vice President of Human Resources. The Plan is
a defined contribution plan under 29 U.S.C. § 1002(34), tax
qualified under 26 U.S.C. § 403(b). The University matches
employees’ contributions up to 5% of compensation.
       As a 403(b), the Plan offers mutual funds and annuities:
the former through TIAA-CREF and Vanguard Group, Inc.
and the latter through TIAA-CREF. Since 2010, the Plan has
offered as many as 118 investment options. As of December
2014, the Plan offered 78 options: 48 Vanguard mutual funds,
and 30 TIAA-CREF options including mutual funds, fixed and
variable annuities, and an insurance company separate account.
Effective October 19, 2012, Penn organized its investment
fund lineup into four tiers. The TIAA-CREF and Vanguard
options under Tier 1 consisted of lifecycle or target-date funds
for the “Do-it-for-me” investor. Certain core funds were
designated Tier 2, designed for the “Help-me-do-it” investor
looking to be involved in his or her investment choices without
having to decide among too many options. Under Tier 3, the
Plan offered an “expanded menu of funds” for “the more
advanced ‘mix-my-own’ investor,” and under Tier 4, the Plan
offered the option of a brokerage account window for the “self-
directed” investor looking for additional options, subject to
additional fees. Plan participants thereafter could “select a




                               5
combination of funds from any or all of the investment tiers.”
At the end of 2014, the Plan had $3.8 billion in assets: $2.5
billion invested in TIAA-CREF options, and $1.3 billion
invested in Vanguard options.
       TIAA-CREF and Vanguard charge investment and
administrative (recordkeeping) fees. Mutual fund investment
fees are charged as a percentage of a fund’s managed assets,
known as the expense ratio, and the rate can differ by share
class. The mutual funds in which the Plan invests have two
share classes: retail and institutional. Retail class shares
generally have higher investment fees than institutional class
shares. There are also two common recordkeeping fee models.
In a flat fee model, recordkeeping fees are a set amount per
participant, whereas in a revenue sharing model, part of an
option’s expense ratio is diverted to administrative service
providers. TIAA-CREF and Vanguard charged the Plan under
the revenue sharing model.
       Sweda alleged numerous breaches of fiduciary duty and
prohibited transactions. She brought six counts against all
Defendants, and one count against the University. The first six
counts alleged breaches of fiduciary duty in violation of 29
U.S.C. § 1104(a)(1) (Counts I, III, and V) and prohibited
transactions in violation of 29 U.S.C. § 1106(a)(1) (Counts II,
IV, and VI). Sweda also alleged that the University failed to
adequately monitor its appointed fiduciaries in Count VII.
        Penn moved to dismiss the complaint, and the District
Court granted the motion. The court determined that Sweda
failed to state a claim for fiduciary breach under Bell Atl. Corp.
v. Twombly, 550 U.S. 544 (2007) and Renfro v. Unisys Corp.,
671 F.3d 314 (3d Cir. 2011), because her factual allegations
could also indicate rational conduct. As for the prohibited
transaction claims, the court held that the service agreements




                                6
could not constitute prohibited transactions without an
allegation that Penn had the subjective intent to benefit a party
in interest. The court dismissed Count VII after determining
that it was duplicative of the claims at Counts I, III, and V.1
Sweda now appeals.
                               II.
        The District Court had jurisdiction under 28 U.S.C.
§ 1331 and 29 U.S.C. § 1132(e)(1) and (f). We have
jurisdiction under 28 U.S.C. § 1291. We conduct plenary
review of an order granting a motion to dismiss for failure to
state a claim under Federal Rule of Civil Procedure (12)(b)(6).
Renfro, 671 F.3d at 320; Burtch v. Milberg Factors, Inc., 662
F.3d 212, 220 (3d Cir. 2011).
                               III.
A. Pleadings standards for claims brought under ERISA
        The question in this case is whether Sweda stated a
claim that should survive termination at the earliest stage in
litigation. When a court grants a motion to dismiss a complaint
under Rule 12(b)(6), it deprives a plaintiff of the benefit of the
court’s adjudication of the merits of its claim before the court
considers any evidence. That is why, in exercising our plenary
review, we apply the same standard as the district court and
construe the complaint “in the light most favorable to the
plaintiff,” Santomenno ex rel. John Hancock Tr. v. John
Hancock Life Ins. Co., 768 F.3d 284, 290 (3d Cir. 2014)
(citation and internal quotation marks omitted), to determine

       1
        Sweda does not address the District Court’s dismissal
of Count VII in her opening brief. Therefore, the District
Court’s dismissal of Count VII is not before us on appeal.
Barna v. Bd. of Sch. Dir. of the Panther Valley Sch. Dist., 877
F.3d 136, 145 (3d Cir. 2017).




                                7
whether it “contain[s] sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on its face,’”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “[W]e disregard
rote recitals of the elements of a cause of action, legal
conclusions, and mere conclusory statements.” James v. City
of Wilkes-Barre, 700 F.3d 675, 679 (3d Cir. 2012). A claim
“has facial plausibility when the pleaded factual content allows
the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Thompson v. Real Estate
Mortg. Network, 748 F.3d 142, 147 (3d Cir. 2014) (citation and
internal quotation marks omitted).
        Here, the District Court held that Sweda’s complaint did
not state a plausible claim, observing at various points in its
memorandum that “[a]s in Twombly, the actions are at least
‘just as much in line with a wide swath of rational and
competitive business strategy’ in the market as they are with a
fiduciary breach.” Sweda v. Univ. of Pennsylvania, No. CV 16-
4329, 2017 WL 4179752, at *7, 8 (E.D. Pa. Sept. 21, 2017)
(quoting Twombly, 550 U.S. at 554). However, Twombly’s
discussion of alleged misconduct that is “just as much in line
with a wide swath of rational and competitive business
strategy” is specific to antitrust cases. 550 U.S. at 554. In an
antitrust case, “a conclusory allegation of agreement at some
unidentified point does not supply facts adequate to show
illegality,” therefore “when allegations of parallel conduct are
set out in order to make a § 1 claim, they must be placed in a
context that raises a suggestion of a preceding agreement, not
merely parallel conduct that could just as well be independent
action.” Id. at 557.
       One of our sister circuits has declined to extend
Twombly’s antitrust pleading rule to breach of fiduciary duty
claims under ERISA because “[r]equiring a plaintiff to rule out




                                8
every possible lawful explanation for the conduct he
challenges would invert the principle that the complaint is
construed most favorably to the nonmoving party.” Braden v.
Wal-Mart Stores, Inc., 588 F.3d 585, 597 (8th Cir. 2009)
(citation and internal quotation marks omitted). We agree, and
decline to extend Twombly’s antitrust pleading rule to such
claims. To the extent that the District Court required Sweda to
rule out lawful explanations for Penn’s conduct, it erred.
        We now turn to the task of evaluating Sweda’s
complaint. We progress in three steps: First, we will note the
elements of a claim; second, we will identify allegations that
are conclusory and therefore not assumed to be true, and; third,
accepting the factual allegations as true, we will view them and
reasonable inferences drawn from them in the light most
favorable to Sweda to decide whether “they plausibly give rise
to an entitlement to relief.” Connelly v. Lane Constr. Corp.,
809 F.3d 780, 787 (3d Cir. 2016) (quoting Iqbal, 556 U.S. at
679).2 Pleadings that establish only a mere possibility of
misconduct do not show entitlement to relief. Fowler, 578 F.3d
at 211.
       In our evaluation of the complaint, we must account for
the fact that Rule 8(a)(2), Twombly, and Iqbal operate with
contextual specificity. Renfro, 671 F.3d at 321 (“[W]e must
examine the context of a claim, including the underlying
substantive law, in order to assess its plausibility.”). Therefore,
ERISA’s purpose informs our assessment of Sweda’s

       2
         We have also described this as a two-step analysis, but
the task is the same. See Fowler v. UPMC Shadyside, 578 F.3d
203, 210-11 (3d Cir. 2009) (the court (1) separates factual and
legal elements of a claim and takes the well-pleaded factual
allegations as true, and (2) determines whether those facts state
a plausible claim for relief).




                                9
pleadings. ERISA’s protective function is the focal point of the
statute. The statute plainly states that ERISA is a response to
“the lack of employee information and adequate safeguards
concerning [employee benefit plans’] operation,” and adds that
ERISA reflects Congress’s desire “that disclosure be made and
safeguards be provided with respect to the establishment,
operation, and administration of such plans.” 29 U.S.C.
§ 1001(a). This Court has repeatedly acknowledged and
affirmed ERISA’s protective function. See e.g. McCann v.
Unum Provident, 907 F.3d 130, 143 (3d Cir. 2018); Edmonson
v. Lincoln Nat’l Life Ins. Co., 725 F.3d 406, 413 (3d Cir. 2013);
Nat’l Sec. Sys., Inc. v. Iola, 700 F.3d 65, 81 (3d Cir. 2012).
ERISA furthers “the national public interest in safeguarding
anticipated employee benefits” upon which individuals’
livelihoods depend. Cutaiar v. Marshall, 590 F.2d 523, 529 (3d
Cir. 1979).
        ERISA also “represents a careful balancing between
ensuring fair and prompt enforcement of rights under a plan
and the encouragement of the creation of such plans.” Fifth
Third Bancorp v. Dudenhoeffer, 134 S. Ct. 2459, 2470 (2014)
(citations and internal quotation marks omitted); In re Unisys
Sav. Plan Litig., 74 F.3d 420, 434 (3d Cir. 1996) (ERISA
“protect[s] and strengthen[s] the rights of employees” and
“encourage[s] the development of private retirement plans.”).
Plan sponsors and fiduciaries have reliance interests in the
courts’ interpretation of ERISA when establishing plan
management practices. ERISA “‘induc[es] employers to offer
benefits by assuring a predictable set of liabilities.’” Renfro,
671 F.3d at 321 (quoting Rush Prudential HMO, Inc. v. Moran,
536 U.S. 355, 379 (2002)). Both pursuits—participant
protection and plan creation—are important considerations at
the pleadings stage.
       Two sections of the statute are particularly important to




                               10
this appeal: the section outlining fiduciary duties, 29 U.S.C.
§ 1104, and the section prohibiting certain transactions, id.
§ 1106. Under § 1104(a), fiduciaries are held to the prudent
man standard of care,3 which is drawn from trust law. Tibble v.
Edison Int'l (Tibble III), 135 S. Ct. 1823, 1828 (2015); In re
Unisys, 74 F.3d at 434 (“Congress has instructed that section
1104 ‘in essence, codifies and makes applicable to …
fiduciaries certain principles developed in the evolution of the
law of trusts.’”) (quoting S. Rep. No. 127, 93 Cong., 2d Sess.
(1974)). Section 1104(a) lays the foundation of fiduciary duty,
and § 1106(a) “[s]upplement[s] that foundational obligation”
by “erect[ing] a categorical bar to transactions between the
plan and a ‘party in interest’ deemed likely to injure the plan.”
Nat’l Sec. Sys., Inc., 700 F.3d at 82.
        The standards for fiduciary conduct in §§ 1104 and
1106 may overlap. When evaluating whether there has been a
breach of fiduciary duties under § 1104, courts may consider
the administrator’s need to “defray[] reasonable expenses of
administering [a] plan.” 29 U.S.C. § 1104(a)(1)(A)(ii). A
prohibited transactions claim under § 1106 might also involve
expense-related transactions between a plan and party in
interest. Id. § 1106(a)(1)(C). Despite the overlap, a fiduciary
who breaches the duties under § 1104(a) does not necessarily
violate § 1106(a). Because Sweda alleged that Penn breached
its fiduciary duties and caused the Plan to engage in prohibited
transactions, we will first address claims under § 1104(a)(1)

       3
          The duties in § 1104(a) fully apply to all fiduciaries
except fiduciaries of Employee Stock Ownership Plans
(ESOPs). Fifth Third Bancorp, 134 S. Ct. at 2467. Neither
ESOPs nor the fiduciary duties accompanying them are at issue
in this case.




                               11
(Counts I, III, and V), and then address her claims under
§ 1106(a)(1) (Counts II, IV, and VI).
B. Section 1104(a)(1) claims (Counts I, III, and V)
       1. Elements of a claim under § 1104(a)(1)
        In reviewing the District Court’s dismissal of Sweda’s
fiduciary breach claims, our first task is to identify the elements
of such a claim. They are: “(1) a plan fiduciary (2) breaches an
ERISA-imposed duty (3) causing a loss to the plan.” Leckey v.
Stefano, 501 F.3d 212, 225–26 (3d Cir. 2007), as amended
(Dec. 21, 2007). Because the parties do not dispute that Penn
is a fiduciary or whether loss was adequately alleged, our focus
is whether Sweda adequately alleged that Penn breached its
fiduciary duties. A fiduciary must “discharge his duties with
respect to a plan solely in the interest of the participants and
beneficiaries . . . for the exclusive purpose of . . . providing
benefits to participants and their beneficiaries; and . . .
defraying reasonable expenses of administering the plan.” 29
U.S.C. § 1104(a)(1), (a)(1)(A). As explained above, fiduciaries
are held to the “prudent man” standard of care, which requires
fiduciaries to exercise “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. § 1104(a)(1)(B). Fiduciaries are also required to
diversify investments unless it would be imprudent,4 and to
administer the plan according to governing documents and
instruments. Id. § 1104(a)(1)(C), (D). Fiduciaries are
personally liable for losses due to breach. Id. § 1109(a).
       A fiduciary must prudently select investments, and

       4
         ESOP fiduciaries are exempted from the general duty
to diversify. Fifth Third Bancorp, 134 S. Ct. at 2467.




                                12
failure to “monitor . . . investments and remove imprudent
ones” may constitute a breach. See Tibble III, 135 S. Ct. at
1828-29; see also 29 C.F.R. § 2550.404a-1(b)(1)(i) (fiduciaries
must give “appropriate consideration to those facts and
circumstances that . . . the fiduciary knows or should know are
relevant to the particular investment or investment course of
action involved”); see also Fink v. Nat’l Sav. & Trust Co., 772
F.2d 951, 957 (D.C. Cir. 1985) (“investigation of the merits of
a particular investment is at the heart of the prudent person
standard”). Fiduciaries must also understand and monitor plan
expenses. “Expenses, such as management or administrative
fees, can sometimes significantly reduce the value of an
account in a defined-contribution plan,” Tibble III, 135 S. Ct.
at 1826, by decreasing its immediate value, and by depriving
the participant of the prospective value of funds that would
have continued to grow if not taken out in fees. Recognizing
the substantial impact of a fiduciary’s choice among fee
options, the Ninth Circuit, in Tibble v. Edison Int’l (Tibble II),
affirmed the district court’s finding that the plan fiduciary’s
inclusion of retail class shares of three funds when institutional
class shares of the same funds were available for 24 to 40 fewer
basis points, was a fiduciary breach. 729 F.3d 1110, 1137-39
(9th Cir. 2013), vacated on other grounds, 135 S. Ct. 1823
(2015).
       Cognizant of the impact of fees on Plan value,
fiduciaries should be vigilant in “negotiation of the specific
formula and methodology” by which fee payments such as
“revenue sharing will be credited to the plan and paid back to
the plan or to plan service providers.” DOL Advisory Opinion




                               13
2013-03A, 2013 WL 3546834, at *4.5 Fiduciaries must also
consider a plan’s “power . . . to obtain favorable investment
products, particularly when those products are substantially
identical—other than their lower cost—to products the trustee
has already selected.” Tibble v. Edison Int’l (Tibble IV), 843
F.3d 1187, 1198 (9th Cir. 2016). See Tibble II, 729 F.3d at 1137
n.24 (common knowledge that investment minimums are often
waived for large plans). When expenses are paid from plan
assets, fiduciaries must ensure that the assets are used “for the
exclusive purpose of providing benefits to participants and
beneficiaries and defraying reasonable expenses of
administering the plan.” DOL Advisory Opinion 2001-01A,
2001 WL 125092, at *1. See 29 U.S.C. § 1104(a)(1)(A).
       Bearing these fiduciary duties in mind, a court assesses

       5
         Under ERISA Procedure 76-1 § 10, only the parties
described in a request for a DOL advisory opinion may rely on
the opinion, and only to the extent that the problem is fully and
accurately described in the request. Advisory Op. Procedure,
41 Fed. Reg. 36281-02 (August 27, 1976). The opinions do not
have precedential effect. “Because of the nature and limitations
of these rulings,” the Supreme Court declined to “express [a]
view as to whether they are or are not entitled to deference” in
Comm'r v. Keystone Consol. Indus., Inc., 508 U.S. 152, 162 n.3
(1993). Such advisory opinions are likely “entitled to respect”
to the extent that they have the “power to persuade” under the
Supreme Court’s decision in Skidmore v. Swift & Co., 323 U.S.
134, 140 (1944). Christensen v. Harris Cty., 529 U.S. 576, 587
(2000) (citations omitted). See e.g. Caremark, Inc. v. Goetz,
480 F.3d 779, 790 (6th Cir. 2007) (deference to DOL advisory
opinion was warranted because of the opinion’s persuasive
force and its consistency with federal and state law and
regulations).




                               14
a fiduciary’s performance by looking at process rather than
results, “focusing on a fiduciary's conduct in arriving at [a] . . .
decision . . . and asking whether a fiduciary employed the
appropriate methods to investigate and determine the merits of
a particular investment.” In re Unisys, 74 F.3d at 434 (citations
omitted). A fiduciary’s process must bear the marks of loyalty,
skill, and diligence expected of an expert in the field. It is not
enough to avoid misconduct, kickback schemes, and bad-faith
dealings. The law expects more than good intentions. “[A] pure
heart and an empty head are not enough.” DiFelice v. U.S.
Airways, Inc., 497 F.3d 410, 418 (4th Cir. 2007) (quoting
Donovan v. Cunningham, 716 F.2d 1455, 1467 (5th Cir.
1983)). Many allegations concerning fiduciary conduct, such
as reasonableness of “compensation for services” are
“inherently factual question[s]” for which neither ERISA nor
the Department of Labor give specific guidance. DOL
Advisory Opinion 2013-03A, 2013 WL 3546834, at *4-5.
        In Renfro, we established the pleading standard for
breach of fiduciary duty under ERISA after examining the
reasoning of other Circuits that had addressed the issue in light
of Twombly and Iqbal, particularly Hecker v. Deere & Co., 556
F.3d 575 (7th Cir. 2009), and Braden v. Wal–Mart Stores, Inc.,
588 F.3d 585 (8th Cir. 2009). The Renfro plaintiffs challenged
the mix and range of investment options in their retirement
plan, the use of asset-based rather than per-participant fees, and
the alleged imbalance of the fees charged and services
rendered. 671 F.3d at 326. The district court granted
defendants’ motion to dismiss, holding that “the plan offered a
sufficient mix of investments . . . [such] that no rational trier of
fact could find, on the basis of the facts alleged in the operative
complaint, that the . . . defendants breached an ERISA
fiduciary duty by offering [that] particular array of investment
vehicles.” Id. at 320 (citations and internal quotation marks




                                15
omitted).
       We affirmed. Id. at 327-28. We determined that we
could not “infer from what [was] alleged that the [fiduciary’s]
process was flawed.” Id. at 327 (quoting Braden, 588 F.3d at
596). We held that ERISA plans should offer meaningful
choices to their participants, and that:
              [T]he range of investment options
              and the characteristics of those
              included options—including the
              risk profiles, investment strategies,
              and associated fees—are highly
              relevant and readily ascertainable
              facts against which the plausibility
              of claims challenging the overall
              composition of a plan's mix and
              range of investment options should
              be measured.
Id. We explained that a fiduciary breach claim must be
examined against the backdrop of the mix and range of
available investment options. Id. We did not hold, however,
that a meaningful mix and range of investment options
insulates plan fiduciaries from liability for breach of fiduciary
duty. Such a standard would allow a fiduciary to avoid liability
by stocking a plan with hundreds of options, even if the
majority were overpriced or underperforming. One important
reason why we cannot read Renfro to establish such a bright-
line rule (that providing a range of investment options satisfies
a fiduciary’s duty) is that ERISA fiduciaries have a duty to act
prudently according to current practices—as the statute puts it,
the “circumstances then prevailing.” 29 U.S.C.
§ 1104(a)(1)(B). Practices change over time, and bright line
rules would hinder courts’ evaluation of fiduciaries’




                               16
performance against contemporary industry practices. Bearing
these things in mind, we turn to Sweda’s complaint to
determine whether she adequately alleged fiduciary breach in
Counts I, III, and V.
       2. Conclusory allegations of fiduciary breach
       First, we must eliminate conclusory allegations from the
complaint. Connelly, 809 F.3d at 787. Sweda included a few
conclusory allegations, such as “a prudent process would have
produced a different outcome,” Am. Compl. ¶75, but
conclusory statements of that variety are rare in the complaint,
and after discarding them, many well-pleaded factual
allegations remain.
       3. Well-pleaded facts alleging breach of fiduciary duty
        Sweda alleged that Penn was “responsible for hiring
administrative service providers, such as a recordkeeper, and
negotiating and approving those service providers’
compensation.” Am. Compl. ¶36. She also alleged that Penn
was responsible for the menu of investment options available
to participants. Id. In Count I, she alleged that Penn entered a
“lock-in” agreement with TIAA-CREF that mandated
inclusion of the CREF Stock and Money Market accounts, and
required the Plan to use TIAA-CREF as a recordkeeper. Am.
Compl. ¶86.
       In Count III, Sweda alleged that Penn paid excessive
administrative fees, failed to solicit bids from service
providers, failed to monitor revenue sharing, failed to leverage
the Plan’s size to obtain lower fees or rebates, and failed to
comprehensively review Plan management. Specifically,
Sweda alleged that the Plan paid between $4.5 and $5.5 million
in annual recordkeeping fees at a time when similar plans paid
$700,000 to $750,000 for the same services. Sweda also
alleged that percentage-based fees went up as assets grew,




                              17
despite there being no corresponding increase in recordkeeping
services. Sweda alleged that Penn could have negotiated for a
cap on fees or renegotiated the fee structure, but failed to do
either. Sweda also alleged that Penn could have assessed the
reasonableness of Plan recordkeeping fees by soliciting
competitive bids, but, unlike prudent fiduciaries, failed to do
so. For contrast, Sweda offered examples of similarly situated
fiduciaries who acted prudently, such as fiduciaries at Loyola
Marymount who hired an independent consultant to request
recordkeeping proposals and consolidated services with a
single provider. Sweda pointed to similar moves at Pepperdine,
Purdue, and CalTech, as well as Caltech’s negotiation for $15
million in revenue sharing rebates. Sweda alleged that unlike
those organizations, Penn failed to review Plan management,
and fell behind other fiduciaries in the industry.
        In Count V, Sweda alleged that Penn breached its
fiduciary duties by: paying unreasonable investment fees,
including and retaining high-cost investment options with
historically poor performance compared to available
alternatives, and retaining multiple options in the same asset
class and investment style. Specifically, Sweda alleged that
despite the availability of low-cost institutional class shares,
Penn selected and retained identically managed but higher cost
retail class shares. She included a table comparing options in




                              18
the Plan with the readily available cheaper alternatives.6 Sweda
also alleged that some options in the line-up had layers of
unnecessary fees. Not only did Sweda allege that the options
Penn selected and retained were imprudently costly, she also
alleged that they were duplicative thereby decreasing the value
of actively managed funds, reducing the Plan’s leverage, and
confusing participants. Sweda also alleged that 60% of Plan
options underperformed appropriate benchmarks, and that
Penn failed to remove underperformers. Sweda pointed to the
CREF Stock Account and TIAA Real Estate Account as
examples of consistent underperformers. She alleged that
Penn’s process of selecting and managing options must have
been flawed if Penn retained expensive underperformers over

       6
         Most of the investment options Sweda criticized in her
complaint were designated as Tier 3 and Tier 4 options. Sweda
also criticized Tier 2 options such as the TIAA-CREF
International Equity Index Fund, listed in Sweda’s table
comparing Plan options with their “lower-cost, but otherwise
identical” alternatives. Sweda confirmed that criticized options
fell under Tiers 2, 3, and 4 at oral argument. Oral Arg. at 7:33.
At this time we do not address whether Penn may be able to
assert a defense to liability under 29 U.S.C. § 1104(c) due to
participants’ self-directed investing activity. The § 1104(c)
safe harbor defense is an affirmative defense and therefore it is
generally not part of a court’s consideration of a motion to
dismiss under Rule 12(b)(6), except where the defense has
been anticipated by a plaintiff’s complaint. Hecker, 556 F.3d
at 588 (citing In re Unisys, 74 F.3d at 446 for the classification
of § 1104(c) as an affirmative defense). Unlike the plaintiffs in
Hecker who explicitly and “thoroughly anticipated” the safe
harbor defense, Sweda did not “put it in play” at the pleadings
stage. Id.




                               19
better performing, cheaper alternatives. At this stage, her
factual allegations must be taken as true, and every reasonable
inference from them must be drawn in her favor. Connelly, 809
F.3d at 790.
       4. Sweda plausibly stated a claim in Counts III and V
        At this final step, we employ a holistic approach,
considering all of Sweda’s well-pleaded factual allegations
including the range of investment options alongside other
germane factors such as reasonableness of fees, selection and
retention of investment options, and practices of similarly
situated fiduciaries, to determine whether her allegations
plausibly demonstrate entitlement to relief. See Renfro, 671
F.3d at 327; see also Braden, 588 F.3d at 598 (statute’s
remedial scheme “counsel[s] careful and holistic evaluation of
an ERISA complaint’s factual allegations before concluding
that they do not support a plausible inference that the plaintiff
is entitled to relief.”). The complaint should not be “parsed
piece by piece to determine whether each allegation, in
isolation, is plausible.” Braden, 588 F.3d at 594. See Tatum v.
RJR Pension Inv. Comm., 761 F.3d 346, 360 (4th Cir. 2014)
(citing DiFelice, 497 F.3d at 420) (courts must look to the
totality of the circumstances to assess the prudence of
investment decisions).
       Sweda plausibly alleged breach of fiduciary duty.
Sweda’s factual allegations are not merely “unadorned, the-
defendant-unlawfully-harmed-me accusation[s].” Iqbal, 556
U.S. at 678. As recounted above, they are numerous and
specific factual allegations that Penn did not perform its
fiduciary duties with the level of care, skill, prudence, and
diligence to which Plan participants are statutorily entitled
under § 1104(a)(1). Sweda offered specific comparisons
between returns on Plan investment options and readily




                               20
available alternatives, as well as practices of similarly situated
fiduciaries to show what plan administrators “acting in a like
capacity and familiar with such matters would [do] in the
conduct of an enterprise of a like character and with like aims.”
29 U.S.C. § 1104(a)(1)(B).7 The allegations plausibly allege
that Penn failed to “defray[] reasonable expenses of
administering the plan” and otherwise failed to “discharge [its]
duties” according to the prudent man standard of care. Id.
§ 1104(a)(1)(A)(ii) and (B).
        Other appellate courts have found that similar conduct
plausibly indicates breach of fiduciary duty. For instance, in
Tussey v. ABB, Inc., the Eighth Circuit held that the district
court did not err in finding fiduciaries breached their duties by
“[failing to] (1) calculate the amount the Plan was paying [the
recordkeeper] for recordkeeping through revenue sharing, (2)
determine whether [the recordkeeper’s] pricing was
competitive, [or] (3) adequately leverage the Plan's size to
reduce fees,” among other things. 746 F.3d 327, 336 (8th Cir.

       7
        Sweda also directly compared fees on options included
in the Plan with readily available lower-cost options. The
dissent suggests that because the range of fees on options
included in the Plan is lower than the range of challenged fees
in Renfro, Sweda needed to allege a change in market
circumstances since Renfro was decided to state a plausible
claim. In making that suggestion, the dissent misses the object
of our inquiry, that is, Penn’s “conduct in arriving at an
investment decision.” In re Unisys, 74 F.3d at 434 (citations
omitted). To that end, the allegations in Sweda’s complaint
show that Penn frequently selected higher cost investments
when identical lower-cost investments were available. This is
one of many allegations that, together, plausibly allege that
Penn breached its fiduciary duty.




                               21
2014). In Tibble IV, the Ninth Circuit held that whether a
fiduciary breached its fiduciary duties by selecting a higher
cost share class was an issue requiring development by the
district court, and remanded the case for further proceedings.
843 F.3d at 1197-98.
       In dismissing the claims in Counts III and V, the District
Court erred by “ignor[ing] reasonable inferences supported by
the facts alleged,” and by drawing “inferences in [Defendants’]
favor, faulting [Plaintiffs] for failing to plead facts tending to
contradict those inferences.” Braden, 588 F.3d at 595. While
Sweda may not have directly alleged how Penn mismanaged
the Plan, she provided substantial circumstantial evidence from
which the District Court could “reasonably infer” that a breach
had occurred. Pension Benefit Guar. Corp. ex rel. St. Vincent
Catholic Med. Ctrs. Ret. Plan v. Morgan Stanley Inv. Mgmt.
Inc., 712 F.3d 705, 718 (2d Cir. 2013) (citation and internal
quotation marks omitted). Based on her allegations, the claims
in Counts III and V should not have been dismissed.
        Penn argues that allowing Sweda to proceed on this
complaint ignores fiduciary discretion, and also argues that it
in fact employed a prudent process in its Plan management.
Finally, Penn argues that reversal would overexpose ERISA
fiduciaries to liability. According to Penn, ERISA fiduciaries
are “afforded a healthy measure of discretion in deciding what
is in the plan participants’ interests.” Br. of Appellees at 2. At
oral argument, Penn emphasized fiduciary discretion, calling it
the “hallmark of fiduciary activity.” Oral Arg. at 25:05. Penn
is not incorrect that the exercise of discretionary authority over
plan assets is a characteristic of fiduciaries such that courts can
identify fiduciaries by this trait, see Pohl v. Nat'l Benefits
Consultants, Inc., 956 F.2d 126, 129 (7th Cir. 1992), nor is
Penn incorrect that discretion is an important aspect of
fiduciary behavior that the courts should consider in evaluating




                                22
fiduciary performance. ERISA fiduciaries, like trustees, are
afforded discretion because “[t]here are no universally
accepted and enduring theories of financial markets or
prescriptions for investment that can provide clear and specific
guidance,” therefore “[v]aried approaches to the prudent
investment” of assets are permissible. Restatement (Third) of
Trusts § 90 (2007), cmt. f.
        However, while fiduciaries have discretion in plan
management, that discretion is bounded by the prudent man
standard. Discretion “does not mean . . . that the legal standard
of prudence is without substantive content or that there are no
principles by which the fiduciary's conduct may be guided and
judged,” rather a fiduciary’s conduct at all times “must be
reasonably supported in concept and must be implemented
with proper care, skill, and caution.” Id. Fiduciary discretion
must be exercised within the statutory parameters of prudence
and loyalty. See DOL Advisory Op. 2006-08A, 2006 WL
2990326, at *3. Those parameters impose a fiduciary standard
that is considered “the highest known to the law.” Tatum, 761
F.3d at 355–56 (quoting Donovan v. Bierwirth, 680 F.2d 263,
272 n.8 (2d Cir. 1982)). See Varity Corp. v. Howe, 516 U.S.
489, 497 (1996) (ERISA fiduciary duty may even exceed
fiduciary duty as derived from the common law of trusts).
Therefore, while we recognize and appreciate fiduciary
discretion, if there is indeed a “hallmark” of fiduciary activity
identified in the statute, it is prudence. See 29 U.S.C. § 1104(a).
       As to Penn’s second argument, that it did in fact employ
a prudent process, this argument goes to the merits and is
misplaced at this early stage. Although Penn may be able to
demonstrate that its process was prudent, we are not permitted
to accept Penn’s account of the facts or draw inferences in
Penn’s favor at this stage of litigation. Finally, we address
Penn’s argument, supported by amici including the American




                                23
Council on Education and the Chamber of Commerce of the
United States of America8, that allowing Sweda’s complaint
through the 12(b)(6) gate will overexpose plan sponsors and
fiduciaries to costly litigation and will discourage them from
offering benefit plans at all. Br. of Appellees at 38. Penn
predicts that reversal would “give class action lawyers a free
ticket to discovery and the opportunity to demand extortionate
settlements.” Id.9 Penn’s solution is to interpret Renfro to mean
that if a plan fiduciary provides a “mix and range of investment
options,” plaintiffs cannot plausibly allege breach of fiduciary

       8
          As well as the American Association of State Colleges
and Universities (AASCU), Association of American
Universities (AAU), Association of Community College
Trustees (ACCT), Association of Public and Land Grant
Universities (APLU), College and University Professional
Association for Human Resources (CUPA-HR), Council of
Independent Colleges (CIC), National Association of
Independent Colleges and Universities (NAICU), and the
American Benefits Council.
        9
          The dissent also expresses concern that reversal will
overexpose university sponsors and volunteer fiduciaries to
class action claims designed to yield large settlements and
significant attorneys’ fees. The dissent fears that universities
will be less likely to offer benefit plans and fiduciaries less
likely to volunteer their services. If that is the case, we should
leave it to Congress to address the possibility of a different
fiduciary standard that is suitable to the goal of inducing
universities to offer plans and would-be fiduciaries to
volunteer. As it stands, ERISA fiduciaries are held to one
standard under § 1104 and we cannot adjust our pleadings
standards to accommodate subcategories of sponsors and
fiduciaries.




                               24
duty.
       The Supreme Court addressed a nearly identical
concern in Fifth Third Bancorp. There, the defendants
“[sought] relief from what they believe[d were] meritless,
economically burdensome lawsuits.” 134 S. Ct. at 2470. The
Court explained that while Congress, through ERISA, sought
to encourage creation of retirement plans, that purpose was not
intended to prevent participants with meritorious claims from
gaining access to the courts. Id. While Fifth Third concerned
an ESOP plan and defendants’ request for a presumption of
prudence, its reasoning is apt here. Despite our appreciation of
Penn and amici’s fear of frivolous litigation, if we were to
interpret Renfro to bar a complaint as detailed and specific as
the complaint here, we would insulate from liability every
fiduciary who, although imprudent, initially selected a “mix
and range” of investment options. Neither the statute nor our
precedent justifies such a rule. We will therefore reverse the
District Court’s dismissal of the claims in Counts III and V,
and remand for further proceedings.10

        10
          The dissent argues that we ought to affirm the District
Court’s dismissal of Count V for Sweda’s want of
constitutional standing under Edmonson v. Lincoln Nat’l Life
Ins. Co., 725 F.3d 406 (3d Cir. 2013). The dissent argues that
because Sweda conceded that most of the underperforming
options are in Tiers 3 and 4, the plaintiffs should have included
information about whether they invested in Tier 3 or Tier 4
options in the complaint. In the dissent’s view, plaintiffs’
failure to include that information constitutes a failure to allege
an injury in fact. However, while the complaint does not
identify plaintiffs’ investment options by tier, it does contain
facts that indicate that the named plaintiffs invested in the
underperforming investment options. In a paragraph entitled




                                25
“Standing” in the complaint, Sweda included the following
information:

              To the extent the Plaintiffs must
              also show an individual injury . . .
              each Plaintiff has suffered such an
              injury, in at least the following
              ways . . . The named Plaintiffs’
              individual accounts in the Plan
              were     further     harmed      by
              Defendants’ breaches of fiduciary
              duties because one or more of the
              named Plaintiffs during the
              proposed class period (1) invested
              in    underperforming       options
              including the CREF Stock and
              TIAA Real Estate accounts[.]

        App. 36-37. This allegation links the named plaintiffs
with the underperforming investment options and is sufficient
to show individual injuries.
        In light of the dissent’s point on constitutional standing,
we should address the issue as it pertains to participants and
beneficiaries who bring a civil action against fiduciaries under
29 U.S.C. § 1132(a)(2). The dissent cites this Court’s decision
in Perelman v. Perelman, where we held that participants in a
defined benefit plan could not show actual injury for
constitutional standing for an § 1132(a)(3) claim by pointing
to a “diminution of plan assets” because such participants are
entitled to a fixed periodic payment rather than part of the asset
pool. 793 F.3d 368, 374 (3d Cir. 2015). We also noted that
“[t]here is no question that representative suits by plan




                                26
        We will affirm dismissal of Count I because it is time
barred. Fairview Twp. v. U.S. Envtl. Prot. Agency, 773 F.2d
517, 525 n.15 (3d Cir. 1985) (we may affirm on any basis).
Sweda limited her claim to the initial agreement between the
Plan and TIAA-CREF to include the CREF Stock and Money
Market accounts in the Plan, and to use TIAA-CREF for
recordkeeping. This agreement was entered into prior to
December 31, 2009, and Sweda filed her initial complaint on
August 10, 2016. Sweda did not present this claim as an
ongoing breach like the petitioners in Tibble III, 135 S. Ct.
1823. Although we must draw every reasonable inference in
Sweda’s favor, we will not read factual allegations into a
complaint. Count I is therefore time barred under the six-year
statute of limitations. 29 U.S.C. § 1113(1).11


participants or beneficiaries against fiduciaries for breach of
fiduciary duty are permitted by, and generally brought under,
ERISA § [1132(a)(2)].” Id. at 376 n.6. This case implicates the
latter part of our observation in Perelman because Sweda
brought this suit under § 1132(a)(2) on behalf of the Plan.
        11
           No action may be commenced under this subchapter
with respect to a fiduciary's breach of any responsibility, duty,
or obligation under this part, or with respect to a violation of
this part, after the earlier of--
    (1) six years after (A) the date of the last action which
    constituted a part of the breach or violation, or (B) in the
    case of an omission the latest date on which the fiduciary
    could have cured the breach or violation, or
    (2) three years after the earliest date on which the plaintiff
    had actual knowledge of the breach or violation;
except that in the case of fraud or concealment, such action
may be commenced not later than six years after the date of
discovery of such breach or violation. 29 U.S.C. § 1113.




                               27
C. Section 1106(a)(1) claims (Counts II, IV, and VI)
       1. Elements of a claim under § 1106(a)(1)
        Section 1106(a) supplements the fiduciary duties by
specifically prohibiting certain transactions between plans and
parties in interest. The elements of a party-in-interest,
prohibited transaction claim are: (1) the fiduciary causes (2) a
listed transaction to occur (3) between the plan and a party in
interest. 29 U.S.C. § 1106(a)(1). ERISA defines “party in
interest” as “a person providing services to such plan.” 29
U.S.C. § 1002(14)(B). Sweda argues that TIAA-CREF and
Vanguard are parties in interest according to the plain language
of § 1002(14)(B). She also points to a Department of Labor
advisory opinion holding that a life insurance company that
provided recordkeeping and related services to a retirement
plan would be a party in interest under the statute. See DOL
Advisory Opinion 2013-03A, 2013 WL 3546834. Importantly,
an investment company does not become a party in interest
merely because a plan invests in securities issued by the
investment company. 29 U.S.C. § 1002(21)(B).
       Fiduciaries are prohibited from causing a plan to engage
in the transactions listed at § 1106(a)(1). Those transactions
are:
              (A) sale or exchange, or leasing, of
              any property between the plan and
              a party in interest; (B) lending of
              money or other extension of credit
              between the plan and a party in
              interest; (C) furnishing of goods,
              services, or facilities between the
              plan and a party in interest; (D)
              transfer to, or use by or for the
              benefit of a party in interest, of any




                               28
              assets of the plan; or (E)
              acquisition, on behalf of the plan,
              of any employer security or
              employer real property in violation
              of section 1107(a) of this title.
Between the definition of service providers as parties in
interest, id. § 1002(14)(B), and this exhaustive list of
prohibited transactions, § 1106(a)(1) could be read to have an
extremely broad application. Some courts have embraced that
breadth and interpreted § 1106(a)(1) to prohibit almost any
transaction with a party in interest. The Seventh Circuit, for
example, has held that § 1106(a)(1) creates a per se rule against
party in interest transactions, so that plaintiffs who allege such
transactions may do so without even pleading
unreasonableness of fees. Allen v. GreatBanc Trust Co., 835
F.3d 670, 676 (7th Cir. 2016). In Allen, the Seventh Circuit
ruled that the exemptions from prohibited transactions, under
29 U.S.C. § 1108, are affirmative defenses, and that
“plaintiff[s] ha[ve] no duty to negate any or all of them” in a
complaint. Id. It also noted that five other circuits (the Second,
Fourth, Fifth, Eighth, and Ninth) have ruled similarly. Id. See
Braden, 588 F.3d at 600-01 (plaintiff did not have to plead
facts “raising a plausible inference that the payments were
unreasonable” because exemption in § 1108 is a defense raised
by defendant). Responding to concerns about a flood of
prohibited transaction claims, the Seventh Circuit reasoned
that Rule 11 sanctions and reasonable risk aversion would
prevent the floodgates from opening. Allen, 835 F.3d at 677.
        We decline to read § 1106(a)(1) as the Seventh Circuit
does because it is improbable that § 1106(a)(1), which was
designed to prevent “transactions deemed likely to injure the .
. . plan” and “self-dealing,” Nat’l Sec. Sys., Inc., 700 F.3d at 92
(citation and internal quotation marks omitted), would prohibit




                                29
ubiquitous service transactions and require a fiduciary to plead
reasonableness as an affirmative defense under § 1108 to avoid
suit. Not even Sweda advocates for such a broad reading of
§ 1106(a)(1), conceding in her complaint that “paying for
recordkeeping with asset-based revenue sharing is not [a] per
se violation of ERISA.” Am. Compl. ¶101. One of the reasons
we do not find Allen persuasive is that the transactions the
Seventh Circuit scrutinized in Allen were a far cry from the
ordinary service arrangements at issue here. In Allen, an ESOP
fiduciary bought the employer’s stock using a loan financed by
the principal shareholders of the company. The value of the
stock then fell so drastically that “[t]he Plan’s participants, all
employees of [the company], wound up being on the hook for
interest payments on the loan.” Allen, 835 F.3d at 673. A
transaction of that variety is far removed from ordinary
recordkeeping arrangements. Therefore, Allen does not
provide sufficient justification to recognize a per se rule that
every furnishing of goods or services between a plan and party
in interest is a prohibited transaction under § 1106(a)(1).
       Our ruling today does not conflict with our earlier
decisions holding that transactions between a plan and plan
fiduciaries are per se prohibited under § 1106(b). See Cutaiar,
590 F.2d at 528; see also Nat’l Sec. Sys., Inc., 700 F.3d at 94.
In Cutaiar, we held that “[w]hen identical trustees of two
employee benefit plans whose participants and beneficiaries
are not identical effect a loan between the plans without a
[§ 1108] exemption, a per se violation of ERISA exists” under
§ 1106(b)(2). 590 F.2d at 529. In National Security Systems,
we held that a transaction between a plan and fiduciary that is
tainted by self-dealing is a per se violation of § 1106(b)(3)
“regardless of the reasonableness of compensation.” 700 F.3d
at 93. Those cases do not control here because § 1106(a) and
(b) have distinct purposes: “[s]ubsection (a) erects a




                                30
categorical bar to transactions between the plan and a ‘party in
interest’ deemed likely to injure the plan,” and “[s]ubsection
(b) prohibits plan fiduciaries from entering into transactions
with the plan tainted by conflict-of-interest and self-dealing
concerns.” Id. at 82. The protective function of ERISA is at its
height in the latter scenario when there is a risk of fiduciary
self-dealing. The instances where participants might benefit
from a transaction between a plan and a fiduciary are so rare
that they can be prohibited outright.
        Reading § 1106(a)(1) as a per se rule barring all
transactions between a plan and party in interest would miss
the balance that Congress struck in ERISA, because it would
expose fiduciaries to liability for every transaction whereby
services are rendered to the plan. See Renfro, 671 F.3d at 321
(“In enacting ERISA, Congress ‘resolved innumerable
disputes between powerful competing interests—not all in
favor of potential plaintiffs.’” (quoting Mertens v. Hewitt
Assocs., 508 U.S. 248, 262 (1993))). Additionally, if we
interpreted § 1106(a)(1) to prohibit every transaction for
services to a plan, we would have to ignore other parts of the
statute. For instance, ERISA specifically acknowledges that
certain services are necessary to administer plans. See 29
U.S.C. § 1104(a)(1)(A)(ii). Interpreting § 1106(a)(1) to
prohibit necessary services would be absurd, and when one
interpretation of a statute leads to an absurd result, we may
consider an alternative interpretation that avoids the absurdity.
Thorpe v. Borough of Jim Thorpe, 770 F.3d 255, 263 (3d Cir.
2014) (quoting First Merchants Acceptance Corp. v. J.C.
Bradford & Co., 198 F.3d 394, 402 (3d Cir. 1999)). Therefore
we decline to interpret § 1106(a)(1) as prohibiting per se the
“furnishing of goods [or] services,” 29 U.S.C. § 1106(a)(1)(C),
by all “person[s] providing services to [the] plan,” id.




                               31
§ 1002(14)(B).12
       The Supreme Court similarly avoided absurdity in its
interpretation of § 1106(a)(1) in Lockheed Corp. (addressing
whether the administrator of a plan could condition payment
on performance by participants). The Court held that payments
of benefits to a participant, which under a hyper-literal reading
of the statute could be understood as “a transfer to, or use by
or for the benefit of a party in interest, of any assets of the
plan,” 29 U.S.C. § 1106(a)(1)(D), was not a prohibited
transaction. Lockheed Corp., 517 U.S. at 892-93. The Supreme
Court rejected the hyper-literal reading because it would have
been absurd and illogical in the context of the statute. Id. The
Court went through the subsections of § 1106(a)(1), listing the
different statutorily prohibited transactions, and explained that
they follow a common thread: they are all “commercial
bargains that present a special risk of plan underfunding
because they are struck with plan insiders, presumably not at
arm’s length.” Id. at 893. The Court distinguished payment of
plan benefits because they “cannot reasonably be said to share
that characteristic.” Id.
        We have interpreted § 1106(a)(1)(D) similarly, holding
that a violation occurs when: (1) a fiduciary, (2) causes a plan
to engage in a transaction, (3) that uses plan assets, (4) for the

       12
          Moreover, § 1106(a) was not designed to prevent
negotiation between unaffiliated parties. See Lockheed Corp.
v. Spink, 517 U.S. 882, 893 (1996). Thus, if a service provider
has no prior relationship with a plan before entering a service
agreement, the service provider is not a party in interest at the
time of the agreement. As explained herein, it only becomes a
party in interest after the initial transaction occurs, and
subsequent transactions are not prohibited absent self-dealing
or disloyal conduct.




                               32
benefit of a party in interest, and (5) “the fiduciary ‘knows or
should know’ that elements three and four are satisfied.” Reich
v. Compton, 57 F.3d 270, 278 (3d Cir. 1995). In Reich, we held
that specific intent is required because of the plain meaning of
the statutory phrase “for the benefit,” and also because if
§ 1106(a)(1)(D) did not require “subjective intent to benefit a
party in interest, [it] would produce unreasonable
consequences that we feel confident Congress could not have
wanted.” Id. at 279.
        The Supreme Court’s identification of the common
thread in § 1106(a)(1), a special risk to the plan from a
transaction presumably not at arm’s length—and its
determination that transactions that do not share that common
thread are permissible—as well as our interpretation of
§ 1106(a)(1)(D), represent a more harmonious way to interpret
the prohibited transactions listed in § 1106(a)(1) in the context
of the statute as a whole. The element of intent to benefit a
party in interest effects the purpose of § 1106(a)(1), which is
to rout out transactions that benefit such parties at the expense
of participants. Section 1106(a)(1) is not meant to impede
necessary service transactions, but rather transactions that
present legitimate risks to participants and beneficiaries such
as “securities purchases or sales by a plan to manipulate the
price of the security to the advantage of a party-in-interest.”
Leigh v. Engle, 727 F.2d 113, 127 (7th Cir. 1984) (quoting H.R.
Conf. Rep. No. 1280, 93rd Cong., 2d Sess. 308) (alteration
omitted). We therefore hold that absent factual allegations that
support an element of intent to benefit a party in interest, a
plaintiff does not plausibly allege that a “transaction that
constitutes a direct or indirect . . . furnishing of goods, services,
or facilities between the plan and a party in interest” prohibited
by § 1106(a)(1)(C) has occurred. Requiring plaintiffs to allege
facts supporting this element avoids absurdity in interpreting




                                 33
the statute.
       2. Conclusory and well-pleaded factual allegations of
       prohibited transactions
        The factual allegations that Sweda included in her
complaint to support her claims for prohibited transactions
overlap with the allegations supporting her fiduciary breach
claims. Besides the allegations recounted above, Sweda
alleged that revenue sharing was “kicked back” to TIAA-
CREF for recordkeeping associated with TIAA-CREF options.
Am. Compl. ¶109. She alleged that Penn “allowed TIAA’s
financial interest to dictate the Plan’s investment selections and
recordkeeping arrangement.” Am. Compl. ¶87. She also
alleged that Penn failed to act in the exclusive interest of
participants, instead “serv[ing] TIAA-CREF’s and Vanguard’s
financial interests” with decisions such as “allowing TIAA-
CREF and Vanguard to put their proprietary investments in the
Plan without scrutinizing those providers’ financial interest.”
Am. Compl. ¶¶112, 200. These general allegations about
kickbacks and prioritizing TIAA-CREF and Vanguard’s
financial interests over the participant and beneficiaries’
financial interests are largely conclusory, but we also consider
well-pleaded factual allegations summarized at § III.B.3 that
are relevant to Sweda’s prohibited transaction claims.
       3. Sweda failed to plausibly state a claim under Counts
       II, IV, and VI
        Looking at the totality of the allegations in the
complaint, taken as true, Connelly, 809 F.3d at 787, Sweda
failed to state a plausible claim for prohibited transactions in
Counts II, IV, and VI.
               a. Count II
       In Count II, Sweda alleged that a prohibited transaction




                               34
occurred when Penn allowed TIAA-CREF to require inclusion
of CREF Stock and Money Market accounts among the Plan’s
investment options and agreed to TIAA-CREF recordkeeping
services, pursuant to a “lock-in” agreement. Am. Compl. ¶193.
Two of Sweda’s prohibited transaction claims emanate from
this agreement: (1) that a prohibited transaction occurred at the
time of the initial agreement, and (2) that a prohibited
transaction occurred every time fees were later paid pursuant
to the agreement. As to the initial agreement, Sweda did not
sufficiently allege that TIAA-CREF was a party in interest at
that time: she included no allegation that TIAA-CREF was
“providing services to [the] plan,” 29 U.S.C. § 1002(14)(B).
Because Sweda failed to allege that TIAA-CREF was a party
in interest at the time of the “lock-in,” that element is factually
unsupported, and she failed to state a claim for the first alleged
prohibited transaction in Count II. Sweda’s second claim in
Count II that prohibited transactions occurred every time
property was exchanged or services were rendered pursuant to
the “lock-in” agreement is so closely related to Count IV
(payment of recordkeeping fees) that we will address these
claims together.
              b. Counts II and IV
        In Counts II and IV, Sweda alleged that Penn caused the
Plan to enter prohibited transactions when it caused the Plan to
pay administrative fees to TIAA-CREF and Vanguard. Sweda
plausibly alleged that TIAA-CREF and Vanguard were parties
in interest under § 1002(14)(B) because they provided services
to the plan at the time fees were paid, and Penn’s own Plan
materials identify TIAA-CREF and Vanguard as parties in
interest. At the pleadings stage, we must assume that this well-
pleaded fact is true. Next we look to whether Penn caused the
Plan to enter a prohibited transaction with TIAA-CREF or
Vanguard for administrative fees. Sweda alleged that the




                                35
administrative fee payments constituted prohibited
transactions under § 1106(a)(1) in three ways: (1) they were
prohibited transfers of property under § 1106(a)(1)(A), (2) they
were transfers of assets under subsection (D), and (3) they
constituted furnishing of services under subsection (C). We
first address whether Sweda plausibly alleged that
administrative fee payment by revenue sharing constituted a
transfer of property under (A) or Plan assets under (D).
       Sweda alleged that administrative fees were paid by
revenue sharing. Am. Compl. ¶¶ 46, 110 (Vanguard is
“compensated for recordkeeping services based on internal
revenue sharing it receives from the Vanguard Investor share
class mutual funds.”). She also alleged that investment fees
were drawn from mutual fund assets. Am. Compl. ¶44.
(“Mutual fund fees are usually expressed as a percentage of
assets under management . . . [t]he fees deducted from a mutual
fund’s assets . . .”). Mutual fund assets are distinct from Plan
assets, because, under the statute, assets of “a plan which
invests in any security issued by an investment company” do
not “include any assets of such investment company.” 29
U.S.C. § 1101(b)(1). See Hecker, 556 F.3d at 584 (With
support from the Department of Labor, defendants
demonstrated that revenue sharing fees did not impinge plan
assets because they were drawn from the assets of mutual
funds). Therefore, Sweda did not plausibly allege that revenue
sharing involved a transfer of Plan property or assets under
§ 1106(a)(1)(A) or (D), and furthermore, Sweda did not
plausibly allege that Penn had subjective intent to benefit a
TIAA-CREF or Vanguard by a use or transfer of Plan assets,
which, under our precedent, is required to state a claim under
§ 1106(a)(1)(D). Reich, 57 F.3d at 279.
       Finally, we must address whether a prohibited
transaction occurred under § 1106(a)(1)(C), the prohibition of




                              36
“furnishing of goods, services, or facilities between the plan
and a party in interest.” As we explained above, it is possible
to read subsection (C) to create a per se prohibited transaction
rule forbidding service arrangements between a plan and a
party rendering services to the plan. However, because reading
§ 1106(a)(1)(C) to that end would be absurd, Sweda must plead
an element of intent to benefit the party in interest. After
striking conclusory allegations, such as “Defendants served
TIAA-CREF’s and Vanguard’s financial interests” (Am.
Compl. ¶112) from the complaint, we do not find that Sweda
alleged facts showing that Penn intended to benefit TIAA-
CREF or Vanguard. We will affirm the dismissal of Sweda’s
claims for prohibited transactions under Counts II and IV.
              c. Count VI
        At Count VI, Sweda alleged that Penn caused the Plan
to engage in prohibited transactions when it caused the Plan to
pay investment fees to TIAA-CREF and Vanguard. For similar
reasons that Sweda did not plausibly allege prohibited
transactions in Counts II and IV, she also failed to plausibly
allege prohibited transactions in Count VI. First, Sweda did not
plausibly allege that payment of investment fees constituted a
prohibited transaction under § 1106(a)(1)(A), because Sweda
alleged that investment fees were drawn from mutual fund
assets, not Plan assets. Second, for the same reason, investment
fees were not plausibly alleged to be a transfer of assets of the
Plan under § 1106(a)(1)(D). Third, Sweda did not allege that
Penn intended to benefit TIAA-CREF or Vanguard under
§ 1106(a)(1)(D), as required by our precedent. Reich, 57 F.3d
at 279. Finally, as we explained above in our discussion of
Counts II and IV, in order to state a claim for prohibited
transactions under § 1106(a)(1)(C), “furnishing goods,
services, or facilities between the plan and a party in interest,”
a plaintiff must allege intent to benefit a party in interest.




                               37
Sweda failed to do so. Therefore, we will affirm the dismissal
of the claim for prohibited transactions under Count VI.
                             IV.
         Sweda plausibly alleged that Penn failed to conform to
the high standard required of plan fiduciaries under 29 U.S.C.
§ 1104(a)(1). However, she did not plausibly allege that Penn
caused the Plan to enter prohibited transactions under
§ 1106(a)(1). We therefore will REVERSE the portion of the
District Court’s order granting the Appellees’ motion to
dismiss Counts III and V and remand for further proceedings.
We will AFFIRM the District Court’s order dismissing Counts
I, II, IV, VI, and VII.




                              38
             Sweda v. University of Pennsylvania,
                        No. 17-3244


ROTH, Senior Judge, concurring in part and dissenting in
part:

        Like many large employers, the University of
Pennsylvania maintains a retirement plan for its employees.
Between 2009 and 2014, the plan’s assets increased in value
by $1.6 billion, a 73% return on investment. Despite this
increase, plaintiffs have filed a putative class action, claiming
that the plan’s fiduciaries have imprudently managed it and
seeking tens of millions of dollars of damages. Having
convinced this Court to reverse in part the District Court’s
dismissal of the action, the plaintiffs will continue to pursue
their remaining claims, which will be litigated extensively, at
large cost to the university. As a result, the university is in an
unenviable position, in which it has every incentive to settle
quickly to avoid (1) expensive discovery and further motion
practice, (2) potential individual liability for named
fiduciaries,1 and (3) the prospect of damages calculations, after
lengthy litigation, with interest-inflated liability totals.

        This pressure to settle increases with the size of the plan,
regardless of the merits of the case. Alleged mismanagement
of a $400,000 plan will expose fiduciaries to less liability than
mismanagement of a $4 billion plan. Thus, notwithstanding
the strength of the claims, a plaintiff’s attorney, seeking a large
fee, will target a plan that holds abundant assets. I am

1
 Sec’y, U.S. Dep’t of Labor v. Kwasny, 853 F.3d 87, 91–92 (3d
Cir. 2017).
concerned that this is the case both here and in numerous other
lawsuits that have targeted large corporations and universities
that administer some of the largest retirement plans in the
country.2

       This strategy has substantial consequences for
fiduciaries of these plans, particularly at universities. While
the fiduciaries for large corporations may have experience in
dealing with potential liabilities, fiduciaries at universities are
often staff members who volunteer to serve in these roles.3
Even though indemnification agreements exist for these
individual members, as long as they are party to the suit they
will be required to disclose this litigation in personal financial
transactions.4 Moreover, universities, which unlike large


2
  For a representative sample of cases plaintiffs’ counsel has
brought against corporations and universities respectively, see
infra notes 26–27.
3
  While this suit does not name the members of the Investment
Committee as defendants, and the record does not specify the
members of the Investment Committee or their roles within the
university, other suits name staff members as individual
defendants. E.g., Tracey v. Mass. Inst. Of Tech., No. 16-11620,
2017 WL 4453541 (Aug. 31, 2017), adopted in part and
rejected in part, 2017 WL 4478239 (Oct. 4, 2017).
4
  See Cunningham v. Cornell Univ., No. 16-cv-6525, 2018 WL
1088019, at *1 (Jan. 19, 2018) (“Plaintiffs shall address why
they need to name 29 additional individuals as defendants other
than (a) they think they can; and (b) the assertion of multi-
million dollar claims against these individuals who served on
a committee at their employer’s request has the tremendous
power to harass these individuals because they will be required




                                2
corporations are not typically in the business of profitmaking,
must keep in mind, when determining how best to proceed in
litigation, that the university will be responsible for any
damages award. This reality demands that cases such as this
one be carefully scrutinized in order not to permit implausible
allegations to result in a large settlement, under which a
substantial portion of the funds that are to be reimbursed to
retirement plans are instead diverted to attorneys’ fees.

        Ultimately, this case presents a question virtually
identical to the one addressed by this Court seven years ago, in
Renfro v. Unisys Corp.5: Does an ERISA plan fiduciary acting
in good faith, under the prudent person standard, have a duty
to do more than provide a wide, reasonable, and low-cost
variety of investment options for individual plan beneficiaries
who want to have control over their own investment portfolio?
Plaintiffs contend that because the pleadings have identified
specific problematic funds in the mix and range offered by
defendants, the answer should be yes. The majority agrees,
holding that the administrators of a pension plan must ensure
that sophisticated investors receive the best version of each
plan available. This departs from the core principles in Renfro,
set out above, which the District Court followed faithfully. For
these reasons, I would affirm in full the District Court’s
dismissal of the amended complaint.




to list the lawsuit on every auto, mortgage or student financial
aid application they file.”).
5
  671 F.3d 314, 327–28 (3d Cir. 2011).




                               3
                               I

        The Plan, as explained by the District Court, is a
defined-contribution plan that offers its beneficiaries four
levels of involvement in their investments. The first tier is a
“do-it-for-me” tier, where investors have their choice between
a TIAA target fund and a Vanguard target fund, which funds
automatically adjust their investment strategy with no input
from the beneficiary, based on an expected retirement date.
Tier 2 is a “help-me-do-it” tier, which allows a beneficiary to
select from a group of eight options and weigh them as
preferred. The third tier is a “mix-my-own” tier, which
provides a few options for each of nine types of funds. And
finally, Tier 4 is a “self-directed” tier, which provides access
to the full panoply of 78 funds offered by defendants.6

        Of these 78 investment options, virtually all are mutual
funds. Over the course of the class period, the proportion of
retail-class mutual funds, as opposed to cheaper institutional-
class mutual funds, has varied. Appellants have specifically
challenged 58 of these retail-class funds as having had cheaper
but otherwise identical institutional-class analogues at some
point during the class period (Count V). Defendants note in
this connection that dozens of funds have been switched to
institutional classes over time. Plaintiffs also challenge the
method in which fees are calculated (Count III), stating that an
asset-based calculation has overcompensated the record
keepers and that a failure to negotiate rebates constituted a
breach of fiduciary duty.


6
  Before October 2012, forty additional funds were included in
this tier, for a total of 118.




                               4
       At argument, when asked about the four separate tiers
of beneficiary involvement, plaintiffs stated that the funds
being challenged were largely related to Tiers 3 and 4, and in
a follow-up response, specifically excluded Tier 1 from the
scope of the complaint.

                              II

       It is well established that ERISA was intended to be a
“comprehensive and reticulated” statute7 enacted after “a
decade of congressional study of the Nation’s private
employee benefit system.”8 ERISA “resolved innumerable
disputes between powerful competing interests—a balance
between encouraging the creation of plans and ensuring
enforcement of rights under a plan.”9 Congress intended to
create a system “that is [not] so complex that administrative
costs, or litigation expenses, unduly discourage employers
from offering [ERISA] plans in the first place.”10 Instead,
ERISA’s purpose is, in part, to “assur[e] a predictable set of

7
  Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204,
209 (2002).
8
  Santomenno ex rel. John Hancock Tr. v. John Hancock Life
Ins. Co., 768 F.3d 284, 291 (3d Cir. 2014) (quoting Mertens v.
Hewitt Assocs., 508 U.S. 248, 251 (1993)); accord Renfro v.
Unisys Corp., 671 F.3d 314, 321 (3d Cir. 2011).
9
  Renfro, 671 F.3d at 321 (3d Cir. 2011) (quoting Mertens, 508
U.S. at 262).
10
   Conkright v. Frommert, 559 U.S. 506, 517 (2010) (quoting
Varity Corp. v. Howe, 516 U.S. 489, 497 (1996)); see also Fifth
Third Bancorp. v. Dudenhoffer, 134 S. Ct. 2459, 2470 (2014)
(“Congress sought to encourage the creation of [employee
stock ownership plans].”).




                              5
liabilities, under uniform standards of primary conduct and a
uniform regime of ultimate remedial orders and awards when
a violation has occurred.”11

       Plaintiffs’ counsel, “one of the few firms handling
ERISA class actions such as this,”12 have brought numerous
ERISA suits across the country. While these cases were at first
limited to corporate retirement plans,13 they have expanded to
include several suits against university retirement plans.14
These cases typically are not litigated to conclusion, either


11
   Id. (quoting Rush Prudential HMO, Inc. v. Moran, 536 U.S.
355, 379 (2002)).
12
    Beesley v. Int’l Paper Co., No. 06-CV-703, 2014 WL
375432, at *3 (Jan. 31, 2014).
13
   E.g., Renfro, 671 F.3d at 314; accord Tibble v. Edison Int’l,
831 F.3d 1262 (9th Cir. 2016); Tussey v. ABB, Inc., 746 F.3d
327 (4th Cir. 2014); Hecker v. Deere & Co., 556 F.3d 575 (7th
Cir. 2009).
14
   E.g., Cunningham v. Cornell Univ., No. 16-CV-6525, 2019
WL 275827 (Jan. 22, 2019) (considering class certification
motion); Divane v. Nw. Univ., No. 16-CV-8157, 2018 WL
1942649 (Apr. 25, 2018) (considering defendants’ motion to
strike jury demand), appeal filed (July 18, 2018); Clark v. Duke
Univ., No. 16-CV-1044, 2018 WL 1801946 (Apr. 13, 2018)
(considering class certification motion); Tracey v. Mass. Inst.
of Tech., No. 16-11620, 2017 WL 4478239 (Oct. 4, 2017)
(considering motion to dismiss); Cates v. Trs. Of Columbia
Univ., No. 16-CV-6524, 2017 WL 3724296 (Aug. 28, 2017)
(considering motion to dismiss); Sacerdote v. N.Y. Univ., No.
16-cv-6284, 2017 WL 3701482 (Aug. 25, 2017) (considering
motion to dismiss).




                               6
terminating through settlement or a judicial finding against the
plaintiffs.

       Given that these cases are brought as putative class
actions, counsel is able to petition the court for fees after a
successful settlement. In cases of successful settlements,
counsel, upon petition, are often awarded one third of the
settlement amount, plus expenses, from the settlement fund.15
While benefits to the plan may result from the settlement, they
are substantially diluted by the fees’ calculation, even before
considering the litigation costs that the universities shoulder
through the motion to dismiss stage. Indeed, while there is no
comprehensive listing of “jumbo plans” maintained in this
country, this pattern of bringing class actions against large
funds seems to have sustained itself and could continue as long
as more plans can be identified.

       Such a result would be the opposite of “assuring a
predictable set of liabilities, under uniform standards of
primary conduct.”16 Indeed, it would not only discourage the
offering of these plans, but it would also discourage


15
   See, e.g., Krueger v. Ameriprise Fin., No. 11-CV-2781, 2015
WL 4246879, at *4 (July 13, 2015) (approving 33 1/3% fees
and additional costs totaling 36% of the common fund); Nolte
v. Cigna Corp., No. 07-CV-2046, 2013 WL 12242015, at *4
(Oct. 15, 2013) (approving 33 1/3% fees and additional costs
totaling 36% of the common fund); George v. Kraft Foods
Global, Inc., No. 08-CV-3799, 2012 WL 13089487, at *4
(June 26, 2012) (approving 33 1/3% fees and additional costs
totaling 49% of the common fund);
16
   Conkright, 559 U.S. at 517.




                               7
“individuals from serving as fiduciaries.”17 Therefore, in
enforcing the pleading standards under Twombly and Iqbal,
courts must take great care to allow only plausible, rather than
possible, claims to withstand a motion to dismiss.18 While the
majority takes great care to lay out the pleading standards that
govern this dispute, for the reasons stated below, I disagree that
those standards have been met.

        The majority cites Fifth Third Bancorp v.
Dudenhoeffer19 to support discarding any concern of
encouraging      attorney-driven     litigation,  despite     its
“appreciation of Penn and amici’s fear of frivolous
litigation.”20 But Fifth Third concerned an employee stock
ownership plan, under which employees invested primarily in
the stock of their employer, a plan that the majority points out
is subject to distinct duties under 29 U.S.C. § 1104(a).21 The
defendants in that case were arguing for a special presumption
that investments in the employer’s stock would be prudent
unless the employer was in dire financial straits.22 No such


17
   Id.
18
   To the extent that amici, including the American Council on
Education, address this point, I find it persuasive. More
importantly, I also believe that this consideration is consistent
with the holding in Renfro. The majority’s primary response
to this argument of amici is that defendants’ alternative would
foreclose ERISA liability for any plan with a mix and range of
options. I will address this below. See infra Part IV.
19
   134 S. Ct. 2459 (2014).
20
   Maj. Op. at 25.
21
   Fifth Third, 134 S. Ct. at 2463, 2467.
22
   Id. at 2466.




                                8
presumption is necessary here to determine under Renfro that
plaintiffs’ claims were properly dismissed.

      For the above reasons, I conclude that the District
Court’s analysis of this case, following Renfro, was the correct
one.

                               III

        Turning then to a more pragmatic concern with the
pleading here, ERISA states that a civil action may be brought
“by the Secretary, or by a participant, beneficiary or
fiduciary.”23 This statutory edict, however, does not override
the constitutional requirements for standing.24 In order for a
plaintiff to carry her burden of establishing constitutional
standing,25 three elements must be met: (1) an injury in fact
“that is concrete and particularized and actual or imminent, as
opposed to conjectural or hypothetical”, (2) a causal
connection between that injury and the conduct so that the

23
   29 U.S.C. § 1132(a)(2).
24
   Perelman v. Perelman, 793 F.3d 368, 373–74 (3d Cir. 2015).
As the majority points out, Perelman is a defined-benefit case
brought under 29 U.S.C. § 1132(a)(3), and a footnote in
Perelman does approve of representative suits by plan
participants or beneficiaries under § 1132(a)(2). The issue in
the instant case, however, is that we do not have sufficient
information about the putative representatives to determine
whether the harms they are claiming, which do not implicate
every Plan participant, have affected them specifically.
25
   “The burden of establishing standing lies with the plaintiff.”
Id. at 373 (citing Berg v. Obama, 586 F.3d 234, 238 (3d Cir.
2009)).




                               9
injury is fairly traceable to the defendant’s action, and (3) “it
must be likely, as opposed to merely speculative, that the injury
will be redressed by a favorable decision.”26 We have held that
“an ERISA beneficiary suffers an injury-in-fact . . . when a
defendant allegedly breaches its fiduciary duty, profits from
the breach, and the beneficiary, as opposed to the plan, has an
individual right to the profit.”27

        Plaintiffs allege that the Plan’s use of the 58 retail-class
funds that had cheaper institutional-class analogues caused an
injury in fact sufficient to confer standing for Count V. They
do not, however, automatically have an individual right to the
alleged lost profits simply because they are participants in the
Plan broadly. At argument, plaintiffs specifically conceded
that Tier 1 did not include any of the 58 funds challenged in
Count V; plaintiffs limited their focus in Count V to Tiers 3
and 4. Therefore, in order for plaintiffs to carry the burden of
proof that they were injured by the selection of the 58 retail-
class funds, they must plead that they were participants in Tier
3 or Tier 4. They have not done so here.

       The amended complaint does not contain facts that link
any of the named plaintiffs to any tier at any point during the
class period. While a paragraph in the complaint is devoted to
each of the six plaintiffs, each of those paragraphs consists of
three sentences. The first lists the plaintiff’s name and
residence, the second states the plaintiff’s job title, and the third
sentence is as follows, with changes only for gender: “She is

26
   Edmonson v. Lincoln Nat’l Life Ins. Co., 725 F.3d 406, 415
(3d Cir. 2013) (quoting Lujan v. Defenders of Wildlife, 504
U.S. 555, 560 (1992)).
27
   Id. at 418 (emphasis added).




                                 10
a participant in the Plan under 29 U.S.C. § 1002(7) because she
and her beneficiaries are or may become eligible to receive
benefits under the Plan.”28 This averment indicates merely that
plaintiffs are participants under the definition of § 1132(a)(2).
It provides no information as to which tier, or tiers, any
individual plaintiff chose for investment. Indeed, the entire
record contains no direct information on this point. Plaintiffs
conceded this at oral argument. The “standing” portion of the
amended complaint does imply that plaintiffs invested in ways
consistent with being in a more active investment tier, but it
does so by alleging generally that “the named Plaintiffs and all
participants in the Plan suffered financial harm” as a result of
defendants conduct alleged in Count V. 29 This cannot be
sufficient.30

        This language in the amended complaint appears to
mirror its citation to LaRue v. DeWolff, Boberg & Assocs. to
support standing here.31 However, LaRue does not save
plaintiffs. The two situations in LaRue that the Supreme Court

28
   App. 39–40.
29
   App. 36 ¶ 8(a); see, e.g., Emergency Physicians of St. Clare’s
v. United Health Care, No. 14-CV-404, 2014 WL 7404563, at
*4 (D.N.J. Dec. 29, 2014) (dismissing plaintiff’s ERISA suit
due to lack of standing under 29 U.S.C. § 1132(a)(2) as the
complaint would have required the district court to read
additional implied details into a complaint).
30
   As the majority opinion states, an investor is not confined to
a single tier. This does not change the fact that no information
is provided in the complaint that allows us to identify whether
any of the appellees invested in either a relevant fund or a
relevant tier.
31
   552 U.S. 248 (2008).




                               11
held to constitute cognizable claims under § 1132(a)(2) were
instances when “a fiduciary breach diminishes plan assets
payable to all participants and beneficiaries, or . . . to persons
tied to particular individual accounts.”32 The latter justification
is identical to our test above, and as counsel conceded at
argument, the plan’s system of tiers included at least one tier,
Tier 1, that was not alleged to have been affected by retail-class
investments, rendering the former justification inapplicable.
As a result, I would affirm the District Court’s dismissal of
Count V.33

       If this were the only deficiency in plaintiffs’ amended
complaint, the appropriate remedy would be to dismiss Count
V without prejudice to allow plaintiffs an opportunity to allege
sufficient facts regarding the tiers they invested in. However,
for the reasons below, I believe that dismissing Count V
without prejudice would be futile because plaintiffs have
otherwise failed to plead a claim upon which relief can be
granted.34

                                IV


32
   Id. at 256 (emphasis added).
33
    Count III’s allegation of excessive overall recordkeeping
fees implicates all participants and thus survives this analysis,
but it still fails for the reasons stated in Part V below.
34
   “Leave to amend is properly denied if amendment would be
futile, i.e., if the proposed complaint could not ‘withstand a
renewed motion to dismiss.’” City of Cambridge Retirement
Sys. v. Altisource Asset Mgmt. Corp., 908 F.3d 872, 878 (3d
Cir. 2018) (quoting Jablonski v. Pan Am. World Airways, Inc.,
863 F.2d 289, 292 (3d Cir. 1988)).




                                12
       In Renfro v. Unisys Corp., we evaluated a similar
complaint at the same stage in litigation, and determined that
the mix and range of investment options in the retirement plan
provided by Unisys was sufficient to demonstrate that the
defendants’ fiduciary duty had been met.35 Despite a greater
mix and range of options in the instant case, the majority
believes that the standards that foreclosed the plaintiffs’
arguments in Renfro do not do so here. However, a close look
at the facts indicates that plaintiffs’ arguments under both
Counts III and V are the same as, if not in fact weaker than, in
Renfro.

       I will turn to Count V first. Three fact patterns were
presented in Renfro: the facts surrounding the Unisys plan as
well as facts from two cases we considered from other circuits
with opposite outcomes. In Braden v. Wal-Mart Stores, Inc.,
the Eighth Circuit reversed the district court’s grant of a motion
to dismiss, as the plan at issue contained only thirteen
investment options and was alleged to be part of a kickback
scheme.36 In contrast, in Hecker v. Deere & Co., the Seventh
Circuit affirmed the dismissal of a complaint against a plan
with twenty-three mutual fund options and a third-party service
that provided beneficiaries access to hundreds more.37 The
Seventh Circuit reasoned that it was implausible that this
structure did not grant beneficiaries sufficient investment




35
   671 F.3d 314, 325–28 (3d Cir. 2011).
36
   588 F.3d 585, 589–90, 596 (8th Cir. 2009); see also Renfro,
671 F.3d at 327.
37
   556 F.3d 575, 578–79, 586 (7th Cir. 2009); see also Renfro,
671 F.3d at 326–27.




                               13
choices, as the fees on each of these options ranged from 0.07%
to 1% across all funds.38
        In Renfro, the Unisys plan included 73 distinct
investment options,39 71 of which were specifically named in
the operative complaint as having excessive fees. Fees among
the investment options in the Unisys plan ranged from 0.1% to
1.21%. We held that since the allegations solely contested the
fees charged in the Unisys plan, we could not “infer from what
is alleged that the process was flawed,”40 and we affirmed the
dismissal of the excessive investment fees claim.41

        In the instant case, the Plan has had a minimum of 78
investment options during the class period, 58 of which are
specifically contested in the amended complaint. Fees among
these options in the Plan range from 0.04% to 0.87%. Despite
plaintiffs’ claims that these fees are excessive, their attempts to
distinguish Renfro boil down to the level of detail in the
complaint rather than, for example, any change in market
circumstances that might render this 0.04% to 0.87% range
excessively high today. While the question of fiduciary breach
does not boil down to a numerical calculation, plaintiffs do not
contest that the Plan has a greater number of investment
options than the Unisys plan and that the highest and lowest
fees charged by Plan funds are both lower than in Renfro. It is
therefore difficult to see, in the absence of additional
allegations regarding market circumstances or fiduciary
misconduct, how this claim could be plausible if the claims in
Renfro were not.

38
   Hecker, 556 F.3d at 586.
39
   671 F.3d at 327.
40
   Renfro, 671 F.3d at 327 (quoting Braden, 588 F.3d at 596).
41
   Id. at 328.




                                14
       The majority believes that endorsing this reasoning
would allow a fiduciary to “avoid liability by stocking a plan
with hundreds of options, even if the majority were overpriced
or underperforming.”42 This oversimplifies the analysis in
Renfro, which afforded substantial weight in its discussion of
Braden to allegations of a kickback scheme.43 If coupled with
other allegations of mismanagement, a plan flooded with
hundreds of options might itself be evidence of an imprudently
clumsy attempt at fiduciary compliance or a distraction from
bad-faith dealings.

        In the instant case, plaintiffs do not allege any such
schemes. Even their prohibited transaction claims, which the
majority properly dismissed, derive from an “extremely broad”
reading of 29 U.S.C. § 1106 rather than any self-interest on the
part of the fiduciaries. Without more, the Count V challenge
to the Plan is neatly circumscribed by Renfro, regardless of the
level of specificity devoted to the pleadings.44

      Moreover, plaintiffs’ admission that the challenged
funds are primarily offered to Tiers 3 and 4 compels this
outcome. If the challenged funds were being provided in Tier

42
   Maj. Op. at 16.
43
   See Renfro, 671 F.3d at 327 (“Unlike the pleadings in
Braden, plaintiffs have not contended there was any sort of
concealed kickback scheme . . . .”).
44
   The majority’s reliance on Tibble v. Edison International,
843 F.3d 1187 (9th Cir. 2016) (“Tibble IV”), is misplaced. To
the extent that Tibble IV, a Ninth Circuit case, contradicts an
opinion of the Third Circuit in Renfro, it cannot apply in this
case.




                              15
1—that is, to investors who wished to have their investments
managed for them—the selection of more expensive share
classes in a large portion of the fund would be concerning.
However, since Tiers 3 and 4 attract investors who have a more
sophisticated understanding of investment options and,
inversely, are unlikely to attract investors who might be easily
confused by the available investments, the overall mix and
range of options is not disturbed by the fact that only the retail-
class option was available for a proportion of the funds in these
tiers. The majority stresses the importance of “Penn’s ‘conduct
in arriving at an investment decision’”45 but fails to mention
that twenty funds were switched from retail-class shares to
institutional-class shares between 2011 and 2016, a shift that
demonstrates that defendants, in choosing investment options,
were not deliberately ignoring the benefits of institutional-class
shares.

       The majority alternatively suggests that this analysis is
too singularly focused on numerical performance or on
allegations of misconduct.         But both cannot be true
simultaneously. A plausible allegation of either kind at the
pleading stage would be sufficient to defeat a motion to
dismiss, but plaintiffs here have not plausibly alleged either. I
would therefore affirm the District Court’s dismissal of Count
V.

                                V

      The plain text of Renfro also mandates that plaintiffs’
Count III claim regarding the method of calculating fees must
fail. In rejecting a similar, albeit less thoroughly pled,

45
     Maj. Op. at 21 n.7.




                                16
excessive fees claim, we stated that the Renfro plaintiffs’
“allegations concerning fees are directed exclusively to the fee
structure and are limited to contentions that Unisys should have
paid per-participant fees rather than fees based on a percentage
of assets in the plan.”46 This is an exact description of Count
III, and the parallel logic is apparent between the two
complaints, even if the amended complaint here is
supplemented with more concrete numbers than the Renfro
complaint. The allegations that failed in Renfro must fail here
also.

       The majority relies solely on Tussey v. ABB, Inc.47 to
demonstrate that claims involving excessive recordkeeping
fees can survive a motion to dismiss. This reliance is improper.
The Eighth Circuit noted that “unlike” cases like Renfro,
Tussey “involve[d] significant allegations of wrongdoing,
including allegations that ABB used revenue sharing to benefit
ABB and Fidelity at the Plan’s expense.”48 Plaintiffs had
proven, during a bench trial, that ABB had been explicitly
warned about the excessiveness of their revenue sharing
agreement and had failed to act in any way upon that warning.49




46
   671 F.3d at 327.
47
   746 F.3d 327 (8th Cir. 2014).
48
   Tussey, 746 F.3d at 336.
49
   Id. (“The district court found, as a matter of fact, that the
ABB fiduciaries [failed to take curative steps] even after
ABB’s own outside consultant notified ABB the Plan was
overpaying for recordkeeping and might be subsidizing ABB’s
other corporate services.”).




                              17
No such facts are alleged here, and as such, plaintiffs’ Count
III claim must fail.50

                               VI

       For these reasons, I would affirm the District Court’s
dismissal of all counts of the amended complaint. I therefore
respectfully dissent from the majority’s decision to reverse the
District Court’s dismissal of Counts III and V of the amended
complaint.




50
   To the extent the majority attempts to rely on DOL Advisory
Opinion 2013-03A to support its position that revenue sharing
reimbursements might be necessary to satisfy the prudent man
standard, this reliance is also misplaced. The quoted language
in the advisory opinion merely opines on what a fiduciary must
do during revenue sharing negotiations in order to satisfy the
prudent man standard. DOL Advisory Opinion 2013-03A,
2013 WL 3546834, at *4 (“Prudence requires that a plan
fiduciary, prior to entering into such an arrangement, will
understand the formula, methodology and assumptions used by
Principal . . . following disclosure by Principal of all relevant
information pertaining to the proposed arrangement.”).




                               18
