CourtListener opinion 10148838

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UNITED STATES DISTRICT COURT 
 NORTHERN DISTRICT OF ILLINOIS 
 EASTERN DIVISION 

MICHAEL MAZZA, individually, and as ) 
Representative of a Class of Participants and ) 
Beneficiaries of the Pactiv Evergreen Services ) 
Inc. Employee Savings Plan, ) 
 ) 
 Plaintiff, ) 
 ) No. 22 C 5052 
 v. ) 
 ) Judge Sara L. Ellis 
PACTIV EVERGREEN SERVICES INC. and ) 
THE BOARD OF DIRECTORS OF PACTIV ) 
EVERGREEN SERVICES INC., ) 
 ) 
 Defendants. ) 

 OPINION AND ORDER 
 Plaintiff Michael Mazza, a former participant in the Pactiv Evergreen Services Inc. 
Employee Savings Plan (the "Plan") that Defendant Pactiv Evergreen Services Inc. ("Pactiv") 
sponsors,1 filed this purported class action lawsuit under the Employee Retirement Income 
Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., against Pactiv and its Board of Directors (the 
"Director Defendants"). In his amended complaint, Mazza complains that Defendants breached 
their fiduciary duty of prudence by causing Plan participants to pay excessive recordkeeping and 
administrative ("RKA") fees and that they failed to adequately monitor other Plan fiduciaries. 
Defendants have moved to dismiss Mazza's amended complaint for failure to state a claim under 
Federal Rule of Civil Procedure 12(b)(6). Because Mazza has sufficiently alleged his claims, the 
Court denies Defendants' motion. 

1 From January 1, 2016 to November 24, 2019, Reynolds Services Inc. ("Reynolds") sponsored the Plan. 
After a spinoff, on November 25, 2019, Reynolds' successor, Pactiv, became the Plan sponsor. 
 BACKGROUND2 
 Pactiv provides household products, including preparation, cooking, cleanup, and storage 
solutions. Pactiv sponsors and provides employees with a § 401(k) defined contribution pension 
plan, Pactiv Evergreen Services Inc. Employee Savings Plan (the "Plan"). Pactiv matched 

employees' contributions to the Plan. Pactiv's contributions to the payment of Plan costs are 
guaranteed but pension benefits are not. Instead, the market performance of participants' 
contributions less expenses determines the value of participants' investments. Pactiv serves as 
the Plan Administrator. Pactiv and the Director Defendants serve as ERISA fiduciaries, 
exercising discretionary oversight, authority, or control over the Plan. 
 Mazza began working at Reynolds, Pactiv's predecessor, in June 2012 as the director of 
marketing. When he left Reynolds' employment in July 2018, he held the role of senior director 
of marketing. Mazza is a former Plan participant, having held investments in target date funds, 
international funds, bond funds, and small cap funds through the Plan. 
 Fiduciaries of mega 401(k) defined contribution plans, like the Plan here, hire 

recordkeepers to provide bundled service offerings to the plans. All recordkeepers servicing 
mega plans deliver essentially the same RKA services of the same level and quality, regardless 
of the specific service plans listed on their Form 5500s. Recordkeepers typically provide plans 
with Bundled RKA services, a "buffet style level of service," as part of a bundled fee. Doc. 8 
¶ 40. These Bundled RKA services include recordkeeping, transaction processing, 
administrative services related to converting a plan from one recordkeeper to another, participant 

2 The Court takes the facts in the background section from Mazza's amended complaint and presumes 
them to be true for the purpose of resolving Defendants' motion to dismiss. See Phillips v. Prudential 
Ins. Co. of Am., 714 F.3d 1017, 1019–20 (7th Cir. 2013). Although the Court normally cannot consider 
extrinsic evidence without converting a motion to dismiss into one for summary judgment, Jackson v. 
Curry, 888 F.3d 259, 263 (7th Cir. 2018), the Court may consider "documents that are central to the 
complaint and are referred to in it" in ruling on a motion to dismiss, Williamson v. Curran, 714 F.3d 432, 
436 (7th Cir. 2013). 
communications, maintenance of an employer stock fund, plan document services, plan 
consulting services such as assistance in selecting the investments offered to participants, 
accounting and audit services, compliance support, and compliance testing. Recordkeepers also 
may offer plans Ad Hoc RKA services, which have separate, additional fees based on 

participants' conduct and usage of those services. Ad Hoc RKA services include loan 
processing, brokerage services and account maintenance, distribution services, and processing of 
qualified domestic relations orders. Recordkeepers mainly earn their fees from providing 
Bundled RKA services, not Ad Hoc RKA services. Recordkeepers may also perform certain 
RKA services on behalf of investment managers. In exchange, recordkeepers may collect a 
portion of the total expense ratio fee for the specific investment in a practice called revenue 
sharing or indirect compensation. 
 Recordkeeping fees are relatively stable and did not materially change for mega plans 
during the class period. The underlying cost to recordkeepers of providing recordkeeping 
services primarily depends on the number of participant accounts in a plan, not the plan's total 

assets. Thus, recordkeepers typically quote their fees for Bundled RKA services on a per 
participant basis, without accounting for any individual differences in services requested. The 
minor variations in the level and quality of Bundled RKA services have little to no material 
impact on the fees the recordkeepers charge, with virtually all recordkeepers providing the same 
core services. Indeed, industry experts, and even Fidelity, a top recordkeeper, have maintained 
at least since 2016 that Bundled RKA services "are a commodity with little variation in price." 
Id. ¶ 43. In other words, "[t]he cheaper you can find competent custody and recordkeeping 
services, the better for participants." Id. 
 The Plan uses Principal Life Insurance Company ("Principal") as its recordkeeper and 
third party administrator. Principal provides the Plan with a standard level of Bundled RKA 
services that is "of a nearly identical level and quality" as other recordkeepers servicing mega 
plans. Id. ¶ 52. The Plan's 2018 Section 404(a)(5) disclosure indicated that the Plan charged 

participants an annual administrative expense of $42.25, with administrative expenses "typically 
includ[ing] items such as recordkeeping, participant website, participant statements, Plan 
compliance services and financial professional services." Doc. 17-4 at 2. The Plan did not 
disclose anything to suggest that the annual administrative fee it charged participants included 
any unusual services or services above and beyond standard recordkeeping and administrative 
services. The Plan did disclose that Ad Hoc services and participation in the Principal Managed 
Account Program would incur additional fees. The Plan also paid Principal revenue sharing, 
which it disclosed in its Form 5500s and Section 404(a)(5) disclosures, further indicating that 
"[a]ny revenue sharing received from the Plan's investment options will be credited back in full 
to the impacted participant as a Fee Adjustment on a monthly basis." Doc. 17-4 at 2. 

 In 2020, the Plan had approximately $879,161,567 in assets, more assets than 99.78% of 
the defined contribution plans that filed Form 5500s for that year. That same year, it had 10,205 
participants, more participants than 99.82% of the defined contribution plans that filed Form 
5500s for that year. This gave the Plan substantial bargaining power over Plan fees and 
expenses. 
 The following table provides the number of participants in the Plan and the Plan's RKA 
fees between 2016 and 2020: 
 Recordkeeping and Administration (RKA) Fees 
 2016 2017 2018 2019 2020 Average 
Participants 12,619 13,294 13,770 10,870 10,205 12,152 
Est. RKA Fees $852,638 $819,477 $846,679 $895,374 $725,617 $827,957 
Est. RKA Per Participant $68 $62 $61 $82 $71 $68 

Doc. 8 ¶ 80. Comparable plans receiving the same services of the same level and quality as the 
Plan received from Principal paid the following RKA fees: 
 Comparable Plans' RKA Fees Based on Publicly Available Information from Form 5500 
 (Price Calculations are based on 2018 Form 5500 or most recent if 2018 not available) 

 RKA 
 Plan Participants Assets RKA Fee Fee Recordkeeper 
 /pp 
 The Boston Consulting 
 Group, Inc. Employees' 
 Savings Plan And Profit 8,067 $894,454,060 $336,660 $42 Vanguard 
 Sharing Retirement Fund 
 Bausch Health Companies 
Inc. Retirement Savings Plan 8,902 $904,717,349 $322,496 $36 Fidelity 
Children's Medical Center Of 
 Dallas Employee Savings 9,356 $349,335,673 $337,416 $36 Fidelity 
 Plan 403(B) 
 Ralph Lauren Corporation 9,389 $552,586,935 $290,066 $31 T. Rowe 
 401(K) Plan Price 
 Vibra Healthcare 9,750 $107,652,510 $277,532 $28 Great-West 
 Retirement Plan 
 Republic National 9,922 $671,989,837 $324,171 $33 Great-West 
 401(K) Plan 
 S Ca Permanente Medical 
 Group Tax Savings 10,770 $773,795,904 $333,038 $31 Vanguard 
 Retirement Plan 
 Employee Savings Plan 12,152 $933,346,984 $827,957 $68 Principal 
 Average Fee 
 Viacom 401(K) Plan 12,196 $1,249,874,734 $376,314 $31 Great-West 
 Sutter Health Retirement 13,248 $406,000,195 $460,727 $35 Fidelity 
 Income Plan 
 Fortive Retirement Savings 13,502 $1,297,404,611 $472,673 $35 Fidelity 
 Plan 
 Michelin Retirement 13,798 $616,026,001 $425,270 $31 Vanguard 
 Account Plan 
 Dollar General Corp 401(k) 
Savings and Retirement Plan 16,125 $355,768,325 $635,857 $39 Voya 
Michelin 401(K) Savings Plan 16,521 $2,380,269,826 $570,186 $35 Vanguard 
 Fedex Office And Print 
 Services, Inc. 401(K) 17,652 $770,290,165 $521,754 $30 Vanguard 
 Retirement Savings 
 Plan 
 Pilgrim's Pride Retirement 18,356 $321,945,688 $486,029 $26 Great-West 
 Savings Plan 
 JBS 401(K) Savings Plan 19,420 $374,330,167 $481,539 $25 Great-West 

Id. ¶ 81. Based on this information, a hypothetical prudent plan fiduciary would have paid on 
average an effective annual RKA fee of around $32 per participant between 2016 and 2020, or 
approximately $388,841 per year in RKA fees total. In other words, the Plan cost its participants 
on average an additional $439,106 per year (or approximately $36 per participant per year) in 
RKA fees between 2016 and 2020, totaling $2,195,529. Defendants did not regularly reassess 
the Plan's Bundled RKA fees that it paid to Principal during the class period, solicit quotes from 
other recordkeepers, or perform competitive comparisons of the Bundled RKA fees. 
 LEGAL STANDARD 
 A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, not 
its merits. Fed. R. Civ. P. 12(b)(6); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 
1990). In considering a Rule 12(b)(6) motion, the Court accepts as true all well-pleaded facts in 
the plaintiff's complaint and draws all reasonable inferences from those facts in the plaintiff's 
favor. Kubiak v. City of Chicago, 810 F.3d 476, 480–81 (7th Cir. 2016). To survive a Rule 
12(b)(6) motion, the complaint must assert a facially plausible claim and provide fair notice to 
the defendant of the claim's basis. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. 
Twombly, 550 U.S. 544, 555 (2007); Adams v. City of Indianapolis, 742 F.3d 720, 728–29 (7th 
Cir. 2014). A claim is facially plausible "when the plaintiff pleads factual content that allows the 
court to draw the reasonable inference that the defendant is liable for the misconduct alleged." 
Iqbal, 556 U.S. at 678. 

 ANALYSIS 
I. Breach of the Duty of Prudence 
 ERISA's duty of prudence requires a plan fiduciary to "discharge his duties with respect 
to a plan . . . with the care, skill, prudence, and diligence under the circumstances then prevailing 
that a prudent man acting in a like capacity and familiar with such matters would use in the 
conduct of an enterprise of a like character and with like aims." 29 U.S.C. § 1104(a)(1)(B). The 
duty of prudence includes a continuing duty to monitor investments. Tibble v. Edison Int'l, 575 
U.S. 523, 529 (2015). Fiduciaries also must "incur only costs that are reasonable in amount and 
appropriate to the investment responsibilities of the trusteeship." Hughes v. Nw. Univ., 63 F.4th 
615, 627 (7th Cir. 2023) (quoting Tibble v. Edison Int'l, 843 F.3d 1187, 1197 (9th Cir. 2016)). 

"To plead a breach of the duty of prudence under ERISA, a plaintiff must plausibly allege 
fiduciary decisions outside a range of reasonableness." Id. at 630. To determine if a plaintiff's 
complaint passes muster, the Court must conduct a "careful, context-sensitive scrutiny of a 
complaint's allegations to divide the plausible sheep from the meritless goats." Albert v. 
Oshkosh Corp., 47 F.4th 570, 577 (7th Cir. 2022) (quoting Fifth Third Bancorp v. Dudenhoeffer, 
573 U.S. 409, 425 (2014)). 
 Mazza alleges that Defendants breached the duty of prudence by failing to ensure the 
reasonableness of the Plan's RKA fees and failing to monitor and evaluate Principal's costs in 
comparison to other recordkeeper options. Defendants respond that the Seventh Circuit's 
decision in Albert, 47 F.4th 570, requires the dismissal of Mazza's claim. In Albert, the Seventh 
Circuit affirmed the dismissal of the plaintiff's excessive RKA fee claim, which relied on a price 
comparison of RKA fees charged to various plans. Id. at 579–80. The court emphasized that the 
plaintiff did not provide allegations that suggested that the plan's charged RKA "fees were 

excessive in relation to the services provided." Id. at 580. But the court left the door open to 
future recordkeeping claims "surviv[ing] the ‘context-sensitive scrutiny of a complaint's 
allegations' courts perform on a motion to dismiss." Id. 
 In the Seventh Circuit's most recent decision in Hughes, the Seventh Circuit 
distinguished Albert and found that the plaintiffs provided the required context to allege that their 
plan's RKA fees "were excessive relative to the recordkeeping services rendered." 63 F.4th at 
632. This context included allegations that "the quality or type of recordkeeping services 
provided by competitor providers are comparable to that provided by Fidelity and TIAA," that 
"recordkeeping services are fungible and that the market for them is highly competitive," and 
that "$35 per participant was a reasonable recordkeeping fee based on the services provided by 

existing recordkeepers and the Plans' features." Id. The court also noted that plaintiffs had 
"provide[d] examples of several other university I.R.C. § 403(b) plans that successfully reduced 
recordkeeping fees by soliciting competitive bids, consolidating to a single recordkeeper, and 
negotiating rebates," and that Northwestern had "successfully lowered the Plans' administrative 
fees (including recordkeeping fees) in the October 2016 restructuring, which suggests that 
Northwestern's recordkeeping fees were unreasonably high and that means to lower such fees 
were available." Id. at 632 (footnote omitted). The court specifically rejected the defendant's 
argument that a plaintiff would have to "prove that another recordkeeper would have offered a 
lower fee" in order to proceed past a motion to dismiss. Id. at 633. 
 Although a close question, Mazza's allegations align more closely with those the Seventh 
Circuit allowed to proceed in Hughes than those it rejected in Albert. Initially, the Court 
acknowledges that Defendants' alleged failure to regularly solicit quotes or competitive bids on 
its own does not amount to a breach of the duty of prudence. Id. at 625–26 ("We reaffirm that a 

fiduciary need not constantly solicit quotes for recordkeeping services to comply with its duty of 
prudence."). But Mazza alleges more than that, and, as Hughes recognized, "fiduciaries who fail 
to monitor the reasonableness of plan fees and fail to take action to mitigate excessive fees—
such as by adjusting fee arrangements, soliciting bids, consolidating recordkeepers, negotiating 
for rebates with existing recordkeepers, or other means—may violate their duty of prudence." 
Id. at 626. Mazza's amended complaint includes allegations that recordkeepers for mega 
retirement plans like Pactiv's all provide the same level and quality of services with insignificant 
variation in price, suggesting that the Plan's RKA fees were excessive compared to the services 
the Plan received based on comparisons to other plans using recordkeepers that provided 
comparable services for less. Following Hughes, these allegations suffice to allege a breach of 

the duty of prudence. See id. at 633 ("[U]nder the pleading standard, plaintiffs have sufficiently 
alleged that recordkeeper consolidation and soliciting an equally capable but lower-cost 
recordkeeper were available options. Plaintiffs point to other institutions that had successfully 
consolidated and reduced fees. And they maintain that the market is competitive with equally 
capable recordkeepers who can provide comparable services for less.")3; Guyes v. Nestle USA, 
Inc., No. 20-CV-1560, 2022 WL 18106384, at *8 (E.D. Wis. Nov. 21, 2022) (allowing proposed 
recordkeeping claim based on allegations that recordkeeping services "are essentially fungible," 

3 Defendants point out that, unlike in this case and Albert, Hughes involved claims that the defendant 
should have consolidated the number of recordkeepers it used. See Hughes, 63 F.4th at 632 & n.4. But 
the Court does not read Hughes to suggest that the Seventh Circuit viewed the issue of consolidation as 
determinative in deciding to allow the excessive recordkeeping claim to proceed to discovery. 
as well as a comparison of the plan's fees with those charged by similar plans), report & 
recommendation adopted, 2023 WL 22629 (E.D. Wis. Jan. 3, 2023); Coyer v. Univar Sols. USA 
Inc., No. 1:22 CV 0362, 2022 WL 4534791, at *5 (N.D. Ill. Sept. 28, 2022) (allowing excessive 
recordkeeping fee claim where the plaintiffs alleged that "the primary drivers of price in large 

plans are the number of accounts and whether the plan's fiduciaries solicited competitive bids, 
rather than the marginal cost of recordkeeping for each participant," and the plaintiffs provided 
comparative information of similarly sized plans' recordkeeping fees, alleging that those plans 
received at least the same services for less); cf. Baumeister v. Exelon Corp., No. 21-cv-6505, 
2022 WL 4477916, at *2 (N.D. Ill. Sept. 22, 2022) (dismissing excessive recordkeeping cost 
claim based on Albert because the plaintiffs "plead no facts to show whether the selected 
comparators receive recordkeeping services of a similar nature and quality to those offered by 
the Plan's recordkeeper"). 
 Defendants' arguments do not compel a different conclusion at this stage. They contend 
that Mazza's allegations about comparable services and their quality are conclusory and that 

alternative explanations exist for the differences in charged fees. See Probst v. Eli Lilly & Co., 
No. 1:22-cv-01106, 2023 WL 1782611, at *1012 (S.D. Ind. Feb. 3, 2023) (allegations that "all 
mega plans receive nearly identical recordkeeping services and that any difference in services 
was immaterial to the price of those services" did not "identify what specific types of services 
comparator plans received"). For example, they note that the Form 5500s for the various 
comparator plans indicate that their fees did not cover the same services as those provided by 
Principal to the Plan. See Glick v. ThedaCare, Inc., No. 20-CV-1236, 2022 WL 16927749, at *3 
(E.D. Wis. Oct. 27, 2022) (dismissing recordkeeping fee claim where "the amended complaint 
does not contain any allegations concerning the specific services performed by the comparator 
plans' recordkeepers or any allegations supporting a plausible inference that the plan's 
recordkeeping services were equivalent to those provided by the comparator plans"), report & 
recommendation adopted, 2022 WL 16924188 (E.D. Wis. Nov. 14, 2022); Mator v. Wesco 
Distrib., Inc., No. 2:21-CV-00403, 2022 WL 3566108, at *8 (W.D. Penn. Aug. 18, 2022) 

(rejecting the plaintiff's comparison of the plan's RKA fees to other plans' fees, noting that at 
least one comparator did not use the same list codes on the Form 5500 and that the comparator 
plans had a wide variety of participants and asset sizes). While Defendants offer alternative 
explanations that warrant exploration during discovery, they are not so obvious that they require 
dismissal of Mazza's claim at the pleading stage, particularly given Mazza's allegations that 
RKA services are commoditized and that recordkeepers quote fees on a per participant basis 
without regard for individual differences in the services requested. See Hughes, 63 F.4th at 629 
("Only obvious alternative explanations must be overcome at the pleadings stage, and only by a 
plausible showing that such alternative explanations may not account for the defendant's 
conduct. Accordingly, whether a claim survives dismissal necessarily depends on the strength or 

obviousness of the alternative explanation that the defendant provides. . . . Where alternative 
inferences are in equipoise—that is, where they are all reasonable based on the facts—the 
plaintiff is to prevail on a motion to dismiss."); Lucero v. Credit Union Ret. Plan Ass'n, No. 22-
cv-208, 2023 WL 2424787, at *5 (W.D. Wis. Mar. 9, 2023) (allowing plaintiffs' recordkeeping 
claims to proceed, noting that while "Defendants have raised fair points about the probative 
value of the evidence cited in plaintiffs' complaint to show a violation of defendants' duty of 
prudence," such arguments were better suited to "a summary judgment motion"). Thus, the 
Court allows Mazza to proceed on his breach of the duty of prudence claim with respect to 
excessive RKA fees. 
I. Failure to Monitor 
 Defendants also moved to dismiss Mazza's failure to monitor claim, arguing that it is 
wholly derivative of the breach of the duty of prudence claim. See Albert, 47 F.4th at 583 
("[H]is duty to monitor claims rise or fall with his duty of prudence and duty of loyalty claims."). 
Because the Court finds that Mazza has sufficiently pleaded his breach of the duty of prudence 
claim, the Court allows his failure to monitor claim to proceed as well. 
 CONCLUSION 
 For the foregoing reasons, the Court denies Defendants' motion to dismiss Mazza's 
amended complaint [16]. 

Dated: May 18, 2023 Be Sle 
 SARA L. ELLIS 
 United States District Judge 

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