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IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
RONDA A. PLEDGER, SANDRA )
BRITT, JENNIFER L. PRIMM, )
ALEX BROOKS, JR., and )
EDWARD COMER BUCK, )
)
Plaintiffs, )
) Civil Action No.
v. ) 1:15-cv-04444-MHC
)
RELIANCE TRUST COMPANY, )
INSPERITY, INC., INSPERITY )
HOLDINGS, INC., INSPERITY )
RETIREMENT SERVICES, L.P., )
INSPERITY RETIREMENT PLAN )
COMMITTEE, and JOHN DOES )
1-20, )
)
Defendants. )
)
INSPERITY DEFENDANTS’ REPLY IN FURTHER SUPPORT OF THEIR
STATEMENT OF UNDISPUTED MATERIAL FACTS AND RESPONSE TO
PLAINTIFFS’ STATEMENT OF ADDITIONAL MATERIAL FACTS
Insperity, Inc. (“Insperity”), Insperity Holdings, Inc. (“Holdings”), and
Insperity Retirement Services, L.P. (“Retirement Services) (collectively, the
“Insperity Defendants”), hereby reply to Plaintiffs’ Responses to Insperity
Defendants’ Statement of Undisputed Material Facts (“SFs”) and respond to
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Plaintiffs’ Statement of Additional Material Facts (“AMFs”) (ECF No. 160-1) in
further support of their Motion for Summary Judgment (“Motion”) as follows1:
REPLY IN FURTHER SUPPORT OF THE INSPERITY DEFENDANTS’
STATEMENT OF UNDISPUTED MATERIAL FACTS
1. Insperity, Inc. (“Insperity”) (formerly “Administaff, Inc.”) is a
publicly-traded company headquartered in Kingwood, Texas. See Insperity, Inc.
Form 10-K (2015) (NSP-000011394) (Ex. 13).
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 1, therefore their Response does not create a
genuine issue of material fact.
2. Insperity is one of the nation’s largest “professional employer
organizations” (a “PEO”). (Id.)
Response: Disputed. The citation does not support the movant’s fact. The
annual report states that Insperity “believes” it “is one of the largest PEO service
providers in the United States.” Ex. 13 at 15 [Doc. 134-14].2
1 “Ex. ##” (for Ex. 1 through Ex. 92) references the exhibits filed in Support of
Defendants’ Statement of Undisputed Material Facts in Support of the Insperity
Defendants’ Motion for Summary Judgment [Doc. 134]; and “Exhibit P##”
references the exhibits filed in Support of Plaintiffs’ Responses to Statements of
Undisputed Material Facts in Support of the Defendants’ Motions for Summary
Judgment [Doc. 163]. “Doc.” page references are to the CM/ECF header page
number.
2 “Doc.” page references are to the CM/ECF header page number.
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Reply: Plaintiffs fail to show how the citation does not support SF ¶ 2. The
Insperity Defendants’ “belief” regarding this fact is unrebutted and undisputed, since
Plaintiffs’ response does not cite any evidence to the contrary. Consequently, SF ¶
2 should be deemed admitted.
3. Insperity, through wholly-owned subsidiaries, provides off-site full-
service human resources and business solutions to small- and medium- sized U.S.
businesses. (Id.)
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 3, therefore their Response does not create a
genuine issue of material fact.
4. Insperity Holdings, Inc. (“Holdings”) is a wholly-owned subsidiary of
Insperity. (Id.)
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 4, therefore their Response does not create a
genuine issue of material fact.
5. The National Association of Professional Employer Organizations
(“NAPEO”) describes PEOs as follows:
Professional employer organizations (PEOs) provide comprehensive HR
solutions for small businesses. Payroll, benefits, HR, tax administration, and
regulatory compliance assistance are some of the many services PEOs provide
to small and mid-sized businesses across the country. By taking care of
paperwork and providing regulatory compliance assistance, PEOs help
businesses improve productivity, increase profitability, and focus on their core
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mission. Through a PEO, the employees of small businesses gain access to
big-business employee benefits such as: 401(k) plans; health, dental, life, and
other insurance; dependent care; and other benefits they might not typically
receive as employees of a small company.
See https://www.napeo.org/what-is-a-peo/about-the-peo-industry/overview.
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 5, therefore their Response does not create a
genuine issue of material fact.
6. Insperity offers its client-employers and their employees the option to
participate in the Insperity 401(k) Plan (the “Plan”). See Insperity 401(k) Plan
(amended and restated effective January 1, 2014) (NSP-000010901) (Ex. 1).
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 6, therefore their Response does not create a
genuine issue of material fact.
7. The Plan is a defined contribution, individual account, retirement
benefit plan under the Employee Retirement Income Security Act, as amended
(“ERISA”), 29 U.S.C. § 1002(2)(A) and § 1002(34). (Id.)
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 7, therefore their Response does not create a
genuine issue of material fact.
8. In or around December 2003, Holdings entered into a Trust Agreement
with Reliance Trust Company (“RTC”) (the “Trust Agreement”). See Trust
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Agreement (NSP-000010904) (Ex. 2).
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 8, therefore their Response does not create a
genuine issue of material fact.
9. The Trust Agreement is incorporated by reference into the Plan. See
Plan (Ex. 1) at § 7.1.
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 9, therefore their Response does not create a
genuine issue of material fact.
10. Holdings is the sponsor of the Plan. See Plan (Ex. 1) at § 2.12 (defining
the “Company” as “Insperity Holdings, Inc.”); see also Trust Agreement (Ex. 2) at
§ 1.11.
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 10, therefore their Response does not create a
genuine issue of material fact.
11. Holdings is the “named fiduciary” responsible for the administration of
the Plan. See Plan (Ex. 1) at § 2.4 (defining the “Administrator” as the “Company”);
§ 2.12 (defining the “Company” as “Insperity Holdings, Inc.”); and § 10.1 (noting
the Administrator is a fiduciary).
Response: Admitted.
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Reply: Plaintiffs admit SF ¶ 11, therefore their Response does not create a
genuine issue of material fact.
12. Under the express terms of the Plan, Holdings is responsible for
“appoint[ing]” the recordkeeper for the Plan. See Plan (Ex. 1) at § 2.60 (defining the
“recordkeeper” to mean the “corporation or other entity appointed by the Company
to keep the records (including electronic records such as voice instructions) under the
Plan.”).
Response: Disputed in part. The citation does not support the movant’s
citation. Section 2.60 of the Plan defines the recordkeeper to mean “the corporation
or entity appointed by the Company to keep the records…under the Plan.” Ex. 1 at
13 [Doc. 134-2]. Section 10.2 provides that Holdings has “sole discretionary
authority…to control and manage the operation and administration of the Plan” and
the authority to “appoint such accountants, counsel, specialists, and other persons as
it deems necessary or desirable in connection with the administration of this Plan.”
Id. at 55.
Reply: Plaintiffs fail to show how the citation does not support the SF ¶
12. Section 2.12 of the Plan defines the “Company” as “Insperity Holdings, Inc.”
See Plan (Ex. 1), [Doc. 134-2]. As admitted by Plaintiffs, “Section 2.60 of the Plan
defines the recordkeeper to mean ‘the corporation or entity appointed by the
Company to keep the records…under the Plan.’” Thus, as “the Company,” Holdings
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is responsible for “appoint[ing]” the recordkeeper for the Plan. Plaintiffs’ citation
to Section 10.2 of the Plan further confirms that Holdings has the authority to appoint
the Plan’s recordkeeper. Consequently, SF ¶ 12 should be deemed admitted.
13. Section § 10.2 of the Plan states that Holdings has the “sole
discretionary authority to . . . control and manage the operation and administration of
the Plan and shall have all powers, authority and discretion necessary or appropriate
to carry out the Plan provisions.” See Plan (Ex. 1) at § 10.2.
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 13, therefore their Response does not create a
genuine issue of material fact.
14. Section 10.1 of the Plan states that “to prevent any two parties to the
Plan from being deemed co-fiduciaries with respect to a particular function, both the
Plan and Trust Agreement are intended, and should be construed, to allocate to each
party to the Plan only those specific powers, duties, responsibilities, and obligations
as are specifically granted to it under the Plan or Trust Agreement.” See Plan (Ex.
1) at § 10.1.
Response: Objection. The movant’s fact is not material and of no
consequence in determining the action. 29 U.S.C. §1105(a).
Reply: Plaintiffs fail to show how SF ¶ 14 is not material. Section 10.1 of the
Plan is not inconsistent with ERISA § 405(a), 29 U.S.C. §1105(a). Indeed, ERISA
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§ 405(c), 29 U.S.C. § 1105(c) expressly allows for the allocation of fiduciary
responsibilities provided in Section 10.1 of the Plan. An unambiguous plan term
“must be followed” by the plan’s fiduciaries so long as it is “not inconsistent with
any statutory requirement of ERISA.” Ward v. Ret. Bd. of Bert Bell/Pete Rozelle
NFL Player Ret. Plan, 643 F.3d 1331, 1334 (11th Cir. 2011). Accordingly,
Plaintiffs’ objection should be overruled. Consequently, SF ¶ 14 should be deemed
admitted.
15. Section 10.3 of the Plan states that Holdings may “delegate or allocate,
from time to time, by a written instrument, all or any part of its responsibilities under
the Plan.” See Plan (Ex. 1) at § 10.3.
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 15, therefore their Response does not create a
genuine issue of material fact.
16. Section 10.3 of the Plan states that by delegating duties to another
entity, Holdings “shall not be liable for any acts or omissions of any such person,
who shall periodically report to the Administrator, as applicable, concerning the
discharge of the delegated or allocated responsibilities.” See Plan (Ex. 1) at § 10.3.
Response: Objection. The movant’s fact is not material and of no
consequence in determining the action. 29 U.S.C. §1105(a).
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Reply: Plaintiffs fail to show how SF ¶ 16 is not material for the reasons stated
in the Reply to SF ¶ 14. Accordingly, Plaintiffs’ objection should be overruled.
Consequently, SF ¶ 16 should be deemed admitted.
17. Section 10.4 of the Plan states that the Plan “is intended to allocate to
each named fiduciary the individual responsibility for the prudent execution of the
functions assigned to it, and none of such responsibilities or any other responsibility
shall be shared by two or more of such named fiduciaries unless such sharing is
provided for by a specific provision of the Plan. Whenever one named fiduciary is
required herein to follow the directions of another named fiduciary, the two named
fiduciaries shall not be deemed to have been assigned a shared responsibility, but the
responsibility of a named fiduciary receiving such directions shall be to follow them
insofar as such instructions are on their face proper under applicable law.” See Plan
(Ex. 1) at § 10.4.
Response: Objection. The movant’s fact is not material and of no
consequence in determining the action. 29 U.S.C. §1105(a). Disputed. The record
demonstrates that Holdings disregarded this provision as it exercised discretionary
authority or discretionary control respecting the addition of the Insperity Horizon
Risk-Managed Funds. See, e.g., Exhibit P1 (Depo. Exhibit 67
(RTCPLEDGER000304859)).
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Reply: Plaintiffs fail to show how SF ¶ 17 is not material for the reasons stated
in the Reply to SF ¶ 14. Plaintiffs’ challenge to SF ¶ 17 also does not create a genuine
disputed issue of material fact. SF ¶ 17 simply quotes from the Plan and Plaintiffs
do not dispute that the Plan has been accurately quoted.
Instead, Plaintiffs direct the Court to Exhibit P1 to support a different
argument outside of SF ¶ 17. Plaintiffs rely on Exhibit P1 (an e-mail from William
Harlow to [Names] on [Date]) to suggest that William Harlow and Richard Rawson
“closed the deal” regarding the Horizon Funds in October 2011. (Pl. Brief at 13.)
Plaintiffs then interpret Exhibit P1 as suggesting that Holdings retained some
“discretionary authority or control” with respect to the addition of the Horizon Funds
in the Plan.
Exhibit P1 includes inadmissible hearsay under Fed. R. Evid. 802 to the extent
Plaintiffs have offered it as evidence of an alleged out of Court statement by Mr.
Rawson related to an alleged “deal” with regard to RTC’s selection of the Horizon
Funds. Although the email itself may be admissible as a business record, the hearsay
within the hearsay content of the email (Mr. Rawson’s alleged verbal agreement to
such a “deal”) is not saved from exclusion under any of the exceptions to the hearsay
rule. Thus there is no admissible evidence of any such “deal”.
Furthermore, Exhibit P1 does not create a genuine dispute regarding the
language as written in Section 10.4 of the Plan.
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Further, Plaintiffs’ reliance on Exhibit P1 in their Response ignores the
testimony of William Harlow himself (the author of Exhibit P1). In his deposition,
Plaintiffs’ counsel directly asked Mr. Harlow about this very mail, to which he
replied, “[Exhibit P1 is] a misrepresentation of -- of where we were. I mean, I -- I
did not have the – the authority to close the deal. It had to go through the investment
policy committee.” Deposition of William Harlow (“Harlow Dep.”) at 114:1-115:12
(attached hereto as Ex. 93). Plaintiffs also ignore unrefuted testimony from Mr.
Harlow himself, confirming that investment selection was solely RTC’s fiduciary
responsibility. Harlow Dep. at 151:15-154:6 (Ex. 43). Finally, Plaintiffs’ Response
also ignores the testimony of Richard Rawson, who testified that he did not reach
any purported agreement with Mr. Harlow to offer collective trust target date funds
in the Plan in October, 2011. Deposition of Richard Rawson (“Rawson Dep.”) at
133:11-135:17 (attached hereto as Ex. 94). Thus, Plaintiffs’ cited evidence does not
support the contention in their Response that Insperity “exercised discretionary
authority or discretionary control respecting the addition of the Insperity Horizon
Risk-Managed Funds.” Consequently, SF ¶ 17 should be deemed admitted.
18. Effective May 13, 2002, the Internal Revenue Service (“IRS”) issued
Revenue Procedure 2002-21 (May 13, 2002) (NSP-000011045) (Ex. 14).
Response: Admitted.
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Reply: Plaintiffs admit SF ¶ 18, therefore their Response does not create a
genuine issue of material fact.
19. IRS Revenue Procedure 2002-21 was further supplemented by Revenue
Procedure 2003-86 (December 15, 2003) (NSP-000011046) (Ex. 15).3
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 19, therefore their Response does not create a
genuine issue of material fact.
20. The Rev. Proc held that, in order to avoid plan disqualification, PEO-
sponsored plans had to be operated as a “multiple employer plan.” See Rev. Proc.
2002-21 (May 13, 2002) (NSP-000011045) (Ex. 14) at p. 2 (“Under the approach
provided in this revenue procedure, a PEO that maintains a defined contribution
retirement plan may establish a multiple employer plan that benefits Worksite
Employees.”).
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 20, therefore their Response does not create a
genuine issue of material fact.
21. The Rev. Proc. states, in pertinent part: “An employee’s service with
all of the employers participating in the plan is taken into account for the purposes of
3 Revenue Procedure 2002-21 and Revenue Procedure 2003-86 are collectively
referred to herein as the “Rev. Proc.”
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vesting under [Code] § 411 and plan participation under § 410(a). Similarly, for
purposes of the contribution and benefit limitations of § 415, an employee’s
compensation from all employers participating in the plan is taken into account.
Other rules apply separately to each participating employer and its employees. For
example, non-discrimination testing under § 401(a)(4) and § 401(k), and coverage
testing under § 410(b), are performed separately for each employer maintaining the
multiple employer plan. Top-heavy requirements under § 416 also apply separately
to each employer.” See Rev. Proc. 2002-21 (May 13, 2002) (NSP-000011045) (Ex.
14) at pp. 4-5 (citations omitted).
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 21, therefore their Response does not create a
genuine issue of material fact.
22. Issuance of the Rev. Proc. “completely changed how a PEO would offer
its 401(k) to participants.” See Excerpts from the Deposition of Richard Rawson
(“Rawson Dep.”) (Ex. 16) at 118:15-119:11.
Response: Disputed. The Rev. Proc. set forth the procedure that should be
followed to ensure the qualified status of a defined contribution plan maintained by
a PEO, Ex. 14 [Doc. 134-15], as opposed to the manner in which a PEO would
“offer” such plan to its worksite employees.
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Reply: Plaintiffs’ dispute of SF ¶ 22 does not create a genuine issue of
material fact. SF ¶ 22 contains a quote from Mr. Rawson’s deposition testimony
regarding how the Rev. Proc affected Insperity, as a PEO, concerning its Plan.
Plaintiffs do not refute SF ¶ 22 with any evidence. Instead, Plaintiffs direct the Court
to the Rev. Proc. to make a different argument outside of SF ¶ 22 concerning the
contents of the Rev. Proc. However, SF ¶ 22 does not concern the contents of the
Rev. Proc., but rather Mr. Rawson’s perception of how the Rev. Proc. impacted a
PEO’s offer of a 401(k) plan. Consequently, SF ¶ 22 should be deemed admitted.
23. A “covered entity” means each client that has elected to participate in
the Plan and has an agreement in effect authorizing it to be treated for Plan
qualification purposes as though it was participating in the Plan. See Plan (Ex. 1) at
§ 2.17.
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 23, therefore their Response does not create a
genuine issue of material fact.
24. During the Class Period (2010-2016), there have been approximately
2,300 - 3,000 active “covered entities” (i.e., client-employers) participating in the
Plan at the end of each year. See Affidavit of John Stanton (“Stanton Aff.”) (Ex. 17)
at ¶¶ 20-21; pertinent pages of the Retirement Services Metrics – Plan Year 2016
(NSP-000011874) (Ex. 18).
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Response: Admitted.
Reply: Plaintiffs admit SF ¶ 24, therefore their Response does not create a
genuine issue of material fact.
25. Specifically, there were 2,380 active “covered entities” at the end of
2010, 2,658 active “covered entities” at the end of 2011, 2,504 active “covered
entities” at the end of 2012, 2,412 active “covered entities” at the end of 2013, 2,484
active “covered entities” at the end of 2014, 2,912 active “covered entities” at the
end of 2015 and 3,049 active “covered entities” at the end of 2016. (Id.)
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 25, therefore their Response does not create a
genuine issue of material fact.
26. Hundreds of these “covered entities” and their employees were added
to the Plan each year of the Class Period. (Id.)
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 26, therefore their Response does not create a
genuine issue of material fact.
27. In 2010 there were 550 new Plan client set-ups, 187 new clients with
assets requiring conversion, and 3,298 new participants merged into the Plan. (Id.)
Response: Admitted.
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Reply: Plaintiffs admit SF ¶ 27, therefore their Response does not create a
genuine issue of material fact.
28. In 2011 there were 591 new Plan client set-ups, 198 new clients with
assets requiring conversion, and 3,334 new participants merged into the Plan. (Id.)
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 28, therefore their Response does not create a
genuine issue of material fact.
29. In 2012 there were 614 new Plan client set-ups, 179 new clients with
assets requiring conversion, and 3,705 new participants merged into the Plan. (Id.)
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 29, therefore their Response does not create a
genuine issue of material fact.
30. In 2013 there were 426 new Plan client set-ups, 157 new clients with
assets requiring conversion, and 2,069 new participants merged into the Plan. (Id.)
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 30, therefore their Response does not create a
genuine issue of material fact.
31. In 2014 there were 503 new Plan client set-ups, 148 new clients with
assets requiring conversion, and 6,301 new participants merged into the Plan. (Id.)
Response: Admitted.
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Reply: Plaintiffs admit SF ¶ 31, therefore their Response does not create a
genuine issue of material fact.
32. In 2015 there were 543 new Plan client set-ups, 197 new clients with
assets requiring conversion, and 7,033 new participants merged into the Plan. (Id.)
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 32, therefore their Response does not create a
genuine issue of material fact.
33. In 2016 there were 519 new Plan client set-ups, 220 new clients with
assets requiring conversion, and 7,284 new participants merged into the Plan. (Id.)
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 33, therefore their Response does not create a
genuine issue of material fact.
34. Before the Rev. Proc., Fidelity performed the recordkeeping and
administrative services for the Plan. See Rawson Dep. (Ex. 16) at 118:11-121:21.
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 34, therefore their Response does not create a
genuine issue of material fact.
35. Soon after the issuance of the Rev. Proc., Fidelity indicated that the cost
to perform the requisite “client level testing,” would be too much for the Plan to
“afford.” (Id.)
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Response: Objection. The statement of a non-party offered for the truth of the
matter asserted is hearsay. Fed. R. Evid. 802. The statement lacks foundation as Mr.
Rawson did not remember receiving any fee quote from Fidelity for recordkeeping
services following the issuance of the Rev. Proc. Exhibit P2 (Rawson Dep. 122:18–
123:3).
Reply: Plaintiffs fail to state a valid objection to the admissibility of SF ¶ 35.
SF ¶ 35 is not hearsay because it is not being offered to prove the truth of the matter
asserted. It is being offered to prove that Fidelity made the statement at issue to Mr.
Rawson, not that the statement itself was true. See U.S. Faucets, Inc. v. Home Depot
U.S.A. Inc., No. 1:03-CV-1572WSD, 2006 WL 1518887, at *9 (N.D. Ga. May 31,
2006); Fed. R. Evid. 801(c). Regardless of whether Fidelity’s statement was true, it
impacted Insperity’s decision to provide the Plan’s recordkeeping in-house after
issuance of the Rev. Proc. That is its relevance, and that is the purpose of offering
Fidelity’s statement as an undisputed fact. SF ¶ 35 does not lack foundation because
it is supported by deposition testimony of Mr. Rawson regarding his conversation
with Fidelity. The additional fact that Mr. Rawson does not remember receiving any
fee quote from Fidelity is irrelevant to whether Fidelity made the statement at issue
in SF ¶ 35. Plaintiffs have not offered any evidence to refute Mr. Rawson’s
testimony that Fidelity made the statement at issue in SF ¶ 35. Consequently, SF ¶
35 should be deemed admitted.
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36. Holdings concluded it had “no choice but to go into the recordkeeping
business.” (Id.)
Response: Disputed. As of 2003, third-party service providers were available
to provide recordkeeping and administrative services to the Plan. Ex. P2 at XX
(Rawson Dep. 119:12–19); Exhibit P157 (March 1, 2018 Expert Report of Jania
Stout, ¶150). Holdings did not investigate what other PEOs did with respect to the
provision of recordkeeping and administrative services for their 401(k) plans
following the Rev. Proc. evaluate the choices available to the Plan. Id. (Rawson Dep.
123:22–124:7).
Reply: Plaintiffs’ dispute of SF ¶ 36 does not create a genuine issue of
material fact. SF ¶ 36 concerns Holdings’ conclusion in 2003 that the Rev. Proc.
made third-party recordkeeping arrangements prohibitively expensive. Plaintiffs do
not argue that SF ¶ 36 misquotes Mr. Rawson’s testimony establishing this fact, nor
do Plaintiffs point to any evidence showing that Mr. Rawson or others at Holdings
came to a different conclusion.
Instead, Plaintiffs’ response references additional facts in support of a
different issue outside of SF ¶ 36. Plaintiffs’ response alleges that there were third-
party recordkeepers available (without regard to cost). In addition to being
irrelevant, Plaintiffs’ citation to Mr. Rawson’s deposition testimony does not support
their response. In the cited testimony, Mr. Rawson simply stated that he did not
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“remember [what third-party recordkeeping service providers] might have been
available at the time.” Rawson Dep. at 119:12-19 (Ex. 16). Plaintiffs’ citation to
Ms. Stout is also unavailing, as the cited paragraph in her report is a conclusory
statement of fact unsupported by any other evidence or authority, and she offers no
opinion as to what other recordkeepers would have charged for services to the Plan.
In addition, Ms. Stout’s opinions should be excluded for the reasons stated in the
Insperity Defendants’ Motion to Exclude Proffered Testimony of Plaintiffs’ Expert
Jania Stout (“Stout Daubert Motion”), filed contemporaneously herewith.
Regardless, the existence of third-party recordkeepers, without any evidence as to
what they would have charged for the services at issues, is immaterial and irrelevant
to whether Holdings concluded it had no reasonably-priced third-party
recordkeeping option. Consequently, SF ¶ 36 should be deemed admitted.
37. Holdings established a new subsidiary (Retirement Services) to provide
the necessary recordkeeping services for this Plan in compliance with this new Rev.
Proc. (Id.)
Response: Disputed. The 2003 annual report filed by Insperity with the
Securities and Exchange Commission states that it “formed Administaff Retirement
Services, L.P.” Administaff, Inc., Form 10-K (Dec. 31, 2003),
https://www.sec.gov/Archives/edgar/data/1000753/000095012904000788/h12965e
10vk.htm).
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Reply: Plaintiffs’ dispute of SF ¶ 37 does not create a genuine issue of
material fact. Plaintiffs do not dispute that Retirement Services was created to
provide the necessary recordkeeping services for the Plan in compliance with the
Rev. Proc., but only dispute which corporate entity—Holdings or Insperity, Inc. —
technically formed Retirement Services. Plaintiffs challenge is an immaterial
technicality. Thus, the fact that Retirement Services was created to provide the
necessary recordkeeping services for the Plan in compliance with the Rev. Proc.
Consequently, SF ¶ 37 should be deemed admitted.
38. Retirement Services has performed all recordkeeping and
administrative services for the Plan since 2003. See Trust Agreement (Ex. 2) at §
1.12; see also Rawson Dep. (Ex. 16) at 122:5-17.
Response: Disputed. Retirement Services contracted with “subservice
organizations” in performing recordkeeping and administrative services to the Plan,
such as Sungard Employee Benefits Systems for recordkeeping software for data
processing and related services, Relius for assistance in preparing plan documents,
ASC for testing and government reporting, NewKirk for enrollment kits, and
Pinnacle for pricing and mailing participant statements, among others. Exhibit P3
at 1 ((NSP-000081625) at *625).
Reply: Plaintiffs’ dispute of SF ¶ 38 does not create a genuine issue of
material fact. The additional fact that Retirement Services––like countless business
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organizations––utilizes subcontractors for tasks such as data processing and mailing
does not change the fact that Retirement Services is the Plan’s sole recordkeeper and
administrator. Plaintiffs challenge is an immaterial technicality. Indeed, the
evidence cited in Plaintiffs’ response notes: “Retirement Services uses several
subservice organizations to support the processing of transactions for [Retirement
Services].” Exhibit P3 at 1. Ultimately, all recordkeeping and administrative
services were provided by or through Retirement Services for the Plan since 2003.
Consequently, SF ¶ 38 should be deemed admitted.
39. Retirement Services is responsible for performing all of the
administrative and recordkeeping functions for the Plan, including, but not limited
to: (1) maintaining participant records; (2) allocating contributions to participant
accounts; (3) preparing quarterly participant benefit statements; (4) determining
income tax withholding on distributions; (5) preparing and furnishing tax
information to participants; (6) reporting to government agencies; (7) maintaining
income tax withholding and loan records; (8) preparing the Annual Report (Form
5500) and other filings; (9) performing annual non-discrimination, coverage, and
top-heavy testing; (10) responding to document and information requests from
participants; (11) drafting and disseminating participant communications and
requisite disclosures; and (12) reviewing and processing hardship withdrawal,
distribution and loan requests. Stanton Aff. (Ex. 17) at ¶ 3.
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Response: Disputed. This is an overly broad statement and not “concise”, and
covers over an eight-year period in violation of LR 56.1 B.(1). See LR 56.1
B.(2)(a)(2). There is no written agreement that sets forth the recordkeeping and
administrative services that Retirement Services was “responsible” for performing
the Plan. Exhibit P4 (Daniel Herink Dep. 151:19–153:18); Exhibit P5 (John
Stanton Dep. 87:14–89:8); Exhibit P6 (Lance Studdard Dep. 62:11–64:10).
Retirement Services contracted with “subservice organizations” in performing
recordkeeping and administrative services to the Plan, such as Sungard Employee
Benefits Systems for recordkeeping software for data processing and related
services, Relius for assistance in preparing plan documents, ASC for testing and
government reporting, NewKirk for enrollment kits, and Pinnacle for printing and
mailing participant statements, among others. Exhibit P3 at 1 ((NSP-000081625) at
*625).
Reply: Plaintiffs’ dispute of SF ¶ 39 does not create a genuine issue of
material fact. Plaintiffs fail to show how SF ¶ 39 is overly broad or on what basis it
is not concise.4 Plaintiffs do not dispute the validity or admissibility of the Affidavit
4 Plaintiffs’ response here and throughout is longer than the original fact, thus
negating any objection based on conciseness. LR 56.1(B)(2)(a)(1) requires
Plaintiffs’ response to also be concise. See Walker v. United States, IRS, No. 4:07-
CV-0102-HLM, 2009 WL 1241929, at *3–4 (N.D. Ga. Feb. 26, 2009) (“[P]laintiffs
must remember that a response to a statement of undisputed material facts is not an
opportunity to write another brief. If the fact stated is true, admit it. If the fact is
legitimately disputed, then say why, cite the evidence that supports the denial, and
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of John Stanton wherein he describes the services performed by Retirement Services
for the Plan. Rather than dispute the fact that Retirement Services provided the
specific services described in SF ¶ 39, Plaintiffs’ response focuses on other issues.
In this regard, Plaintiffs’ response is incorrect that there was no written agreement
with Retirement Services. As explained in SF ¶¶ 43-50, Retirement Services and
RTC entered into a Credit Agreement which includes a non-exhaustive list of the
types of operating expenses for which Retirement Services may seek reimbursement.
In addition to, and complimentary with, the Credit Agreement, there is an
arrangement between Retirement Services and the Plan regarding recordkeeping and
administrative services. The deposition excerpts cited in Plaintiffs’ Response to SF
¶ 39 support the existence of such arrangement. See Herink Dep. at 151:19–153:18
(Exhibit P4) (“the Trust Agreement [names] Administaff Retirement Services as
recordkeeper. . . Reliance approv[es] expenses for reasonableness, for being able to
be reimbursed under ERISA, and [it is] a pretty straightforward reasonable
arrangement”); Stanton Dep. at 87:14–89:8 (Exhibit P5) (“[t]here is an arrangement
between us within Insperity to provide the services. It was tasked to me and my team
to provide those services”). Finally, Plaintiffs’ additional fact regarding Retirement
stop.”) (internal citations omitted); Anderson v. Brown Indus., Inc., No. 4:11-CV-
0225-HLM-WEJ, 2012 WL 12501083, at *1 (N.D. Ga. Nov. 5, 2012) (finding
“extensive, sometimes multi-page arguments” in a 29-page response were not
“concise” as required under the local rules).
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Services’ use of subservice organizations is irrelevant for the reasons stated in the
Reply to SF ¶ 38. Consequently, SF ¶ 39 should be deemed admitted.
40. Under the terms of the Trust Agreement, RTC agreed to perform certain
duties, such as custody of Plan assets and various necessary accounting functions.
See Trust Agreement (Ex. 2) at §§ 3.1; 4.1; 5.1-5.3; 6.1.
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 40, therefore their Response does not create a
genuine issue of material fact.
41. Under the terms of the Trust Agreement, Holdings delegated to RTC,
and RTC accepted, responsibility for reviewing and approving all Plan expenses as
“reasonable in amount” and “appropriate for reimbursement under the applicable
provisions of ERISA and under the general policies and procedures [RTC] has
adopted (and provided to the Administrator).” Id. at § 3.4.
Response: Disputed in part. Reliance Trust did not have discretionary
authority or control over the share classes used for the Plan’s investment options and
the revenue sharing that would be generated from Plan investments to be used to pay
Plan expenses. See, e.g., Exhibit P7 (Depo. Exhibit 119 (NSP-000014054); Exhibit
P8 (Depo. Exhibit 85 (RTCPLEDGER00093411); Exhibit P9
(RTCPLEDGER00151180).
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Reply: Plaintiffs’ partial dispute of SF ¶ 41 does not create a genuine issue of
material fact. Plaintiffs do not dispute that Holdings delegated to RTC, and RTC
accepted, responsibility for reviewing and approving all Plan expenses for
reimbursement under the applicable provisions of ERISA and under RTC’s policies
and procedures.
Instead, Plaintiffs’ response addresses a different issue, namely whether RTC
had discretion and control over decisions regarding the selection of share classes that
generate revenue share to cover the Plan’s expenses. In that regard, the Trust
Agreement establishes, as a matter of law, that RTC was delegated and accepted
discretionary authority and control over all decisions regarding the Plan’s
investments. See Trust Agreement (Ex. 2) at § 3.2. There is no carve out or
exception with regard to decisions regarding the selection of appropriate share
classes. Id. Moreover, the evidence cited by Plaintiffs in this response does not
raise any genuine issue of fact with regard to RTC’s authority or control over the
selection of share classes. Plaintiffs direct the Court to Exhibit P7, which is email
correspondence between Mr. Cotter and Mr. Stanton, where Mr. Cotter receives
input from Mr. Stanton regarding share class preferences. Similarly, Exhibit P8
simply contains a half page of notes from Mr. Cotter with a single reference to a
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27
conversation with Mr. Rawson identifying Mr. Rawson’s preferences.5
Furthermore, Plaintiffs ignore testimony from Mr. Cotter himself on this very issue.
See Cotter Dep. at 185:21-187:25 (attached hereto as Ex. 95) (“[RTC] already had
ultimate responsibility for the decision making of the investments that we put in the
plan, but we felt that listening to their feedback on that -- on that topic and taking
that into account was important . . . [w]e didn't take it as marching orders, but we --
we took that [feedback] into account”); id. at 203:10-206:25 (“we selected the fund
that was used”).
Finally, Plaintiffs direct the Court to Exhibit P9, in which Mr. Buckles states
in an email, “I think it is their decision if they want to utilize revenue sharing or not”
to offset expenses. In citing this email, Plaintiffs confuse the plan design function
of whether to use revenue sharing as the means for how the funds should be collected
to cover the Plan’s expenses (i.e., revenue sharing versus participant fees), with the
operational function of selecting specific share classes to generate a sufficient
amount of revenue to offset expenses. This distinction is significant, and is discussed
in the Insperity Defendants’ Reply in Support of Summary Judgment at pp. 3-5.
Plaintiffs again ignore unrefuted testimony from Mr. Harlow himself, confirming
that investment selection was solely RTC’s fiduciary responsibility. Harlow Dep. at
5 The notes reflecting the substance of the conversation with Mr. Rawson in this
document is inadmissible hearsay under Fed. R. Evid. 802.
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151:15-154:6 (Ex. 43). Thus, none of Plaintiffs’ cited authority creates a genuine
dispute regarding SF ¶ 41. Moreover, Plaintiffs’ unrelated issue and their
contentions regarding whether RTC or Retirement Services had the authority and
responsibility for the selection of share classes is contradicted by the evidence they
cite, as well as other undisputed evidence. Consequently, SF ¶ 41 should be deemed
admitted.
42. The Trust Agreement states that RTC “shall be required to review any
expenses and fees the Plan Sponsor, its ERISA Affiliates or third parties incur in
connection with their performance of services for the Plan or Trust.” See Trust
Agreement (Ex. 2) at § 3.4.
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 42, therefore their Response does not create a
genuine issue of material fact.
43. Effective May 19, 2008, Retirement Services (formerly “Administaff
Retirement Services, L.P.”) and RTC (as trustee of the Plan and the Insperity
Corporate 401(k) Plan) entered into a Credit Agreement (the “Credit Agreement”).
See Credit Agreement between Administaff Retirement Services, L.P. and RTC
(NSP-000016856-0004) (Ex. 19).
Response: Objection. The movant’s fact is not material and of no
consequence in determining the action. The Credit Agreement is irrelevant. Fed. R.
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Evid. 402. The Agreement is not a written contract between the Plan and Retirement
Services for the provision of recordkeeping and administrative services. It neither
identifies the services to be provided nor the compensation Retirement Services
would receive for services provided to the Plan.
Reply: Plaintiffs fail to show how SF ¶ 43 and the Credit Agreement is not
material. As explained in SF ¶¶ 43-50 and Reply to SF ¶ 39, the Credit Agreement
(Ex. 19) includes a non-exhaustive list of the types of expenses for which Retirement
Services may seek reimbursement. In the Credit Agreement, the Plan’s Trustee,
RTC, does identify specific services that Retirement Services provided to the Plan,
as well a commitment to reimburse Retirement Services for expenses incurred in
providing such services. The document speaks for itself in this regard. The Credit
Agreement is a contract between Retirement Services and RTC as trustee for the
Plan. Thus, SF ¶ 43 is clearly material to the issues in this case related to these
reimbursed expenses. Accordingly, Plaintiffs’ objection should be overruled and SF
¶ 43 should be deemed admitted.
44. The Credit Agreement states that “in the ordinary course of operations
of the Plans, and in accordance with the terms of the Plans, the Plans incur certain
operating expenses incidental to their ordinary operation, including, by way of
example and not limitation, trustee, recordkeeping, accounting and audit fees and
expenses.” Id. at p. 1.
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Response: Objection. See supra response to No. 43.
Reply: Plaintiffs fail to show how SF ¶ 44 is not material for the reasons stated
in the Reply to SF ¶ 43. Accordingly, Plaintiffs’ objection should be overruled and
SF ¶ 44 should be deemed admitted.
45. The Credit Agreement acknowledges that Retirement Services may,
from time to time, “advance” funds to pay operating expenses of the Plans as they
come due, thereby extending credit to the Plans in the amount of such advances. Id.
at p. 1.
Response: Objection. See supra response to No. 43.
Reply: Plaintiffs fail to show how SF ¶ 45 is not material for the reasons stated
in the Reply to SF ¶ 43. Accordingly, Plaintiffs’ objection should be overruled and
SF ¶ 45 should be deemed admitted.
46. The Credit Agreement states that Retirement Services “incurs certain
other expenses incidental to the ordinary operation of the Plans for which it is
entitled to reimbursement under the terms of the Plans and extends further credit to
the Plans in the form of delayed quarterly billing to the Trustee for approval for
payment of such reimbursement.” Id. at p. 1.
Response: Objection. See supra response to No. 43.
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Reply: Plaintiffs fail to show how SF ¶ 46 is not material for the reasons stated
in the Reply to SF ¶ 43. Accordingly, Plaintiffs’ objection should be overruled and
SF ¶ 46 should be deemed admitted.
47. The Credit Agreement acknowledges the restrictions on prohibited
transactions under ERISA, and states that Retirement Services desires to enter into
the Credit Agreement for the express purpose of complying with ERISA and its
prohibited transaction provisions. Id. at p. 1.
Response: Objection. See supra response to No. 43. Disputed. The Credit
Agreement states that Retirement Services “desires to comply with PTE 80-26, as
amended from time to time, with respect to the transactions described in these
Recitals and is entering into this Agreement for that purpose” not “for the express
purpose of complying with ERISA and its prohibited transaction provisions.”
Reply: Plaintiffs fail to show how SF ¶ 47 is not material for the reasons stated
in the Reply to SF ¶ 43. Accordingly, Plaintiffs’ objection should be overruled.
Plaintiffs’ dispute of SF ¶ 47 also does not create a genuine issue of material fact.
Plaintiffs’ insinuation that SF ¶ 47 misquotes the Credit Agreement is disingenuous.
SF ¶ 47 does not purport to quote the Credit Agreement, but instead summarizes it.
Plaintiffs’ quotation from the Credit Agreement only supports this summary.
Consequently, SF ¶ 47 should be deemed admitted.
48. The Credit Agreement includes a non-exhaustive list of the types of
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32
operating expenses Retirement Services may incur in connection with the operation
of the Plans, and for which Retirement Services may seek reimbursement. Id. at
Attachment A.
Response: Objection. See supra response to No. 43. Disputed. Section 1 of
the Credit refers to Attachment A that set forth “the types of operating expenses
payable by the Plans for which [Retirement Services] may from time to time advance
funds for payment on behalf of the Plans” and notes that the payment of expenses is
“[s]ubject to approval by the Trustee”. Exhibit 19 at 3 [Doc. 134-20].
Reply: Plaintiffs fail to show how SF ¶ 48 is not material for the reasons stated
in the Reply to SF ¶ 43. Accordingly, Plaintiffs’ objection should be overruled.
Plaintiffs’ dispute of SF ¶ 48 also does not create a genuine issue of material fact for
the same reasons stated in the Reply to SF ¶ 47. Consequently, SF ¶ 48 should be
deemed admitted.
49. The Credit Agreement outlines an invoice and payment procedure for
Retirement Services to submit, and RTC to review and approve, reimbursement of
expenses incurred by Retirement Services. Id. at pp. 2-3.
Response: Objection. See supra response to No. 43.
Reply: Plaintiffs fail to show how SF ¶ 49 is not material for the reasons stated
in the Reply to SF ¶ 43. Accordingly, Plaintiffs’ objection should be overruled and
SF ¶ 49 should be deemed admitted.
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50. In addition to the Credit Agreement, RTC and Retirement Services have
documented additional procedures for the review and approval of expenses incurred
by Retirement Services in performing services to the Plan. See, e.g., Excerpts from
the Deposition of Lance Studdard (“Studdard Dep.”) (Ex. 20) at 42:5-43:1; see, e.g.,
Newly Reimbursable Expenses with Allocation Methodology (NSP-000017687)
(Ex. 21).
Response: Disputed. The citation does not support the movant’s fact. Mr.
Studdard does not identify the written procedures for review and approval of
expenses, and the Insperity Defendants do not provide evidentiary support that the
Insperity-authored Exhibit 21 was shared with Reliance Trust. They do not provide
evidentiary support that Exhibit 21 was used by both Reliance Trust and Retirement
Services for the review and approval of expenses in the ordinary course of business.
Reply: Plaintiffs’ dispute of SF ¶ 50 does not create a genuine issue of
material fact. Plaintiffs’ dispute ignores the unrefuted testimony from Mr. Studdard
cited in ¶ 50. Furthermore, Plaintiffs’ dispute mischaracterizes Ex. 21. Plaintiffs
suggest that Ex. 21 was not shared with RTC. However, Ex. 21 was an attachment
to an email from Dustin Boone (Retirement Services) to Jay Mullins (RTC). See
Cover Email to Ex. 21(NSP-000017683), attached hereto as Ex. 96. Thus, there is
evidence that Ex. 21 was exchanged between RTC and Retirement Services.
Consequently, SF ¶ 50 should be deemed admitted.
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51. Each Retirement Services employee keeps contemporaneous records of
his/her actual hours spent working on a given task for a specific plan or client,
including time spent working on the Plan. Stanton Aff. (Ex. 17) at ¶ 4.
Response: Disputed. The movant’s citation does not support the fact. Mr.
Stanton does not declare that he has personal knowledge to attest to the fact that
“each” employee of Retirement Services kept contemporaneous records. Fed. R.
Evid. 602. He does not declare that he verified that each hour recorded by Retirement
Services employees was accurately billed to a specific plan or client. Retirement
Services employees also allocated time to the Plan that was unrelated to specific
tasks performed for the Plan, which were referred to “general business” tasks. E.g.,
Exhibit 21 at 6 [Doc. 134-22]; Exhibit P10 at 73 (Depo. Exhibit 93 at
RTCPLEDGER00386351)).
Reply: Plaintiffs fail to show how the citation does not support SF ¶ 51. SF ¶
51 is an exact quote from Mr. Stanton’s affidavit. Further, Mr. Stanton does declare
he has personal knowledge of the facts contained in his affidavit, including the
quoted paragraph. Stanton Aff. at ¶ 1 (Ex. 17) [Doc. 134-18]. Mr. Stanton was
under no obligation to make the additional declarations at issue in Plaintiffs’
response. The additional fact that Retirement Services employees tracked some time
for “general business tasks” does not change the fact that employees kept
contemporaneous records of their time. Moreover, these time entries were reviewed
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and approved by RTC. See Studdard Dep. at 56:15-22 (Ex. 20); Deposition of Trey
Carter (“Carter Dep”) at 117:4-18 (Ex. 23). Plaintiffs have not offered any evidence
to refute Mr. Stanton’s affidavit and, consequently, SF ¶ 51 should be deemed
admitted.
52. Each task has been predetermined by RTC for potential eligibility for
reimbursement to the Plan and has been coded into a timekeeping system, which
runs on a NetSuite platform. Stanton Aff. (Ex. 17) at ¶ 5; see also Retirement
Services Timekeeping Task List (NSP-000021218) (Ex. 22).
Response: Disputed. The citation does not support movant’s fact. Mr. Stanton
does not declare that he has personal knowledge to completely testify to the process
or lack thereof employed by Reliance Trust. Fed. R. Evid. 602. He also does not
provide the basis for such statement, which if based on an out of court statement,
would be inadmissible hearsay. Fed. R. Evid. 802. The Insperity Defendants provide
no admissible evidence that Reliance Trust predetermined potential eligibility for
each task enumerated in Exhibit 22 [Doc. 134-22], when there appears be only a
discussion in early 2011 related to general categories of expenses for which
reimbursement may be sought. Exhibit P11 (Depo. Exhibit 16 (NSP-000017767));
Exhibit P12 at 2 (Depo. Exhibit 17 (NSP-000017769)). Reliance Trust purportedly
only determined whether “big picture items” were expensable, Exhibit P6 (Lance
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Studdard Dep. 57:14–24), rather than determining that each service performed by
each employee was necessary for the operation of the Plan.
Reply: Plaintiffs fail to show how the citation does not support SF ¶ 52 for
the reasons stated in the Reply to SF ¶ 51. Mr. Stanton’s affidavit is evidence of SF
¶ 52, and the fact that RTC predetermined potential eligibility for each task
enumerated in Ex. 22. Mr. Studdard’s deposition testimony is consistent with Mr.
Stanton’s affidavit. While Plaintiffs quote Mr. Studdard as stating RTC determined
whether “big picture items” were expensable, Mr. Studdard clarified that he defined
“big picture items” as the “categories of tasks that would have been considered for
reimbursement. And not just tasks, other things, just items that -- that would have
been considered for reimbursement.” Studdard Dep. 59:25-60:18 (Exhibit P6). Mr.
Studdard’s testimony, along with Mr. Stanton’s affidavit, shows Plaintiffs’ dispute
of SF ¶ 52 does not create a genuine issue of material fact. Consequently, SF ¶ 52
should be deemed admitted.
53. This time coding process is then reviewed by John Stanton
approximately every two years. Stanton Aff. (Ex. 17) at ¶ 6.
Response: Objection. The fact is vague and ambiguous, and thus Plaintiffs
cannot adequately respond. “Time coding process” is undefined, and Mr. Stanton
provides only conclusory statements without sufficient detail to enable Plaintiffs to
adequately respond. This conclusory assertion without supporting facts has no
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probative value. Leigh v. Warner Bros., 212 F.3d 1210, 1217 (11th Cir. 2000); Smith
v. Bibb Cty. Sch. Dist., No. 16-213, 2018 U.S.Dist.LEXIS 47036, at *30 (M.D. Ga.
Mar. 22, 2018).
Reply: Plaintiffs fail to show how SF ¶ 53 is vague and ambiguous. The “time
coding process” is neither vague nor ambiguous in the context of SFs ¶¶ 51-52 and
the cited affidavit from Mr. Stanton. Moreover, SF ¶ 53 contains a description of a
specific, discrete fact, supported by unrefuted affidavit. This is not a conclusory
statement. See Feliciano v. City of Miami Beach, 707 F.3d 1244, 1253 (11th Cir.
2013) (holding “descriptions of specific, discrete facts of the who, what, when, and
where variety” in a sworn statement were “non-conclusory”). Plaintiffs’ authority
fails to support its stated objection. See Leigh v. Warner Bros., 212 F.3d 1210, 1217
(11th Cir. 2000) (“[o]ne who resists summary judgment must meet the movant's
affidavits with opposing affidavits setting forth specific facts to show why there is
an issue for trial”) (quoting Gossett v. Du–Ra–Kel Corp., 569 F.2d 869, 872 (5th
Cir.1978)). Accordingly, Plaintiffs’ objection should be overruled and SF ¶ 53
should be deemed admitted.
54. Reimbursable hours incurred by Retirement Services employees are
then tabulated for a monthly reimbursement request/submission to RTC. Stanton
Aff. (Ex. 17) at ¶ 7.
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Response: Disputed. The hours for which Retirement Services sought
reimbursement were tabulated for a monthly reimbursement request/submission to
Reliance Trust. Plaintiffs dispute that such hours were properly reimbursable in
accordance with 29 U.S.C. §1108(b)(2) and 29 C.F.R. §2550.408b-2(a), and Mr.
Stanton’s affidavit does not satisfy the necessary elements under the exemption to
establish that such hours were reimburseable. Retirement Services also received
reimbursement for expenses that were incurred in 2010 during 2011, and thus the
monthly reimbursement submission process was not followed. See Exhibit 34 at 2
n. 3. (Depo. Exhibit 129)[Doc. 135-6].
Reply: Plaintiffs fail to show how the citation does not support SF ¶ 54 for
the reasons stated in the Replies to SF ¶¶ 51-52. Yet again, Plaintiffs have not
offered any evidence to refute Mr. Stanton’s affidavit. Because Plaintiffs cannot
demonstrate a genuine dispute of fact, they instead introduce a legal argument in
violation of LR 56.1(B)(2)(a)(1). This is improper. See Furr v. Polk Sch. Dist., No.
4:14-CV-0082-HLM-WEJ, 2015 WL 12591010, at *1, n.2 (N.D. Ga. June 5, 2015),
report and recommendation adopted, 2015 WL 12591009 (N.D. Ga. July 28, 2015)
(recommending grant of defendant’s motion for summary judgment and identifying
that “[m]any of plaintiff's responses contain multiple arguments, and in most cases
do not dispute the evidence supporting the particular [undisputed facts]”) (citing
Walker, 2009 WL 1241929, at *3–4)).
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Finally, Plaintiffs’ argument regarding payment in 2011 for certain expenses
incurred in 2010 is irrelevant. As identified in SF ¶ 50, in 2011, Retirement Services
began using the Newly Reimbursable Expenses with Allocation Methodology as a
guide, which provided for additional categories of expenses to be properly
reimbursed by the Plan. (NSP-000017687) (Ex. 21) [Doc. 134-22]. To the extent
any additional expenses incurred in 2010 were reimbursed in 2011, such expenses
could (and should) have been reimbursed by the Plan in 2010. Plaintiffs fail to show
how the additional fact of such corrective payments refutes SF ¶ 54 and,
consequently, SF ¶ 54 should be deemed admitted.
55. Retirement Services compiles and sends a monthly expense
reimbursement request to RTC. Stanton Aff. (Ex. 17) at ¶¶ 8, 10 and Attachment
A (March 2014 Expense submission) (NSP-000008665-8779).
Response: Disputed. The movant’s citation does not support the fact. Mr.
Stanton does not declare that he has personal knowledge to attest to the fact that
expense reimbursement requests were sent each month during the statutory period.
Fed. R. Evid. 602. He only declares in his declaration that such reimbursement
requests were prepared under his direction. Exhibit 17 ¶9 [Doc. 134-18]. Retirement
Services also received reimbursement for expenses that were incurred in 2010 during
2011, and thus the monthly reimbursement submission process was not followed.
See Exhibit 34 at 2 n. 3. (Depo. Exhibit 129)[Doc. 135-6].
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Reply: Plaintiffs fail to show how the citation does not support SF ¶ 55 for
the reasons stated in the Replies to SF ¶¶ 51-52 and 54. Plaintiffs’ argument
regarding payment in 2011 for certain expenses incurred in 2010 is irrelevant for the
reasons stated in the Reply to SF ¶ 54. Consequently, SF ¶ 55 should be deemed
admitted.
56. Generally, the expenses included in the monthly request include, but
are not necessarily limited to: (1) wages/personnel costs for “but for” employees of
Retirement Services (i.e., employees who would not be employed by Retirement
Services if they did not provide services to the Plan); (2) printing and postage; (3)
dues and software licenses; (4) professional services (e.g., accounting and
consulting); and (5) other general and administrative expenses (e.g., training,
advertising, subscriptions, travel expenses, bank charges). Stanton Aff. (Ex. 17) at
¶ 9.
Response: Disputed. This is an overly broad statement and not “concise”, and
covers over an eight-year period. As such it violates LR 56.1 B.(1). See LR 56.1
B.(2)(a)(2). This list of expenses also is not inclusive. Retirement Services sought
reimbursement for other items, such as food, rent and utilities. See Exhibit 17,
Attachment A [Doc. 134-18]. A “but for” test based on a percentage was not used
by Reliance Trust for reimbursement of Retirement Services salaries until 2016.
Exhibit P13 at 2 (Depo. Exhibit 179 at RTCPLEDGER00405099). Prior to that
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point, no “but for” test as a percentage was used. Exhibit P14 at 5 (Depo. Exhibit
101 at NSP-000035550). Only in a draft memo from December 2015 does there
appear to be any contemplation of Insperity representing to Reliance Trust that its
employees in Retirement Services met the “but for” test. Exhibit P15 at 1 (Depo.
Exhibit 177 at RTCPLEGER00305876). Portions of salaries for Retirement Services
employees who worked less than 50% of their time on the Plan (105001) and the
Insperity Corporate Plan (10700) (referred to as “Fiduciary Hours”) were reimbursed
by the Plan. E.g., Doc. 134-18 at 14 (Attachment A); Exhibit P10 at 129 (Depo. Ex.
93 at RTCPLEDGER00386407). The Insperity Defendants also provide no
admissible evidence that such “but for” test was conducted for each Retirement
Services employee prior to requesting reimbursement of their salaries from Reliance
Trust. Holdings also did not certify prior to approval of expenses that employees
met the but for test. See, e.g., Exhibit P16 at 16 (Depo. Exhibit 157 at
INSPERITY00192); Exhibit P6 (Lance Studdard Dep. 85:11–19).
Reply: Plaintiffs’ dispute of SF ¶ 56 does not create a genuine issue of
material fact. Plaintiffs fail to show how SF ¶ 56 is overly broad or on what basis it
is not concise. Further, at more than twice the length of SF ¶ 56 itself, Plaintiffs’
Response is not concise, as required under LR 56.1(B)(2)(a)(1). Plaintiffs’ dispute
that the list in SF ¶ 56 is “not inclusive” simply ignores explicit language that the
tasks listed were “generally . . . but are not necessarily limited to . . . .” Plaintiffs’
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arguments regarding the “but for” test are patently incorrect, based on the documents
they cite. Specifically, Plaintiffs cite notes from a 2013 meeting to argue that no
“but for” test as a percentage was used prior to 2016. Exhibit P14 at 5 (Depo. Exhibit
101 at NSP-000035550). However, such notes confirm that the “but for” test as a
percentage was being used in 2013. Furthermore, even before the “but for” test as a
percentage was used, Retirement Services and RTC were using a “but for” test. As
noted in the cited 2013 meeting notes, the “but for” test as a percentage was not
needed in earlier years because Retirement Services was “a captive recordkeeper
providing almost all of their services to either the Corp or Big plans.” Id. Thus, a
percentage test was not required because all Retirement Services employees whose
time was ultimately reimbursed spent more than half of their time providing services
to the Plan. As the notes indicate, it was only when Retirement Services started “to
attract more non-PEO recordkeeping business” that a formal percentage “but for”
test was implemented. Id.; see also Studdard Dep. at 71:14-73:14 (attached hereto
as Ex. 97) (confirming “but for” test used even prior to 2005). Furthermore, each
expense reimbursement submission contained timesheets of Retirement Services’
employees, including the percentage of hours worked on services to the Plan. See
Ex. 17, Attachment A [Doc. 134-18]. This document—cited in Plaintiffs’
response—confirms that RTC was informed of the facts necessary to determine
whether the “but for” test was met prior to approving expenses.
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Despite Plaintiffs’ page-long response, they do not cite any evidence
contradicting the fact asserted in SF ¶ 56. Consequently, SF ¶ 56 should be deemed
admitted.
57. Upon receipt and review of this monthly reimbursement request, RTC
evaluates the expenses as to their qualification for reimbursement and
reasonableness. See Studdard Dep. (Ex. 20) at 56:15-22; Deposition of Trey Carter
(“Carter Dep”) (Ex. 23) at 117:4-18.
Response: Disputed. Mr. Studdard of Reliance Trust described the expense
approval process as “administrative in nature”, “more of a verification process”, and
in which he would “literally check for a line item and make sure it had a related
receipt or some sort of proof of that line item.” Exhibit P6 (Lance Studdard Dep.
16:12–17:24.). Prior to approval, Mr. Studdard did not determine the reasonableness
of the expenses because the “big picture items” were previously determined to be
expensable by an ad hoc committee at Reliance Trust. Id. (Lance Studdard Dep.
57:5–59:4, 59:25–60:18, 89:11–94:22). The Insperity Defendants have provide no
admissible evidence that Reliance Trust reviewed and approved each expense for
reasonableness and qualification for reimbursement in accordance with ERISA. Mr.
Studdard did not interview the employees at Retirement Services to understand the
services they performed for the Plan to determine if they were necessary and
appropriate for the operation of the Plan. Id. (Lance Studdard Dep. 113:9–114:10).
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He also did not conduct any investigation of time allocated to the general business
category to determine the portion applicable to services provided to the Plan. Id.
(Lance Studdard Dep. 114:11–115:9). Retirement Services received reimbursement
for expenses that were incurred in 2010 during 2011, and thus the monthly
reimbursement submission process was not followed. See Exhibit 34 at 2 n. 3.
(Depo. Exhibit 129)[Doc. 135-6]. Reliance Trust also prepared a “Procedure Manual
for Payment or Reimbursement of Plan Expenses to Plan Sponsor”, which contained
a “Reimbursement Request Form” for categories of expenses requiring certification
from an officer of Insperity to attest that the expenses are reasonable and necessary
for the proper operation of the Plan. E.g., Exhibit P16 at 16 (Depo. Exhibit 157 at
INSPERITY00192). No form was ever submitted with the expense reimbursement
request. Exhibit P6 (Lance Studdard Dep. 85:11–19).
Reply: Plaintiffs’ dispute of SF ¶ 57 does not create a genuine issue of
material fact. Rather than providing contradicting evidence, the documents
Plaintiffs cite merely clarify the different roles that different individuals at RTC
played in their approval process. Specifically, Mr. Studdard testified that he
reviewed individual expense reimbursement submissions pursuant to “established
procedures” and engaged in a dialogue if he noticed something missing or unusual.
Studdard Dep. at 42:5-43:1 (Ex. 20). It is immaterial and irrelevant whether Mr.
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Studdard relied on templates or pre-approved categories for reimbursement in
making such decisions.
Furthermore, Plaintiffs cherry-pick specific terms from Mr. Studdard’s
testimony wherein he describes his personal role in the expense approval process as
“administrative in nature,” and attempt to impute that characterization to the entire
expense review and approval process conducted by RTC. But, Mr. Studdard was
not the only individual at RTC involved in the overall process. Mr. Studded testified
that there were other more “senior” individuals than him involved in the “policy”
discussions to evaluate whether expenses were properly reimbursable, including
outside counsel (Studdard Dep. at 17:1-3; 130:12-l31:8; 178:10-179:13.) (Ex.97)
Plaintiffs ignore entirely Mr. Carter’s testimony on this topic. E.g., Carter Dep. at
117:4-18 (Ex. 23). As Plaintiffs confirm, RTC initially prepared a Procedure
Manual for Payment or Reimbursement of Plan Expenses to Plan Sponsor
(“Procedure Manual”), which Mr. Studdard testified to using as part of his review of
expenses. See id. at 51:17-52:25 (“[w]e initially used this [procedure manual] to
create a -- a template where we sort of functionalized things and i- -- identified, you
know, expensable or nonexpensable items.”). The Procedure Manual was authored
in 2004, and certain portions were outdated by the start of the class period and thus
not used. Exhibit P16 at 16 (Depo. Exhibit 157 at INSPERITY00192). Thus, it is
immaterial and irrelevant that the outdated forms were not submitted. Finally,
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Plaintiffs’ argument regarding payment in 2011 for certain expenses incurred in
2010 is irrelevant for the reasons stated in the Reply to SF ¶ 54. Consequently, SF
¶ 57 should be deemed admitted.
58. RTC then approves or denies the monthly request (either in whole or in
part). See Studdard Dep. (Ex. 20) at 42:6-15 (“I would review [expense
submissions] as they came in.”); Stanton Aff. (Ex. 17) at ¶ 11; see, e.g., February
23, 2012 e-mail from Lance Studdard to Dustin Boone regarding Expense Approval
(RTCPLEDGER00217774) (Ex. 24).
Response: Disputed. The citations do not support the movant’s fact that
Reliance Trust denied the monthly request in whole or in part. Retirement Services
also received reimbursement for expenses that were incurred in 2010 during 2011,
and thus the monthly reimbursement submission process was not followed. See
Exhibit 34 at 2 n. 3. (Depo. Exhibit 129)[Doc. 135-6].
Reply: Plaintiffs fail to show how the citation does not support SF ¶ 58. SF ¶
58 is an exact quote from Mr. Stanton’s affidavit, which was confirmed by Mr.
Studdard’s testimony. Plaintiffs do not dispute the validity or admissibility of the
Affidavit of John Stanton wherein he describes the services performed by RTC based
on his personal knowledge. Instead, Plaintiffs’ argument regarding payment in 2011
for certain expenses incurred in 2010 is irrelevant for the reasons stated in the Reply
to SF ¶ 54. Consequently, SF ¶ 58 should be deemed admitted.
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59. RTC and Retirement Services communicate from time to time via
telephone or e-mail regarding certain line items included in the request. See Stanton
Aff. (Ex. 17) at ¶ 11; Studdard Dep. (Ex. 20) at 42:6-43:1 (“I would take a note – if
there was a question about something [in the submission] that I thought might have
been missing or was unusual, I would ask it via e-mail, typically. Sometimes I would
call.”); see, e.g., February 2015 e-mail between Jay Mullins and Heidi Lapham
regarding Question on Possible Plan Expense (NSP-000017227) (Ex. 25).
Response: Objection. The phrase “from time to time” is vague and
ambiguous. Disputed. The citations do not support the movant’s fact that Reliance
Trust and Retirement Services communicated from “time to time” but rather only
provide one documented communication from February 2015. Mr. Studdard
testified that he would communicate with Karen Drury or Dustin Boone, not Mr.
Stanton. See Exhibit P6 (Lance Studdard Dep. 43:8–19); contra Exhibit 17 ¶11
[Doc. 134-18].
Reply: Plaintiffs fail to show how SF ¶ 59 is vague and ambiguous. This is a
widely-used phrase and does not require a definition. Mr. Stanton’s affidavit
confirms that he would communicate occasionally with RTC about the monthly
reimbursement requests (Stanton Aff. (Ex. 17) at ¶ 11), and as Plaintiffs point out,
others (including Karen Drury and Dustin Boone, as noted in Plaintiffs’ response)
would also communicate with RTC. Plaintiffs also fail to show how the citations do
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not support SF ¶ 59. As noted, SF ¶ 59 is supported by Mr. Stanton’s affidavit,
testimony from Mr. Studdard, and a sample communication with Heidi Lapham
(thus another individual who communicated with RTC on this topic). There is no
contrary evidence (none is cited) and thus no need to cite more sample
communications. SF ¶ 59 is also supported by Plaintiffs’ response, which notes Mr.
Studdard’s testimony that he communicated with Karen Drury and Dustin Boone.
Mr. Studdard also testified that he would meet with John Stanton, Karen Drury, and
Dan Pollina. Studdard Dep. at 152:5-24 (attached hereto as Ex. 97). Accordingly,
Plaintiffs’ objection should be overruled and SF ¶ 59 should be deemed admitted.
60. Retirement Services and RTC have engaged in discussions over
whether certain expenses may be properly reimbursable under ERISA, often with
the assistance of their respective outside legal counsel. See, e.g., December 21, 2015
Letter to Trey Carter from Neil Shifman regarding Employee and Rental Expenses
(NSP-000055307) (Ex. 26); December 21, 2015 Letter to Trey Carter from Neil
Shifman Regarding Reimbursement Request Reductions and Revenue Sharing
Funds (NSP-000043024) (Ex. 27); PowerPoint from Bryan Cave regarding
Administaff (now Insperity) Plan Expenses (RTCPLEDGER00431363-74) (Ex.
28); February 2, 2011 e-mail from Dan Pollina to outside counsel Mark Bodron
regarding Conference Call to Discuss 401(k) Expense Reimbursement (NSP-
000017723) (Ex. 29).
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Response: Disputed. The citations do not support movant’s fact that
Retirement Services and Reliance Trust engaged in discussions “often” with the
assistance of outside legal counsel. Only Exhibit 129 [Doc. 134-30] reflects a
scheduled discussion with outside legal counsel. Discussions that occurred between
Retirement Services and Reliance Trust primarily focused on business matters
between the two companies unrelated to the Plan. See, e.g., .Exhibit P17 at 1 (Depo.
Exhibit 162 (RTCPLEDGER00093162)); Exhibit P14 at 1 (Depo. Exhibit 101
(NSP-00035546)).
Reply: Plaintiffs fail to offer evidence to contradict the evidence cited by the
Insperity Defendants in support of SF ¶ 60. Insperity Defendants intentionally chose
the signal “see, e.g.” to offer the citations as sample communications. In response,
Plaintiffs offer speculation, while ignoring unrefuted testimony. See also Pollina
Dep. at 167:22-169:4 (attached hereto as Ex. 98) (testifying he met with outside
counsel regarding target date funds); Herink Dep. at 164:10-169:14 (attached hereto
as Ex. 99) (referencing meetings with outside counsel). Plaintiffs’ Response does
not cite any evidence to the contrary, but instead cites two exhibits to make the
irrelevant argument that Retirement Services and RTC also discussed business
matters. Consequently, SF ¶ 60 should be deemed admitted.
61. Holdings knew it could not charge any “overhead” or make a “profit”
by using Retirement Services as the in-house recordkeeper for the Plan. Rawson
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Dep. (Ex. 16) at 34:7-22; 117:1-23; 232:11-24; Excerpts from the Deposition of John
Stanton (“Stanton Dep.”) (Ex. 30) at 147:23-148:7; Excerpts from the Deposition of
Dan Pollina (“Pollina Dep.”) (Ex. 31) at 181:11-25; Excerpts from the Deposition
of Dan Herink (“Herink Dep.”) (Ex. 32) at 99:4-99:14; 208:11-209:8.
Response: Disputed. Richard Rawson specifically explored an opportunity to
“include some profit component to expenses currently charged” that would be
reimbursed by the Plan. Exhibit P18 at 1 (Depo. Exhibit 15 (NSP-000078080)).
Retirement Services also sought reimbursement of IT costs, it concedes are
“overhead”, supra ¶64. Exhibit P12 at 1 (Depo. Exhbit 17 at NSP-000017768).
Retirement Services received reimbursement for time unallocated to the Plan for
general business duties. E.g., Exhibit 17 at 6 [Doc. 134-22]; Exhibit P10 at 73
(Depo. Ex. 93 at RTCPLEDGER00386351)). Retirement Services received
reimbursement for overhead costs, such as utilities and rent. E.g., Exhibit P10 at
130 (Depo. Exhibit 93 at RTCPLEDGER00386408); Exhibit 17 at 15 [Doc. 134-
18]. Reliance Trust later determined that utilities were not reimbursable. Exhibit
P13 at 2 (Depo. Exhibit 179 at RTCPLEDGER00405099).
Reply: Plaintiffs’ dispute of SF ¶ 61 does not create a genuine issue of
material fact. SF ¶ 61 is supported by unrefuted deposition testimony. The fact that,
in 2010, Mr. Rawson explored whether additional expenses could be reimbursed is
irrelevant. Exhibit P18 at 1 (Depo. Exhibit 15 (NSP-000078080)). Mr. Rawson
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expressly addressed Exhibit P18 during his deposition and unequivocally explained:
“We’re not allowed to make a profit off of a benefit such as the 401(k) because it's
an ERISA-qualified plan.” Rawson Dep. at 49:9-52:20 (attached hereto as Ex. 94).
Further, while RTC in 2015 later revisited and was evaluating whether a select
few expenses should have been reimbursed, Retirement Services reimbursed the
Plan for the revisited expenses, plus interest, dating back to 2010. See December
21, 2015 Letter to Trey Carter from Neil Shifman Regarding Reimbursement
Request Reductions and Revenue Sharing Funds (NSP-000043024) (Ex. 27).
Plaintiffs do not, and cannot, cite a single example of Retirement Services failing to
return to the Plan a reimbursement of which RTC rescinded its prior approval, nor
do they offer any direct evidence to refute that Holdings knew it could not charge
any “overhead” or make a “profit.” Consequently, SF ¶ 61 should be deemed
admitted.
62. Holdings believed that forming Retirement Services to perform
recordkeeping services to the Plan would be the “cheapest and best option for [the]
participants” at the “lowest cost.” Rawson Dep. (Ex. 16) at 118:15-121:21.
Response: Disputed. Holdings did not obtain any fee quote from Fidelity or
another third-party service provided for recordkeeping services following the
issuance of the Rev. Proc. to determine whether Retirement Services was the lowest-
cost alternative. See, e.g., Exhibit P2 (Rawson Dep. 122:18–123:3).
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Reply: Plaintiffs’ dispute of SF ¶ 62 does not create a genuine issue of
material fact. The additional fact that Mr. Rawson does not remember receiving any
fee quote from Fidelity is irrelevant for the reasons stated in the Replies to ¶¶ 35-36.
Plaintiffs have not offered any evidence to refute that Mr. Rawson and other
representatives of Holdings believed forming Retirement Services to perform
recordkeeping services to the Plan would be the “cheapest and best option for [the]
participants” at the “lowest cost.” Consequently, SF ¶ 62 should be deemed
admitted.
63. Retirement Services does not seek reimbursement from the Plan for
staff who bill less than 25% of their time in any given month. Stanton Aff. (Ex. 17)
at ¶ 13
Response: Disputed. The fact is vague and ambiguous as to whether
Retirement Services did not seek reimbursement for employees who billed less than
25% on tasks associated with the Plan, or generally billed 25% of their time to any
task recorded on employee timesheets. Objection. Mr. Stanton does not declare that
he has personal knowledge to competently testify to the fact that he has personal
knowledge of all employee timesheets submitted to Reliance Trust to verify that only
employees who billed 25% of their time on tasks directly related to the Plan. Fed. R.
Evid. 602. And only one sample expense submission was provided by Mr. Stanton
in his declaration. Exhibit 17, Attachment A [Doc. 134-18]. In addition, Retirement
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Services received reimbursement for time unallocated to the Plan for general
business duties, which would increase the total time billed by an employee and
sought for reimbursement. E.g., Exhibit 17 at 6 [Doc. 134-22]; Exhibit P10 at 73
(Depo. Ex. 93 at RTCPLEDGER00386351)).
Reply: Plaintiffs fail to show or explain how SF ¶ 63 is vague and ambiguous.
SF ¶ 63 concerns “reimbursement from the Plan” and thus the 25% reference is
clearly to employees who billed less than 25% on tasks associated with the Plan.
Plaintiffs’ alternative interpretation is itself vague and ambiguous. SF ¶ 63 is an
exact quote from Mr. Stanton’s affidavit, which he declares was made with personal
knowledge of the facts contained therein. Stanton Aff. at ¶¶ 1, 13 (Ex. 17).
Accordingly, Plaintiffs’ objection should be overruled for the reasons stated in the
Replies to ¶¶ 51, 52, and 55. Finally, there was no requirement to provide more than
one sample expense submission with Mr. Stanton’s affidavit (Plaintiffs received the
expense submissions for every month of the Class Period during discovery, totaling
over 11,000 pages). Plaintiffs’ additional fact that Retirement Services sought
reimbursement for certain time spent on “general business duties” for employees
who exceeded the 25% threshold is irrelevant. In such cases, the amount reimbursed
is proportionate to the percentage of time spent on Plan matters. Plaintiffs fail to
show how the additional fact of such proportionate reimbursements for employees
above the 25% threshold refutes the fact in SF ¶ 63 that the Plan did not reimburse
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staff who billed less than 25% on reimbursable time. Plaintiffs have not offered any
evidence to refute SF ¶ 63 and, consequently, SF ¶ 63 should be deemed admitted.
64. Retirement Services does not seek reimbursement from the Plan for a
variety of overhead expenses and other costs (the “Unreimbursed Costs”), including,
but not limited to: (1) IT support, (2) internal legal services, (3) support from the
human resources department, (4) support from the finance department, and (5)
various business insurance costs. Stanton Aff. (Ex. 17) at ¶ 14; Deposition of Sean
Duffy (“Duffy Dep.”) (Ex. 33) at 42:23-44:1 (describing methodology of how
overhead costs were calculated and explaining that Insperity does not allocate to
Retirement Services corporate overhead and certain other expenses).
Response: Disputed. Retirement Services sought reimbursement for expenses
that were not direct expenses for services provided to the Plan but would have been
incurred had the services provided to the Plan not been provided, such as for time
unallocated to the Plan for general business duties. E.g., Exhibit 21 at 6, 23 [Doc.
134-22]; Exhibit P10 at 73 (Depo. Ex. 93 at RTCPLEDGER00386351)).
Retirement Services also sought and received reimbursement for allocable overhead,
such as utilities and rent. E.g., Exhibit P10 at 130 (Depo. Exhibit 93 at
RTCPLEDGER00386408); Exhibit 17 at 15 [Doc. 134-18]. Reliance Trust and
Retirement Services later conceded that utilities, portions of rent, and portions of
employee compensation were not permissibly charged to the Plan. Exhibit P13 at
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2–3 (Depo. Exhibit 179 (RTCPLEDGER00405098) at *099–100; Exhibit P19 at 4
(Depo. Exhibit 18 (NSP-000027717) at *720).
Reply: Plaintiffs’ dispute of SF ¶ 64 does not create a genuine issue of
material fact, since it does not respond to the specific overhead expenses identified
and discussed therein, or provide any evidence to contradict the fact that these
overhead expenses were not reimbursed by the Plan. Instead, Plaintiffs refer to
various other expenses, some of which were initially approved by RTC, but about
which it later changed its mind. There is no genuine dispute that all of these other
expenses were repaid to the Plan, as discussed in the Reply to SF ¶ 61 (see discussion
of “overhead” and Retirement Services’ reimbursement for certain expenses). The
other additional expense items mentioned in Plaintiffs’ Response have also been
explained in the Reply to ¶ 63 (see discussion of reimbursement for general business
duties). Consequently, SF ¶ 64 should be deemed admitted.
65. Retirement Services has never included a profit component in the
reimbursement requests submitted to RTC. Stanton Aff. (Ex. 17) at ¶ 15; Rawson
Dep. (Ex. 16) at 34:7-22 (“we get an expense reimbursement from the Plan . . . we
don’t get any reimbursement for, you know, any of our overhead, certainly no
profit.”); id. at 243:6-14 (reimbursements to Retirement Services were
reimbursements of expenses for services provided and not “compensation to
Retirement Services”).
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Response: Disputed. Retirement Services charged direct expenses to
participant accounts and covered entities for recordkeeping and administrative
services but also sought reimbursement from the Plan for time spent by its
employees in performing those services. See, e.g., Exhibit P20 (Depo. Exhibit
114)(fee schedule); Exhibit 17 at 23–29 [Doc. 134-18] and Exhibit P10 at 73–128
(Depo. Exhibit 93 (RTCPLEDGER00386280) at *351–406) (noting time entries for
participant account maintenance, participant education, ERISA testing, loan
processing, and plan setup, among others).
Reply: Plaintiffs’ dispute of SF ¶ 65 does not create a genuine issue of
material fact. SF ¶ 65 is an exact quote from Mr. Stanton’s affidavit and also
supported by the cited deposition testimony. Plaintiffs’ Response does not refute SF
¶ 65 or cite any evidence to the contrary. Instead, Plaintiffs respond to SF ¶ 65 by
making an erroneous new argument. The referenced participant fees were not paid
directly to Retirement Services, but instead were deposited into the suspense
account. Stanton Dep. at 131:4-133:4 (attached hereto as Ex. 100) (“[expense]
reimbursement comes out of an account which is held at RTC Trust which receives
certain asset-based revenue from our investments, as well as certain fees that are
charged to participants for things such as loans and distributions”). Retirement
Services was then reimbursed from the suspense account only for its direct expenses.
See Stanton Dep. at 311:8-312:1 (revenue sharing only applied to direct expenses
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within the Retirement Services division) (attached hereto as Ex. 100). Thus,
Retirement Services did not receive double-payments as Plaintiffs insinuate.
Furthermore, as admitted by Plaintiffs in response to SF ¶ 66, only some of the
Unreimbursed Costs are covered by the fees charged to client-employers. Thus, the
referenced fees paid by participants and covered entities have no bearing on the fact
that Retirement Services has never included a profit component in the
reimbursement requests submitted to RTC. Consequently, SF ¶ 65 should be
deemed admitted.
66. Some of the Unreimbursed Costs are covered by fees charged to client-
employers. Stanton Aff. (Ex. 17) at ¶ 16 and Attachment B, Implementation Guide
(NSP-000108025) at p. vi (listing direct expenses billed to client-companies).
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 66, therefore their Response does not create a
genuine issue of material fact.
67. None of the Unreimbursed Costs is reimbursed by the Plan. Stanton
Aff. (Ex. 17) at ¶ 16.
Response: Disputed. Retirement Services received reimbursement for an
allocable portion of overhead, such as unallocated to the Plan for general business
duties. E.g., Exhibit 17 at 6 [Doc. 134-22]; Exhibit P10 at 73 (Depo. Ex. 93 at
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RTCPLEDGER00386351)), and utilities and rent. E.g., Exhibit P10 at 130 (Depo.
Exhibit 93 at RTCPLEDGER00386408); Exhibit 17 at 15 [Doc. 134-18].
Reply: Plaintiffs’ dispute of SF ¶ 67 does not create a genuine issue of
material fact for the reasons stated in the Replies to SF ¶¶ 61, 63, and 64. SF ¶ 64 is
an exact quote from Mr. Stanton’s affidavit, and Plaintiffs offer no evidence that any
of the Unreimbursed Expenses identified in SF 64 were ever reimbursed by the
Plan. Consequently, SF ¶ 67 should be deemed admitted.
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69. Section 7.4 of the Plan provides that participants bear the costs of
recordkeeping services. See Plan (Ex. 1) at § 7.4.
Response: Disputed. Section 7.4 provides that “Expenses of administering the
Plan…shall be paid from the Trust under the Plan unless expenses are paid by a
Company Affiliate or Covered Entity.” Exhibit 1 at 44 [Doc. 134-2].
Reply: Plaintiffs’ dispute of SF ¶ 69 does not create a genuine issue of
material fact. As Plaintiffs identify, Section 7.4 of the Plan provides that
administrative expenses are paid from the Trust under the Plan. Section 2.76 of the
Plan defines the “Trust” as “the legal entity resulting from the Trust Agreement . . .
between [Holdings] and the Trustee, by which Employer Contributions and
Employee Contributions shall be received, held, invested, and distributed to or for
the benefit of the Participants . . .” Thus, Section 7.4 of the Plan provides that
Participants, through the Trust, pay for recordkeeping services. The additional fact
that certain expenses may be paid by a Company Affiliate or Covered Entity is
irrelevant and does not change the fact that under the Plan, participants bear the cost
of recordkeeping services. Consequently, SF ¶ 69 should be deemed admitted.
70. The Plan uses “revenue sharing” as the method to obtain the funds
necessary to reimburse Retirement Services’ recordkeeping expenses. See Stanton
Aff. (Ex. 17) at ¶ 12; Stanton Dep. (Ex. 30) at 144:10-20 (“[the] [r]evenue account
is merely for reimbursement of expenses”).
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Response: Disputed. Revenue sharing is one source that is used to
compensate Retirement Services for recordkeeping and administrative services.
Retirement Services charges direct participant transaction and maintenance fees to
participant accounts and direct expenses billed to client companies for recordkeeping
and administrative services. E.g., Exhibit 4 at 39 [Doc. 134-5]; Exhibit P23 (Depo.
Exhibit 167); Exhibit 17 at 132 [Doc. 134-18]. The participant transaction and
maintenance fees are combined with the revenue sharing amounts, which are then
used to cover the expenses submitted by Retirement Services to Reliance Trust. Id.
The revenue Retirement Services derived from direct charges to client companies is
not provided to Reliance Trust, and is not used by Reliance Trust as a source of
revenue to reimburse Retirement Services for expenses submitted for
reimbursement. Exhibit P6 (Lance Studdard Dep. 163:17–164:10).
Reply: Plaintiffs’ dispute of SF ¶ 70 does not create a genuine issue of
material fact. SF ¶ 70 is an exact quote from Mr. Stanton’s affidavit and also
supported by the cited deposition testimony. Plaintiffs’ response does not refute SF
¶ 70 or cite any evidence to the contrary. Instead, Plaintiffs respond to SF ¶ 70 by
noting that participants and client-employers are also charged certain fees.
However, as noted in the Reply to SF ¶ 65, the participant fees were not paid directly
to Retirement Services, but instead were deposited into the revenue sharing account
(along with the revenue sharing). Stanton Dep. at 131:4-133:4 (attached hereto as
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Ex. 100). Retirement Services was then reimbursed from the revenue sharing
account only for its direct expenses. See Stanton Dep. at 311:8-312:1 (revenue
sharing only applied to direct expenses within the Retirement Services division)
(attached hereto as Ex. 100). Furthermore, as admitted by Plaintiffs in response to
SF ¶ 66, only some of the Unreimbursed Costs are covered by the fees charged to
client-employers. The additional fact that Retirement Services charged client-
employers fees for overhead expenses that could not be reimbursed by the Plan is
immaterial. See Pollina Dep. at 180:7-184:18 (attached hereto as Ex. 98) (expenses
“billed directly to clients” represent “a charge to a client directly that they would
pay, not with plan assets”). Consequently, SF ¶ 70 should be deemed admitted.
71. Plan participants received disclosure of how the Plan used revenue
sharing for its expenses, as well as the expense ratios in their investments. See
Pollina Dep. (Ex. 31) at 18:12-22; 2014 404(a)(5) Disclosure (NSP-
0000000038093) (Ex. 36) (notifying participants that “[t]he Plan benefits from
revenue sharing payments, and these payments offset some of the administration
expenses.”); 2015 404(a)(5) Disclosure (NSP-000010999) (Ex. 37) (same).
Response: Disputed. The citations do not support the movant’s fact. Mr.
Pollina did not testify to this fact. Exhibits 36 and 37 do not support the fact that
Plan participants received similar disclosures from 2009 through 2013. See, e.g.,
Exhibit P24 (INSPERITY-PLTF-0000031)(2010)(no disclosure). The Summary
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Plan Description relied on by the Insperity Defendants [Exhibit 36, Doc. 134-37]
does not disclose how revenue sharing is used or the expense ratios of Plan
investments. And Exhibits 36 and 37 only disclose that revenue sharing payments
“offset some of the administration expenses”, but not “how” the Insperity
Defendants and Reliance Trust used such payments.
Reply: Plaintiffs’ dispute of SF ¶ 71 does not create a genuine issue of
material fact. Mr. Pollina testified that participants are “informed of the expense
ratios on their investments” and thus the revenue sharing. Pollina Dep. at 18:12-22
(Ex. 31). Plaintiffs do not dispute that Participants received Exs. 36 and 37, nor do
they dispute that each addresses the issue of revenue sharing.
Instead, Plaintiffs’ response references different issues outside of SF ¶ 71
regarding whether participants received similar disclosures to Exs. 37 and 37 in
earlier years and the disclosures in the Summary Plan Description. However, these
different issues do not contradict the fact that Plan participants received disclosures
of how the Plan used revenue sharing for its expenses, as well as the expense ratios
in their investments, through the quarterly investment statements and 2014-2015 fee
disclosures. Consequently, SF ¶ 71 should be deemed admitted.
72. RTC maintains custody of the account where the revenue sharing
payments are deposited and held. See Stanton Aff. (Ex. 17) at ¶ 12; Stanton Dep.
(Ex. 30) at 144:10-20; Carter Dep. (Ex. 23) at 43:7-14.
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Response: Disputed in part. Plaintiffs admit that Reliance Trust maintains
custody of the Plan’s suspense account that holds direct participant fees and revenue
sharing from Plan investments. E.g., Exhibit 3 at 32 [Doc. 134-4].
Reply: Plaintiffs’ partial dispute of SF ¶ 72 does not create a genuine issue of
material fact. As an initial matter, it is not even clear what portion of SF ¶ 72 is
being disputed, if any. Plaintiffs’ Response simply re-states SF ¶ 72. Plaintiffs
admit the fact that “Reliance Trust maintains custody of the suspense account that
holds . . . revenue sharing.” Consequently, SF ¶ 72 should be deemed admitted.
73. Retirement Services does not maintain custody of the revenue sharing
account. Stanton Aff. (Ex. 17) at ¶ 12.
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 73, therefore their Response does not create a
genuine issue of material fact.
74. Retirement Services receives reimbursement of its expenses on a
quarterly basis in arrears, but only after RTC approves the reimbursement amounts
to be released from the revenue sharing account. Stanton Aff. (Ex. 17) at ¶ 12; see
also Herink Dep. (Ex. 32) at 100:17-19 (Herink understood that Retirement Services
expenses “would be reimbursed from the revenue sharing account”).
Response: Disputed. Retirement Services also receives payment from
covered entities for reimbursement of its expenses. See, e.g., Exhibit 17, Attachment
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B at 132 [Doc.134-18]. The Plan’s suspense account holds revenue from participant
direct charges and revenue sharing from which Retirement Services received
reimbursement of those expenses submitted to Reliance Trust. E.g., Exhibit 3 at 32
[Doc. 134-4]. Retirement Services also was reimbursed for expenses incurred in
2010 during 2011, and thus payment was not received quarterly in arrears. Exhibit
34 at 2 n. 3. (Depo. Exhibit 129)[Doc. 135-6].
Reply: Plaintiffs’ dispute of SF ¶ 74 does not create a genuine issue of
material fact for the reasons stated in the Replies to SF ¶¶ 54, 65 and 70.
Consequently, SF ¶ 74 should be deemed admitted.
75. Any excess amount in the revenue sharing account that exceeds
Retirement Services’ monthly expenses is rolled over to cover expenses in the
subsequent quarter. See Deposition of Nick Cotter (“Cotter Dep.”) (Ex. 38) at
201:19-202:3 (his understanding that “excess in the account for revenue sharing . .
. [was] carried over”); see also March 2012 Annual Report (NSP-000011037) (Ex.
5) at p. 40 (“net recaptured revenue against plan expenses . . . target the end of each
quarter”).
Response: Disputed in part. Plaintiffs admit that the excess that is held in the
Plan’s suspense account after payment of expenses submitted by Retirement
Services are rolled over to the subsequent period. E.g., Exhibit 3 at 32 [Doc. 134-4].
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Reply: Plaintiffs’ partial dispute of SF ¶ 75 does not create a genuine issue of
material fact. As with Plaintiffs’ response to SF ¶ 72, it is not clear what portion of
SF ¶ 75 is being disputed, if any. Plaintiffs’ response simply re-states SF ¶ 75.
Consequently, SF ¶ 75 should be deemed admitted.
76. As excess revenue in the revenue sharing account accumulates over
time, it is periodically reallocated to participants. See Stanton Dep. (Ex. 30) at
197:19-198:14 (“in 2010, we did an allocation of some of the excess active
participant accounts” and in 2015 “allocate[d] a good share of what was left over at
that point to participant accounts”).
Response: Disputed. Payment of excess amounts that accumulated in the
Plan’s suspense account to Plan participants was not done at regularly occurring
intervals, as the Insperity Defendants’ citation confirms.
Reply: Plaintiffs’ dispute of SF ¶ 76 does not create a genuine issue of
material fact. Plaintiffs do not dispute that excess revenue is “periodically
reallocated to participants” as stated in SF ¶ 76. Instead, Plaintiffs’ response only
disputes that such reallocation “was not done at regularly occurring intervals”––
which is not the fact stated in SF ¶ 76. Consequently, SF ¶ 76 should be deemed
admitted.
77. Under the terms of the Trust Agreement, Holdings delegated to RTC,
and RTC accepted, all fiduciary responsibility for the selection, retention, and
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monitoring of the Plan’s investment options. See Trust Agreement (Ex. 2) at § 3.2
(“Trustee shall perform discretionary investment services for the Plan. Such services
shall include the following: (a) researching, selecting, monitoring and replacing
Investment Funds; and (b) providing quarterly investment performance analyses and
reports to the Plan Sponsor.”).
Response: Disputed. Holdings maintained fiduciary obligations to monitor
the actions of Reliance Trust. Exhibit P4 (Daniel Herink Dep. 122:20–123:13);
Exhibit P2 (Richard Rawson Dep. 56:23–57:5); Exhibit P25 at 5 (Depo. Exhibit
12 (NSP-000036163) at *167). Holdings had final authority regarding the selection
of Plan investment options, and approved the addition of the Insperity Horizon Risk-
Managed Funds. Exhibit P2 (Richard Rawson Dep. 135:18–136:11); Exhibit P1
(Depo. Exhibit 67 (RTCPLEDGER000304859)).
Reply: Plaintiffs’ dispute of SF ¶ 77 does not create a genuine issue of
material fact. Plaintiffs do not dispute that Holdings delegated to RTC, and RTC
accepted, all fiduciary responsibility for the selection, retention, and monitoring of
the Plan’s investment options as stated in SF ¶ 77. Instead, Plaintiffs’ response
references the additional fact that Holdings maintained a separate duty to monitor
RTC, which is not in dispute. Plaintiffs’ response also incorrectly allege that
Holdings had final authority regarding the selection of Plan investment options.
Plaintiffs ignore all of the undisputed evidence to the contrary. E.g., Cotter Dep. at
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185:21-187:25 (attached hereto as Ex. 95) (“[RTC] already had ultimate
responsibility for the decision making of the investments that we put in the plan, but
we felt that listening to their feedback on that -- on that topic and taking that into
account was important”); id. at 203:10-206:25 (“we selected the fund that was
used”). The former President of RTC (William Harlow) confirmed that investment
selection was solely RTC’s fiduciary responsibility. Harlow Dep. at 151:15-154:6
(Ex. 43). Furthermore, Plaintiffs do not, and cannot, cite to any evidence showing
Holdings actually selected investment options (including the Horizon Funds). See
April 19, 2017 Letter from Mark Teichner to Karen Drury regarding Replacement
of Horizon Funds with American Funds (NSP-000036329) (Ex. 89). See also Reply
to SF ¶ 17. Consequently, SF ¶ 77 should be deemed admitted.
78. The Plan’s Summary Plan Description (“SPD”) states that RTC
“selects” all investment options. See Summary Plan Description (NSP-000010902)
(Ex. 39) at Q&A. No. 28.
Response: Disputed. The SPD states that “investment options available under
the Plan are selected by the Trustee”. Id.
Reply: Plaintiffs’ dispute of SF ¶ 78 does not create a genuine issue of
material fact. As with Plaintiffs’ responses to SF ¶¶ 72 and 75, it is not clear what
portion of SF ¶ 78 is being disputed, if any. It is undisputed that RTC serves as the
Trustee to the Plan. E.g., SF ¶ 8; Trust Agreement (NSP-000010904) (Ex. 2). Thus,
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Plaintiffs admit that RTC, as Trustee, selects the investment options. Consequently,
SF ¶ 78 should be deemed admitted.
79. The Plan’s Investment Policy Statement (“IPS”) declares that: “The
Plan Administrator [Holdings] has appointed Reliance Trust Company as the
independent discretionary trustee who will manage the overall investment process.
The Trustee will be responsible for ensuring that a disciplined investment process is
established and maintained . . .” See November 2008 IPS (NSP-000010925) (Ex.
40) at p. 8; March 2010 IPS (NSP-000010926) (Ex. 41) at p. 8; November 2012 IPS
(NSP-000010927) (Ex. 42) at p. 8.
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 79, therefore their Response does not create a
genuine issue of material fact.
80. The IPS specifies many aspects of the overall investment program,
including: (1) identifying numerous qualitative and quantitative criteria for RTC’s
investment due diligence when selecting investment funds in general, and target date
funds and QDIAs in particular; (2) quarterly monitoring of investment options; (3)
a “watch list” process concerning investment vehicles under special scrutiny; and
(4) annual review of expense ratios, peer group comparisons, and revenue sharing.
See generally, November 2008 IPS (NSP-000010925) (Ex. 40); March 2010 IPS
(NSP-000010926) (Ex. 41); November 2012 IPS (NSP-000010927) (Ex. 42).
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Response: Objection. This is an overly broad statement and not “concise” in
violation of LR 56.1 B.(1). See LR 56.1 B.(2)(a)(2). The term “overall investment
program” is undefined, and therefore vague and ambiguous. Plaintiffs admit that the
IPS identified due diligence criteria for the selection of Plan investment options,
performance objectives for Plan investment options, the watchlist procedures when
one or more factors adversely affect performance, and four items that the
“Fiduciaries” are required to review annually. See, e.g., Exhibit 40 at 15 [Doc. 134-
38].
Reply: Plaintiffs fail to state a valid objection to SF ¶ 80 because Plaintiffs
fail to show how SF ¶ 80 is overly broad or on what basis it is not concise.
Specifically, Plaintiffs fail to show how the term “overall investment program” is
vague and ambiguous in the context of the IPS, which explicitly references and
addresses “[t]he Plan’s investment program.” E.g., November 2012 IPS (NSP-
000010927) (Ex. 42) at p. 4 (“The Plan’s investment program is defined by the
various sections of this IPS . . .”). Accordingly, Plaintiffs’ objection should be
overruled. Since Plaintiffs do not dispute SF ¶ 80, it should be deemed admitted.
81. Under the terms of the Trust Agreement, RTC (as Trustee) has
complete authority and responsibility for management and control of the Trust Fund.
See Trust Agreement (Ex. 2) at § 4.1(a) (“The Trustee shall serve as discretionary
trustee and have all authority and responsibility for the management and control of
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the Trust Fund.”); § 5.1 (“[t]he Trustee shall receive, hold title to, manage, convert,
sell, exchange, invest, reinvest, disburse . . . and otherwise deal with the assets of the
Trust . . . in the manner and for the purposes and uses set forth in the Plan”).
Response: Disputed. Holdings had final authority regarding the selection of
Plan investment options, and approved the addition of the Insperity Horizon Risk-
Managed Funds. Exhibit P2 (Richard Rawson Dep. 135:18–136:11); Exhibit P1
(Depo. Exhibit 67 (RTCPLEDGER000304859)). Retirement Services exercised
authority over the selection of share classes for the Plan’s investment options. See
Exhibit P7 (Depo. Exhibit 119); Exhibit 48 [Doc. 134-46].
Reply: Plaintiffs’ dispute of SF ¶ 81 does not create a genuine issue of
material fact. SF ¶ 81 concerns the “terms of the Trust Agreement” and Plaintiffs’
response does not refute that SF ¶ 81 accurately summaries those terms or cite any
evidence to the contrary. Instead, Plaintiffs’ response makes different arguments
outside of SF ¶ 81. However, these arguments fail for the reasons stated in the
Replies to SF ¶¶ 17, 41 and 77. Consequently, SF ¶ 81 should be deemed admitted.
82. The former President of RTC (William Harlow) testified that RTC is
solely responsible for selecting and retaining investment options for the Plan.
Deposition of William Harlow (“Harlow Dep.”) (Ex. 43) at 151:15-154:6.
Response: Disputed. Mr. Harlow testified that if Insperity objected to the
inclusion of the Insperity Horizon funds in the Plan, Reliance Trust would have
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“listened to the client” and considered their opinions in Reliance Trust’s decision-
making process. Exhibit P26 (William Harlow Dep. 64:14–65:7). Mr. Harlow could
not say whether Reliance Trust would have moved forward if it was informed by
Insperity that it believed that such target date funds would not be in the best interest
of Plan participants. Id. at 66:6–13.
Reply: Plaintiffs’ dispute of SF ¶ 82 does not create a genuine issue of
material fact for the reasons stated in the Replies to SF ¶¶ 77 and 81. The deposition
testimony cited by Plaintiffs actually supports the fact that RTC is solely responsible
for selecting and retaining investment options for the Plan as stated in SF ¶ 82.
Testimony that RTC “listened” to the client and considered its views does not
contradict the fact that RTC had the responsibility to make the final decision
regarding the Horizon funds. Plaintiffs cite no evidence to the contrary.
Consequently, SF ¶ 82 should be deemed admitted.
83. Holdings performed its role as the Plan’s named fiduciary primarily
through its three Directors — Richard Rawson (President), Daniel Herink (Senior
Vice President of Legal, General Counsel and Secretary), and Paul Sarvadi
(Chairman and CEO). Herink Dep. (Ex. 32) at 37:22-42:5; Rawson Dep. (Ex. 16)
at 23:3-24:21; Stanton Dep. (Ex. 30) at 71:3-22.
Response: Disputed. The three Directors were the individuals who had the
duty to carry out the fiduciary obligations of Holdings. Exhibit P27 (Depo. Exhibit
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3 (NSP-000026596)(2010 Plan)); Exhibit 1 [Doc. 134-2] (2014 Plan)(§§2.4, 10.1,
10.2); Exhibit P4 (Daniel Herink Dep. 18:10–19:13). Apart from the Trust
Agreement, Holdings never delegated by written instrument its fiduciary
obligations. Exhibit P4 (Daniel Herink Dep. 54:13–20). There is no written policy
or documentation that was adopted by Holdings that delineated the roles and
responsibilities of the Board of Directors of Holdings, the Directors, and any staff
tasked with assisting the Directors in carrying out their monitoring obligations of
Reliance Trust. See generally Exhibit P4 (Daniel Herink Dep. 33:1–34:12).
Reply: Plaintiffs’ dispute of SF ¶ 83 does not create a genuine issue of
material fact. Plaintiffs do not dispute that Holdings is the “named fiduciary”
responsible for the administration of the Plan as stated in SF ¶ 11. As the “named
fiduciary,” Holdings performed its role primarily through its three Directors.
Plaintiffs’ alleged additional facts that there is no delegation to others, or any
“written policy” or documentation delineating roles for the Directors or staff is
irrelevant and does not contradict SF ¶ 83 as stated. Consequently, SF ¶ 83 should
be deemed admitted.
84. There is no evidence that any formal “committee” was ever formed, but
instead the Directors of Holdings carried out the responsibilities of Holdings (as
named fiduciary) with the assistance of other employees of Insperity’s subsidiaries.
See Herink Dep. (Ex. 32) at 110:17-111:6 (“Q. Do you believe that [the Board of
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Directors] would serve the role of committee advising Insperity Holdings
represented to the Plan? . . . [A:] I feel like we’re kind of dealing with semantics
here. You're getting hung up on this word committee small C. Okay? You know,
obviously Insperity Holdings was the administrator, and the administrator has the
duties the administrator has, and those duties were fulfilled by the company in
various ways in various manners by various folk. Was there a formally established
committee, capital C? Not to my knowledge”); Rawson Dep. (Ex. 16) at 228:10-21
(no recollection of setting up an investment committee).
Response: Disputed in part. The citation does not support the movant’s
statement that the “Directors of Holdings carried out the responsibilities of
Holdings…with the assistance of other employees of Insperity’s subsidiaries.” The
three Directors were the individuals who had the duty to carry out the fiduciary
obligations of Holdings. Exhibit P27 (Depo. Exhibit 3 (NSP-000026596)(2010
Plan)); Exhibit 1 [Doc. 134-2] (2014 Plan)(§§2.4, 10.1, 10.2); Exhibit P4 (Daniel
Herink Dep. 18:10–19:13). Apart from the Trust Agreement, Holdings never
delegated by written instrument its fiduciary obligations. Exhibit P4 (Daniel Herink
Dep. 54:13–20). There is no written policy or documentation that was adopted by
Holdings that delineated the roles and responsibilities of the Board of Directors of
Holdings, the Directors, and any staff tasked with assisting the Directors in carrying
out their monitoring obligations of Reliance Trust. See generally Exhibit P4 (Daniel
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Herink Dep. 33:1–34:12). The Directors never authorized by unanimous written
consent an employee to carry out Holdings’ responsibilities as named fiduciary. Cf.
Exhibit P28 (NSP-000011004)(unanimous written consent for employee to execute
election agreements).
Reply: Plaintiffs’ dispute of SF ¶ 84 does not create a genuine issue of
material fact. Plaintiffs fail to show how the citation does not support SF ¶ 84. Mr.
Herink testified that “[Holdings’] duties were fulfilled by the company in various
ways in various manners by various folk.” Herink Dep. at 110:17-111:6 (Ex. 32).
Thus, the citation supports the fact that the “Directors of Holdings carried out the
responsibilities of Holdings…with the assistance of other employees of Insperity’s
subsidiaries.” Plaintiffs’ citations to the Plan and Trust Agreement do not contradict
SF ¶ 84 as stated. Plaintiffs’ alleged additional fact that there was no formal written
delegation, policy or unanimous written consent is irrelevant and immaterial. There
is no legal requirement to have a formal written document in order for Holdings’
Directors to rely on legal counsel and employees of subsidiaries to assist in
complying with its fiduciary monitoring duty. Plaintiffs cite no evidence to the
contrary and, consequently, SF ¶ 84 should be deemed admitted.
85. Mr. Rawson is the former CFO of Insperity. Rawson Dep. (Ex. 16) at
10:9-18.
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Response: Disputed in part. Mr. Rawson was not the CFO of Insperity prior
to his retirement from the company, and did not serve in that capacity since at least
2004. See Insperity, Inc. Form 10-K (2004),
https://www.sec.gov/Archives/edgar/data/1000753/000095012904000788/h12965e
10vk.htm.
Reply: Plaintiffs’ partial dispute of SF ¶ 85 does not create a genuine issue of
material fact. SF ¶ 85 does not state the time frame during which Mr. Rawson served
as CFO of Insperity, or that it was immediately prior to his retirement. Plaintiffs do
not dispute that Mr. Rawson previously served as CFO of Insperity. Consequently,
SF ¶ 85 should be deemed admitted.
86. Mr. Herink is a licensed CPA and attorney. Herink Dep. (Ex. 32) at
203:11-19.
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 86, therefore their Response does not create a
genuine issue of material fact.
87. In 2016, Jim Allison (Senior Vice President and a licensed CPA)
replaced Mr. Sarvadi as a director of Holdings and assumed Mr. Sarvadi’s role with
respect to the Plan. Herink Dep. (Ex. 32) at 38:3-23.
Response: Disputed in part. Plaintiffs admit that Mr. Allison replaced Mr.
Sarvadi as a Director of Holdings. See Exhibit 32 at 28:3–23 [Doc. 134-33].
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Reply: Plaintiffs’ partial dispute of SF ¶ 87 does not create a genuine issue of
material fact. Plaintiffs admit that Mr. Allison replaced Mr. Sarvadi as a Director of
Holdings and offer no evidence (or even any basis) to refute his title, background as
a CPA, or the fact that he assumed Mr. Sarvadi’s role with respect to the Plan.
Instead, Plaintiffs simply cite the same deposition testimony cited in SF ¶ 87.
Consequently, SF ¶ 87 should be deemed admitted.
88. Mr. Rawson generally took the lead in monitoring RTC on investment
matters, with assistance from John Stanton and his leadership team. See Herink Dep.
(Ex. 32) at 80:13-25 (“Richard Rawson, director, he’s got a team of folks led by
John Stanton that were day-to-day working with Reliance, okay, getting reports,
getting updates, operating the recordkeeping function, and by virtue of that, getting
information from Reliance”); id. at 83:2-7 (“Richard [Rawson] was – was overseeing
retirement and services and that team, and that team, you know, had regular
interactions and received regular reports from [Reliance] on the investments.”).
Response: Objection. The phrase “generally took the lead” is undefined, and
vague and ambiguous. It is also an overly broad statement and not a “concise”, and
covers over an eight-year period in violation of LR 56.1 B.(1). See LR 56.1
B.(2)(a)(2). Disputed. The citation does not support movant’s facts. Mr. Herink does
not have personal knowledge to attest to the actions Mr. Rawson purported took
outside of his presence. Fed. R. Evid. 602. Mr. Herink claims Mr. Rawson received
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“reports” but Mr. Herink did not recall receiving any reports from Reliance and Mr.
Stanton did not provide him any documents that he prepared. Exhibit P4 (Daniel
Herink Dep. 81:3–18, 120:25–121:11). Documentation from staff meetings of
Retirement Services do not reflect that discussions directed at monitoring Reliance
Trust on Plan investment matters. See, e.g., Exhibit P29 (Depo. Exhibit 144 (NSP-
000036443)); Exhibit P30 (Depo. Exhibit 136 (NSP-000023508)); Exhibit P31
(NSP-000020303); Exhibit P32 (NSP-00020409). Mr. Rawson also did not have
any formal training in investments. See Exhibit P2 (Richard Rawson Dep. 171:7–
13).
Reply: Plaintiffs fail to state a valid objection to SF ¶ 88. Plaintiffs fail to
show how SF ¶ 88 is overly broad or on what basis it is not concise. Plaintiffs also
fail to show how SF ¶ 88 is vague and ambiguous. This is a widely-used phrase and
does not require a definition. There is no ambiguity with respect to the fact that, of
the three Directors, Mr. Rawson was the one who generally took the lead in
monitoring RTC on investment matters. Accordingly, Plaintiffs’ objection should
be overruled. Plaintiffs also fail to show how the citation does not support SF ¶ 88.
Plaintiffs offer no evidence to contradict Mr. Herink’s testimony regarding the
respective roles of the Directors. The fact does not include the details of what Mr.
Rawson may have done outside of Mr. Herink’s personal knowledge. It is irrelevant
whether Mr. Herink received reports from Mr. Stanton, as SF ¶ 88 makes no such
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claim. Finally, the fact that Mr. Rawson did not have any formal training in
investments is irrelevant to this fact, other than that the lack of such training may be
relevant to the issue of why he relied on Mr. Stanton to assist him in this role, and
why Holdings engaged RTC as an expert, independent fiduciary to make investment
decisions for the Plan. Plaintiffs cite no authority for the proposition that monitoring
fiduciaries must have the expertise of those they engage to perform expert roles for
the Plan. Consequently, SF ¶ 88 should be deemed admitted.
89. Mr. Herink generally took the lead in monitoring RTC with respect to
any legal matters. Herink Dep. (Ex. 32) at 23:14-25:23; 95:15-97:18.
Response: Objection. The phrase “generally took the lead” is undefined, and
vague and ambiguous. It is also an overly broad statement and not a “concise”, and
covers over an eight-year period in violation of LR 56.1 B.(1). See LR 56.1
B.(2)(a)(2). Disputed. Mr. Herink readily admits that he is no “ERISA expert”.
Exhibit P4 (Daniel Herink Dep. 233:10–14). He was not directly involved or the
lead in seeking and receiving answers to legal questions related to Reliance Trust’s
actions. E.g., Exhibit P33 (Depo. Exhibit 26 (NSP-000071389)); Exhibit P34
(NSP-000074015); Exhibit P35 (Depo. Exhibit 189 (NSP-000013003); Exhibit 71
[Doc. 134-69]; Exhibit 73 [Doc. 134-71]; Exhibit 75 [Doc. 134-73]; Exhibit 77 [Doc.
134-75].
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Reply: Plaintiffs fail to state a valid objection to SF ¶ 89, and Plaintiffs’
dispute of SF ¶ 89 does not create a genuine issue of material fact. Plaintiffs fail to
show how SF ¶ 89 is overly broad or on what basis it is not concise. Plaintiffs also
fail to show how SF ¶ 89 is vague and ambiguous. There is no dispute that Mr.
Herink is the only Director of Holdings with a law degree, and is the General
Counsel of Insperity. There is no ambiguity with respect to the fact that, given his
background and expertise, Mr. Herink was the one who generally took the lead in
monitoring RTC with respect to legal matters. Accordingly, Plaintiffs’ objection
should be overruled. SF ¶ 89 does not state Mr. Herink was an ERISA expert, nor
does he claim to possess such expertise. Such expertise is not required in the role of
a monitoring fiduciary. Further, it is undisputed that Mr. Herink relied on attorneys
with ERISA expertise as part of his monitoring duties. Herink Dep. at 66:6-68:15
(attached hereto as Ex. 99) (“I also, you know, consult with our ERISA lawyers . . .
[which include] lawyers in my department that are ERISA lawyers that -- that I've
hired to work in the Insperity legal department, and also outside ERISA lawyers that
we have engaged over the years as the legal department to assist us in advising the
company”); see also id. at 113:16-116:17 (relied on ERISA lawyers on staff in
handling fiduciary obligations); 155:16-156:14 (“I hired a couple of ERISA lawyers
and wanted them to really pay very, very close attention to [the issue of expense
reimbursement]; and they did update me on what I thought was appropriate”).
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Plaintiffs cite to various documents demonstrating Mr. Pollina and Mr. Sivula
answering legal questions, but such documents only reinforce that Mr. Herink
utilized his team of ERISA lawyers in monitoring RTC as stated in SF ¶ 90.
Consequently, SF ¶ 89 should be deemed admitted.
90. Mr. Herink relied upon assistance from two experienced ERISA
attorneys in his legal department — Dan Pollina and Doug Sivula. Herink Dep. (Ex.
32) at 23:14-25:23; 95:15-97:18.
Response: Disputed. The citation does not support the movant’s fact. Mr.
Herink does not testify as to the qualifications of Mr. Pollina and Mr. Sivula to
demonstrate that they were “experienced ERISA attorneys”.
Reply: Plaintiffs fail to show how the citation does not support SF ¶ 90. SF ¶
90 cites unrefuted testimony from Mr. Herink identifying his own legal team.
Though Plaintiffs did not take the deposition of Mr. Sivula, Mr. Pollina identified
his experience in his deposition. See Pollina Dep. at 7:8-12:13; 19:13-30:3 (attached
hereto as Ex. 98) (describing legal background and walking through his close to 25
years of experience as an ERISA attorney). The fact that Mr. Pollina and Mr. Sivula
are experienced ERISA attorneys is not actually in dispute, and Plaintiffs cite to no
contrary evidence. Consequently, SF ¶ 90 should be deemed admitted.
91. Holdings and RTC participate in an annual in-person meeting in
Kingwood, Texas (“Annual Meeting”). Herink Dep. (Ex. 32) at 55:15-22 (“we had
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annual meetings with Reliance Trust”).
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 91, therefore their Response does not create a
genuine issue of material fact.
92. During these Annual Meetings, RTC presented a “Trustee’s Report”
(“Annual Report”). See March 2010 - March 2017 Annual Reports (NSP-
000011035-11044) (Exs. 3 to 10).
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 92, therefore their Response does not create a
genuine issue of material fact.
93. The Annual Reports contained information about the Plan’s
investments and expenses, including RTC’s process for selecting investment
options, evaluating investment options on an ongoing basis, and periodically
replacing them. (Id.)
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 93, therefore their Response does not create a
genuine issue of material fact
94. The Annual Reports generally provided Holdings with: (1) an overview
of the financial markets and economy; (2) investment returns for each fund on the
Plan’s investment platform (including the target date funds), compared to
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benchmarks and over various time periods (e.g., trailing 10, 5, 3, 1 and year to date
figures, plus since inception); (3) each fund’s style, ticker symbol, and ranking
relative to peers; (4) various metrics dealing with risk; (5) each fund on the “Watch
List;” and (6) upcoming changes to the fund line-up. (Id.)
Response: Objection. This is an an overly broad statement and not a
“concise”, and covers over an eight-year period in violation of LR 56.1 B.(1). See
LR 56.1 B.(2)(a)(2). Disputed. The Trustee’s reports did not provide metrics dealing
with risk for Plan investments. E.g., Exhibit 4 [Doc. 134-5].
Reply: Plaintiffs fail to state a valid objection to SF ¶ 94, and Plaintiffs’
dispute of SF ¶ 94 does not create a genuine issue of material fact. Plaintiffs fail to
show how SF ¶ 94 is overly broad or on what basis it is not concise. Rather than
dispute that Holdings received the information described in SF ¶ 94, Plaintiffs’
response simply identifies one Annual Report which they claim does not include risk
metrics, but others do. See, e.g., Ex. 9 at 32-41, 43-46 [Doc. 134-10]; Ex. 10 at pp.
14, 16-20 [Doc. 134-11]. In this regard, Plaintiffs ignore the use of the term
“generally” in this fact. Moreover, the documents clearly speak for themselves as
to their contents, and there is no genuine dispute as to the information presented to
Holdings annually by RTC. Consequently, SF ¶ 94 should be deemed admitted.
95. These Annual Reports also provided a review of the Plan’s expenses
and revenue sharing arrangements, including revenue received compared to
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expenses they offset, by year, broken down into components, fund expense ratios,
gross, and net expenses, benchmarking of the Plan’s fees and expenses, and other
detail. (Id.)
Response: Objection. This is an overly broad statement and not a “concise”,
and covers over an eight-year period in violation of LR 56.1 B.(1). See LR 56.1
B.(2)(a)(2). Disputed. Through 2013, the reports did not identify revenue sharing
applied to each investment, the total expense ratio by fund, or compare the fund
expense ratios to peer groups and appropriate benchmarking sources. Exhibit 3 [Doc.
134-04]; Exhibit 4 [Doc. 134-05]; Exhibit 5 [Doc. 134-06]; Exhibit 6 [Doc. 134-07].
After 2013, the Trustee’s Report did not separately itemize the expenses reimbursed
to Retirement Services for recordkeeping and administrative services provided to the
Plan, previously referred to as “Recordkeeper expense”. Exhibit P23 (Depo.
Exhibit 167 (RTCPLEDGER00304710) at 4–5); Exhibit 7 at 32 [Doc. 134-8].
Reply: Plaintiffs fail to state a valid objection to SF ¶ 95, and Plaintiffs’
dispute of SF ¶ 95 does not create a genuine issue of material fact. Plaintiffs fail to
show how SF ¶ 95 is overly broad or on what basis it is not concise. Plaintiffs’
additional fact that the format of RTC’s PowerPoint presentation changed over the
Class Period is immaterial to the fact that the annual reports provided the content
described, about which there can be no genuine dispute, since the documents speak
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for themselves as to their contents. Consequently, SF ¶ 95 should be deemed
admitted.
96. Nick Cotter, former Investment Analyst for RTC, typically explained
RTC’s process for selecting and monitoring funds, including both quantitative and
qualitative processes and monitoring criteria to Holdings at the Annual Meetings.
See Cotter Dep. (Ex. 38) at 162:14-164:2; see e.g., March 2010 Annual Report
(NSP-000011035) (Ex. 3) at 18-19.
Response: Disputed. The slide contained in the Trustee’s reports regarding
the manager selection and monitoring process is a standard slide that is contained in
the Trustee’s reports. See, e.g., Exhibit 3 at 20 [Doc. 134-4], Exhibit 5 at 26 [Doc.
134-6]. This quantitative and qualitative processes and monitoring criteria is not
indicative of the process that was followed by Reliance Trust. For instance, in the
March 14, 2012 Trustee’s report, the same slide was presented but the record
demonstrates that Reliance Trust did not follow that process with respect to the
selection of the Insperity Horizon funds. Exhibit 5 at 26 [Doc. 134-6]; Exhibit P43
(Depo. Exhibit 107 (RTCPLEDGER00217706)).
Reply: Plaintiffs’ dispute of SF ¶ 96 does not create a genuine issue of
material fact. As an initial matter, it is irrelevant whether the presentations contained
standardized slides, as it is undisputed that the presentations served as the foundation
of the meeting, but not the entirety of the discussion. See Studdard Dep. at 156:4-25
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(attached hereto as Ex. 97) (“these are, you know, slides that form the basis of what
we discussed [at the annual meeting], so in that regard, they're also talking points . .
. in other words, there was more than just written information being provided; there
was verbal information being provided”). In disputing SF ¶ 96, Plaintiffs ignore the
cited, undisputed testimony from Mr. Cotter, and instead make a different argument
related to the selection of the Horizon Funds. Moreover, Plaintiffs’ argument in this
regard is incorrect and not supported by Plaintiffs’ citation. Exhibit P43 does not
show a failure to follow the process at issue in the meeting referenced. Plaintiffs
ignore undisputed testimony, and cite no evidence to dispute that Mr. Cotter
explained RTC’s process for selecting and monitoring funds to Holdings at the
Annual Meetings. Consequently, SF ¶ 96 should be deemed admitted.
97. RTC performed market comparisons on an annual basis to ensure that
the Plan’s recordkeeping expenses were reasonable and not above-market for the
services provided. See Carter Dep. (Ex. 23) at 131:14-25 (“we do perform [annual]
benchmarking”).
Response: Disputed. The only documented source that Reliance Trust used to
benchmark the Plan’s expenses was the 401(k) Averages Book, which was reported
in the annual Trustee’s Report. Exhibit 3 at 36 [Doc. 134-4]; Exhibit 4 at 43 [Doc.
134-5]. The Trustee’s reports reported that the Plan’s recordkeeping expenses on a
per-participant basis exceeded the benchmark. E.g., Exhibit 3 at 36 [Doc. 134-4],
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Exhibit 4 at 43 [Doc. 134-5], Exhibit 5 at 46 [Doc. 134-6], Exhibit 6 at 48 [Doc.
134-7]. This survey data is an inherently unreliable source to assess the
reasonableness of the Plan’s recordkeeping expenses. See, e.g., Exhibit P157
(March 1, 2018 Expert Report of Jania Stout, ¶149). The Insperity Defendants’ own
expert previously opined that averages reported in survey data do not reflect
competitive pricing. Exhibit P36 (Scheinberg Depo. Exhibit 16, ¶36). Reliance
Trust also never compared the salaries paid to the employees of Retirement Services
to market surveys to assess their reasonableness for comparable services. Exhibit
P6 (Lance Studdard Dep. 105:3–22).
Reply: Plaintiffs’ dispute of SF ¶ 97 does not create a genuine issue of
material fact. The evidence cited in support of SF ¶ 97 confirms that RTC performed
market comparisons on an annual basis to ensure that the Plan’s recordkeeping
expenses were reasonable. Though Plaintiffs purport to dispute this fact, they
concede that RTC used the 401(k) Averages Book to benchmark the Plan’s
expenses—which confirms SF ¶ 97. Plaintiffs also misrepresent the content of the
reports with regard to the Plan’s expenses exceeding the benchmark. In the
referenced reports, the Plan’s expense is the sum of trustee expenses, recordkeeping
expenses and the fund expense ratios (which includes revenue sharing) less
recaptured revenue sharing. Each report shows the Plan’s total net expenses were
less than the total expenses of comparable plans. Plaintiffs’ response contains
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several additional arguments, none of which raise a genuine issue of fact with regard
to SF ¶ 97. Plaintiffs argue that RTC’s benchmarking was “inherently unreliable”
and cite Ms. Stout. However, Ms. Stout’s opinion in this regard is not supported by
any authority or literature and should be excluded for the additional reasons stated
in the Stout Daubert Motion, filed contemporaneously herewith.
Plaintiffs’ citation to Mr. Scheinberg is also misleading. Whether Mr.
Scheinberg previously opined (in a different case) that survey data is not the same
as competitive bidding is irrelevant to the use of survey data for benchmarking
purposes. It is also irrelevant whether RTC specifically compared the salaries paid
to the employees of Retirement Services to market surveys. Plaintiffs offer no
evidence, not even any expert opinion that any salary paid to employees of
Retirement Services was unreasonable, nor do they offer any comparisons to such
surveys. Moreover, Plaintiffs response does not contradict the undisputed fact that
RTC performed the market comparisons as stated in SF ¶ 97. Consequently, SF ¶ 97
should be deemed admitted.
98. RTC shared with Holdings the results of its annual benchmarking in the
Annual Reports. See 2010 Annual Report (NSP-000011035) (Ex. 3) at p. 13; 2011
Annual Report (NSP-000011036) (Ex. 4) at pp. 42-44; 2012 Annual Report (NSP-
000011037) (Ex. 5) at pp. 13, 32, 52; 2013 Annual Report (NSP-000011038) (Ex.
6) at p. 31; 2014 Annual Report (NSP-000011039) (Ex. 7) at p. 26, 33; 2015 Annual
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Report (NSP-000011040) (Ex. 8) at p. 22-24, 35; 2016 Annual Report (NSP-
000011041) (Ex. 9) at p. 26; 2017 Annual Report (NSP-000011042) (Ex. 10) at p.
33.
Response: Disputed. Reliance Trust reported data from the 401(k) Averages
Book in the annual Trustee’s report. E.g., Exhibit 3 at 36 [Doc. 134-4].
Reply: Plaintiffs’ dispute of SF ¶ 98 does not create a genuine issue of
material fact for the reasons stated in Reply to SF ¶ 97. It is undisputed that RTC
performed annual benchmarking, that RTC used the 401(k) Averages Book as part
of its benchmarking analysis, and that RTC shared this information in the Annual
Reports cited in SF ¶ 97. Plaintiffs’ response admits this fact. Consequently, SF ¶
98 should be deemed admitted.
99. RTC confirmed for Holdings in the Annual Reports that the
recordkeeping fees incurred by the Plan were proper and reasonable. See, e.g., 2010
Annual Report (NSP-000011035) (Ex. 3) at p. 6 (“[c]onfirmed that the fees and
expenses are proper and reasonable”); 2011 Annual Report (NSP-000011036) (Ex.
4) at p. 6 (same); 2012 Annual Report (NSP-000011037) (Ex. 5) at p. 6 (same); 2013
Annual Report (NSP-000011038) (Ex. 6) at p. 6 (same).
Response: Disputed. The Trustee’s reports reported that the Plan’s
recordkeeping expenses on a per-participant basis exceeded the 401(k) Averages
Book. E.g., Exhibit 3 at 36 [Doc. 134-4], Exhibit 4 at 43 [Doc. 134-5], Exhibit 5 at
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46 [Doc. 134-6], Exhibit 6 at 48 [Doc. 134-7]. During the expense approval process,
Reliance Trust did not determine the reasonableness of each expense submitted for
reimbursement. Exhibit P6 (Lance Studdard Dep. 57:5–59:4, 89:11–94:22).
Reliance Trust employees questioned the expense approval process and the
proprietary of reimbursing certain expenses. Exhibit P37 (Depo. Exhibit 173
(RTCPLEDGER00057982)); Exhibit P38 (Depo. Exhibit 175
(RTCPLEDGER00400912) at *912). Despite the referenced 2015 Trustee’s report,
Retirement Services withdrew requests for certain expenses and the Plan was
returned amounts previously paid for utilities, rent, and employee salaries during
2015. Exhibit P19 at 4 (Depo. Exhibit 18 (NSP-000027717) at *720).
Reply: Plaintiffs’ dispute of SF ¶ 99 does not create a genuine issue of
material fact. Plaintiffs do not dispute that RTC confirmed for Holdings in the
Annual Reports that the recordkeeping fees incurred by the Plan were proper and
reasonable.
Instead, Plaintiffs’ response makes different arguments outside of SF ¶ 99, all
of which are irrelevant and immaterial to the fact as stated in SF ¶ 99. Plaintiffs
allege that the Plan’s recordkeeping expenses on a per-participant basis exceeded
the 401(k) Averages Book. This allegation is irrelevant to the question of whether
RTC confirmed to Holdings that the Plan’s expenses as a whole were proper and
reasonable, particularly since the “recordkeeping expense” numbers in the 401(k)
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Averages Book included only direct expenses paid by participants or employers for
these services, not higher expense ratios and corresponding revenue sharing.
Plaintiffs also argue that RTC did not determine the reasonableness of “each
expense” submitted for reimbursement. This is irrelevant, but also factually
incorrect and misstates Mr. Studdard’s testimony. See Studdard Dep. at 89:11–94:22
(Exhibit P6) (“[r]esearch went into any of these items being added to [list of items
for reimbursement] and both sides sort of knew, subject to those discussions, that
only properly expensable items should be submitted in the first place. . . if there was
an exception, that exception was marked and discussed . . .”). Plaintiffs next argue
that RTC “questioned the expense approval process,” citing to Exhibit P37 (a draft
email that was never sent). However, just because an individual RTC employee, in
an unsent draft email, “questioned the expense approval process” is immaterial and
irrelevant to the fact that RTC confirmed the Plan’s expenses were proper and
reasonable. Finally, Plaintiffs’ citations to Exhibits P19 and P38 are equally
unavailing. It is undisputed that in 2015, before this suit was filed, RTC reexamined
the propriety of a select few previously submitted expenses, and, Retirement
Services reimbursed the Plan for the reexamined expenses, plus interest, dating back
to 2010. See December 21, 2015 Letter to Trey Carter from Neil Shifman Regarding
Reimbursement Request Reductions and Revenue Sharing Funds (NSP-000043024)
(Ex. 27). Plaintiffs do not, and cannot, cite a single example of Retirement Services
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failing to return to the Plan a reimbursement of which RTC rescinded its prior
approval. Id. Thus, despite the myriad of additional facts, Plaintiffs’ Response does
not contradict the undisputed fact that RTC confirmed for Holdings in the Annual
Reports that the recordkeeping fees incurred by the Plan were proper and reasonable
as stated in SF ¶ 99. Consequently, SF ¶ 99 should be deemed admitted.
100. RTC confirmed for Holdings in the Annual Reports that “fiduciary
expense controls [were] implemented and approval processes is functioning well.”
See 2010 Annual Report (NSP-000011035) (Ex. 3) at p. 30; 2011 Annual Report
(NSP-000011036) (Ex. 4) at p. 37; 2012 Annual Report (NSP-000011037) (Ex. 5)
at p. 40.
Response: Disputed. Reliance Trust employees questioned the expense
approval process and the proprietary of reimbursing certain expenses. Exhibit P37
(Depo. Exhibit 173 (RTCPLEDGER00057982)); Exhibit P38 (Depo. Exhibit 175
(RTCPLEDGER00400912) at *912). Reliance Trust took “corrective actions”
during 2016 based on its review of the expense approval process. Exhibit P13
(Depo. Exhibit 179 (RTCPLEDGER00405098). Retirement Services also withdrew
requests for certain expenses and the Plan was returned amounts previously paid for
utilities, rent, and employee salaries during 2015. Exhibit P19 at 4 (Depo. Exhibit
18 (NSP-000027717) at *720).
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Reply: Plaintiffs’ dispute of SF ¶ 100 does not create a genuine issue of
material fact for the reasons stated in the Replies to SF ¶¶ 61 and 99. SF ¶ 100 is a
quote from the Annual Report, and Plaintiffs offer no contradicting evidence.
Consequently, SF ¶ 100 should be deemed admitted.
101. The Directors of Holdings (Sarvadi, Rawson, Herink, and Allison) were
present in each of these Annual Meetings during the Class Period. Herink Dep. (Ex.
32) at 80:5-82:22; 125:15-126:3; 193:17-23.
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 101, therefore their Response does not create a
genuine issue of material fact.
102. John Stanton, Dan Pollina and Doug Sivula also regularly attended and
actively participated in these Annual Meetings. Herink Dep. (Ex. 32) at 201:25-
202:19; Stanton Dep. (Ex. 30) at 66:25-67:6; 67:22-69:19.
Response: Disputed. The citation does not support movant’s fact. Holdings
did not keep meeting minutes to confirm who was present at the annual meetings
with Reliance Trust, the frequency of their attendance, and the nature of the
participation of the attendees. See Exhibit P4 (Daniel Herink Dep. 132:1–17).
Meeting confirmations do not indicate that Messrs. Pollina and/or Sivula regularly
attended the annual meeting. Exhibit P39 (Depo. Exhibit 13 (NSP-000039924));
Exhibit P40 (NSP-000062849).
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Reply: Plaintiffs fail to show how the citation does not support SF ¶ 102. SF
¶ 102 contains unrefuted deposition testimony from Messrs. Herink and Stanton,
confirming attendance and participation by the individuals listed in SF ¶ 102 at the
Annual Meetings. Plaintiffs cite no evidence to refute this testimony, which is based
on personal knowledge. Instead, Plaintiffs essentially argue that, in the absence of
written meeting minutes, such attendance is unknowable. However, there was no
legal requirement for Holdings to keep written minutes, and Plaintiffs’ argument is
contrary to common sense and Fed. R. Evid. 602. Plaintiffs also cite to Exhibit P39
apparently to argue that because Messrs. Pollina and Sivula were not on one meeting
invitation means they did not regularly attend the Annual Meetings (Mr. Stanton is
listed on the meeting invitation). However, SF ¶ 102 does not state that such
individuals attended every meeting, and a meeting invitation is not evidence of
actual attendance. Consequently, SF ¶ 102 should be deemed admitted.
103. RTC sent detailed investment performance reports (“Performance
Reports”) for each quarter throughout the Class Period. Stanton Aff. (Ex. 17) at ¶
17; see, e.g., Q2 2013 Investment Performance Summary with Cover Email (NSP-
000014792-14793) (Ex. 44); Q4 2014 Investment Performance Summary with
Cover Email (NSP-000012634-12635) (Ex. 45).
Response: Objection. The term “detailed” is argumentative in violation of the
LR 56.1.B.1.(1). See LR 56.1.B.(2)(a)(2). Disputed. The investment performance
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reports were not “detailed”. See, e.g., Exhibit P157 (April 2, 2018 Expert Report of
Jania Stout, ¶38). They reported basic information on fund tickers, investment
categories, and performance. E.g., Exhibit 4 [Doc. 134-42]. This information is
easily obtained from publicly available sources. See Morningstar,
www.morningstar.com.
Reply: Plaintiffs fail to state a valid objection to ¶ 103, and Plaintiffs’ dispute
of SF ¶ 103 does not create a genuine issue of material fact. Plaintiffs do not argue
that RTC failed to send the Performance Reports, nor do they question the validity
of the authority cited in SF ¶ 103. Instead, Plaintiffs dispute use of the term
“detailed.” However, Plaintiffs fail to show how the word “detailed” in SF ¶ 103 is
argumentative. Mr. Stanton used this exact word in his affidavit. Furthermore, the
Performance Reports speak for themselves regarding the level of detail.
Plaintiffs’ citation to Ms. Stout does not support Plaintiffs’ response, since the
cited paragraph does not address whether the Performance Reports were “detailed.”
Furthermore, Ms. Stout’s opinions should be excluded for the reasons stated in the
Stout Daubert Motion, filed contemporaneously herewith. Finally, Plaintiffs’
response that the information in the Performance Reports is also available from other
sources is irrelevant. Thus, Plaintiffs have not offered any evidence to refute Mr.
Stanton’s affidavit and the related Performance Reports and, consequently, SF ¶ 103
should be deemed admitted.
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104. These quarterly Performance Reports provided detailed investment
returns for each investment option in the Plan (including the Horizon Funds) since
inception and for the year to date, the quarter and trailing periods of 1, 3, 5 and 10
years. See, e.g., Q2 2013 Investment Performance Summary with Cover Email
(NSP-000014792-14793) (Ex. 44); Q4 2014 Investment Performance Summary
with Cover Email (NSP-000012634-12635) (Ex. 45).
Response: Objection. The term “detailed” is argumentative in violation of LR
56.1.B.1.(1). See LR 56.1.B.(2)(a)(2). Disputed. The investment performance
reports were not “detailed”. See, e.g., Exhibit P157 (April 2, 2018 Expert Report of
Jania Stout, ¶38). They reported basic information on fund tickers, investment
categories, and performance. E.g., Exhibit 4 [Doc. 134-42]. This information is
easily obtained from publicly available sources. See Morningstar,
www.morningstar.com.
Reply: Plaintiffs fail to state a valid objection to SF ¶ 104, and Plaintiffs’
dispute of SF ¶ 104 does not create a genuine issue of material fact for the reasons
stated in the Reply to SF ¶ 103. Consequently, SF ¶ 104 should be deemed admitted.
105. These Performance Reports also compared the rate of return for each
fund and each period against a relevant market benchmark. (Id.)
Response: Admitted.
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Reply: Plaintiffs admit SF ¶ 105, therefore their Response does not create a
genuine issue of material fact.
106. These Performance Reports classified each fund by its investment style
or category, reported its ticker symbol, and explained that RTC used the Zephyr
software system to compile each Investment Performance Report. (Id.)
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 106, therefore their Response does not create a
genuine issue of material fact.
107. John Stanton carefully reviewed these quarterly Performance Reports.
Stanton Dep. (Ex. 30) at 116:25-118:18; 161:14-165:17; Herink Dep. (Ex. 32) at
78:21-83:25; 119:11-119:25.
Response: Objection. The term “carefully reviewed” is undefined, and vague
and ambiguous, and it is also argumentative in violation of LR 56.1.B.1.(1). See LR
56.1.B.(2)(a)(2). Disputed. Mr. Herink does not have personal knowledge to attest
to the actions Mr. Stanton purported took. Fed. R. Evid. 602. The cited testimony
from Mr. Stanton does not support movant’s fact that Mr. Stanton “carefully
reviewed” the performance reports but rather describes information Mr. Stanton
purportedly showed to Mr. Rawson. Exhibit 30 at 116:25-118:18 [Doc. 134-31].
Reply: Plaintiffs fail to state a valid objection to SF ¶ 107, and Plaintiffs’
dispute of SF ¶ 107 does not create a genuine issue of material fact. Plaintiffs fail to
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show how the term “carefully review” in SF ¶ 107 is undefined, vague and
ambiguous, or argumentative. This is a widely-used phrase and does not require a
definition. Plaintiffs’ dispute that Mr. Herink lacks personal knowledge is
unsupported. As a Director, Mr. Herink had “personal knowledge” of the
monitoring actions undertaken by Mr. Stanton at his direction and Mr. Herink’s
testimony confirms this fact. Finally, the cited testimony shows Mr. Stanton
carefully reviewed and analyzed the investment Performance Reports, with the
purpose of sharing the information with the Directors for their part of his monitoring
function (as implicitly acknowledged in Plaintiffs’ response). Consequently, SF ¶
107 should be deemed admitted.
108. John Stanton kept detailed notes on fund performance patterns based
on these quarterly Performance Reports. Stanton Dep. (Ex. 30) at 117:19-118:20
(stating he added “[a] lot of analysis on the [Performance Report] so that [Richard
Rawson] could understand, on a single sheet, how the investments were doing”); see
also John Stanton Personal Scorecard of Fund Performance 2008-2014 (NSP-
000020627) (Ex. 46); Insperity 401(k) Plan Investment Performance Summary
2008-2016 with John Stanton Notes (NSP-000020645) (Ex. 47).
Response: Objection. The term “detailed” is undefined, vague and
ambiguous, and is also argumentative in violation of LR 56.1.B.1.(1). See LR
56.1.B.(2)(a)(2). Disputed. There is no documentation that Mr. Stanton performed
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an analysis based on the performance reports. See, e.g., Exhibit P158 (April 2, 2018
Rebuttal Report of Jania Stout, ¶25)(noting lack of documentation). Exhibit 47 [Doc.
134-15] merely shows the circling of reported performance and limited handwritten
notes. It does not reflect “detailed” notes on performance patterns.
Reply: Plaintiffs fail to state a valid objection to SF ¶ 108 for the reasons
stated in the Reply to SF ¶ 103. Plaintiffs’ dispute of SF ¶ 108 also does not create
a genuine issue of material fact. SF ¶ 108 is supported by Mr. Stanton’s unrefuted
deposition testimony and the cited exhibits with his handwritten notes. Thus, Ms.
Stout’s factual opinion that there is a lack of documentation is contrary to undisputed
evidence. Furthermore, Ms. Stout’s opinions should be excluded for the reasons
stated in the Stout Daubert Motion, filed contemporaneously herewith. Finally, Ex.
47 speaks for itself regarding the level of detail in Mr. Stanton’s notes contained
therein. Consequently, SF ¶ 108 should be deemed admitted.
109. John Stanton and his leadership team completed their own analysis of
investment performance relative to peers and benchmarks, expense ratios relative to
peer groups, Morningstar ratings, and amounts available for expense reimbursement
and submitted that analysis to Mr. Rawson. Stanton Dep. (Ex. 30) at 116:14-122:9.
Response: Disputed. There is no documentation that Mr. Stanton and the so-
called “leadership team” performed such analysis. See, e.g., Exhibit P158 (April 2,
2018 Rebuttal Report of Jania Stout, ¶25)(noting lack of documentation).
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Reply: Plaintiffs’ dispute of SF ¶ 109 does not create a genuine issue of
material fact. Plaintiffs’ use of the phrase “so-called ‘leadership team’” is also
argumentative in violation of LR 56.1(B)(2)(a)(1). Plaintiffs’ statement that there is
no documentation supporting the analysis performed by Mr. Stanton ignores his
unrefuted deposition testimony. There was no requirement to cite additional
documentation in support of this fact. Plaintiffs’ citation to Ms. Stout fails for the
reasons stated in the Reply to SF ¶ 108. Plaintiffs have not offered any evidence to
refute Mr. Stanton’s testimony and, consequently, SF ¶ 109 should be deemed
admitted.
110. If RTC changed any investment options, John Stanton would discuss
such changes with Richard Rawson. Stanton Dep. (Ex. 30) at 80:24-81:20; 114:22-
115:22; 119:6-122:9.
Response: Disputed. There is no documentation that such discussion occurred
for each fund change. Documentation of Retirement Services meetings does not
reflect such discussions. See, e.g., Exhibit P29 (Depo. Exhibit 144 (NSP-
000036443)); Exhibit P30 (Depo. Exhibit 136 (NSP-000023508)); Exhibit P31
(NSP-000020303); Exhibit P32 (NSP-00020409).
Reply: Plaintiffs’ dispute of SF ¶ 110 does not create a genuine issue of
material fact. SF ¶ 110 is supported by unrefuted deposition testimony. E.g.,
Stanton Dep. at 119:6-122:9 (Ex. 30) (“if there was going to be a change of any kind
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in the investments of the plan, then we would have separate meetings to talk
specifically about those changes). There was no requirement to cite additional
documentation in support of this fact. Regardless, the alleged lack of documentation
does not refute that the discussions occurred. The Insperity Defendants intentionally
chose the signal “see, e.g.” to offer the citations as sample communications.
Similarly, Plaintiffs’ citation to selected meeting agendas and calendar entries does
not refute that the discussions occurred. Plaintiffs do not cite any evidence
contradicting Mr. Stanton’s unrefuted deposition testimony and, consequently, SF ¶
110 should be deemed admitted.
111. John Stanton and his leadership team met with Richard Rawson in-
person to discuss, among other things, the Plan’s investments. See Stanton Dep.
(Ex. 30) at 83:7-22 (Rawson would ask “[d]ifferent questions, depending on the
circumstances. For example, how were the investments doing? And any concerns
we might have about them, if there were such things. Just generally trying to
understand how the investments of the plan were doing.”).
Response: Disputed. Documentation of Retirement Services meetings does
not reflect specific discussions on Plan investments. See, e.g., Exhibit P29 (Depo.
Exhibit 144 (NSP-000036443)); Exhibit P30 (Depo. Exhibit 136 (NSP-
000023508)); Exhibit P31 (NSP-000020303); Exhibit P32 (NSP-00020409).
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Reply: Plaintiffs’ dispute of SF ¶ 111 does not create a genuine issue of
material fact for the reasons stated in the Reply to SF ¶ 110. Plaintiffs cite to the
same four exhibits as the Response to SF ¶ 110, but the exhibits are equally
unavailing here. Again, Plaintiffs do note cite any evidence contradicting Mr.
Stanton’s unrefuted deposition testimony and, consequently, SF ¶ 111 should be
deemed admitted.
112. John Stanton and Richard Rawson also occasionally communicated via
e-mail regarding the Plan’s investment options. See, e.g., June 3, 2011 e-mail from
Richard Rawson to John Stanton regarding Upcoming Fund Changes (NSP-
000018078) (Ex. 48); April 22, 2013 e-mail from Richard Rawson to John Stanton
reflecting questions for RTC (NSP-000055744) (Ex. 49).
Response: Objection. The term “occasionally” is undefined, and therefore
vague and ambiguous. Disputed. The citations provided by the movant only support
the fact that Messrs. Stanton and Rawson communicated on two separate occasions
in two different years.
Reply: Plaintiffs fail to state a valid objection to SF ¶ 112 and Plaintiffs’
dispute of SF ¶ 112 does not create a genuine issue of material fact. Plaintiffs fail to
show how the term “occasionally” is vague and ambiguous as used in SF ¶ 112.
“Occasionally” is a widely-used term and does not require a definition. Plaintiffs’
dispute that only two sample communications are cited in SF ¶ 112 is also not a
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genuine dispute. The Insperity Defendants intentionally chose the signal “see, e.g.”
to offer the citations as sample communications. In response, Plaintiffs simply offer
speculation and do not cite any evidence that refutes SF ¶ 112. Consequently, SF ¶
112 should be deemed admitted.
113. Dan Herink kept apprised of Plan investments and monitored RTC
through the Annual Meetings with RTC as well as periodic updates from others in
the company, such as Messrs. Rawson, Pollina, Stanton, and Sivula. Herink Dep.
(Ex. 32) at 27:11-29:22; 56:24-58:20; 118:18-131:8; 201:1-202:19.
Response: Disputed. The Insperity Defendants have provided no
documentation of the “periodic updates” that Mr. Heink received outside the annual
Trustee’s meetings. Mr. Herink did not recall any documents other than the Trustee’s
report that the Directors of Holdings reviewed and considered in monitoring
Reliance Trust’s actions. Exhibit P4 (Daniel Herink Dep. 129:3–131:8). He did not
recall any documents that were prepared by Mr. Stanton or Retirement Services and
provided to him to assist in monitoring Reliance Trust. Id. 120:25–121:11.
Reply: Plaintiffs’ dispute of SF ¶ 113 does not create a genuine issue of
material fact. The evidence cited by Plaintiffs does not refute SF ¶ 113. Instead, the
additional deposition testimony cited by Plaintiffs supports the fact that Mr. Herink
kept apprised of Plan investments and monitored RTC. (Herink Dep. at 129:3–
131:8) (Ex. 32) (“[i]f you're asking me about [this Trustee Report], that this is the
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only document that we have got? I disagree. There's other documents . . . every year
there's going to be a written report that's provided . . . there were interim meetings
that would occur between Reliance and others at Insperity and -- and information
from those meetings would be reported up to Richard as -- and me on an as-needed
basis.”). That Mr. Herink could not also recall any specific document authored by
Mr. Stanton and provided to him is irrelevant to the fact that Mr. Herink kept
apprised of Plan investments and monitored RTC, as stated in SF ¶ 113. Again,
Plaintiffs simply offer speculation, and focus only on documents, while ignoring
unrefuted testimony and offering no evidence to contradict such testimony.
Consequently, SF ¶ 113 should be deemed admitted.
114. Richard Rawson and Dan Herink kept Paul Sarvadi and Jim Allison
apprised of Plan investments and other updates as needed in between Annual
Meetings. Herink Dep. (Ex. 32) at 82:3-6; 128:11-14; 193:20-23.
Response: Disputed. The Directors of Holdings never met outside of the
annual meeting to monitor Reliance Trust’s actions. E.g., Exhibit P2 (Richard
Rawson Dep. 56:23–59:1). The Insperity Defendants have provided no
documentation on the updates that Messrs. Rawson and Herink purportedly provided
to the other Directors.
Reply: Plaintiffs’ dispute of SF ¶ 114 does not create a genuine issue of
material fact. Plaintiffs do not cite any evidence that refutes SF ¶ 114. The only
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cited evidence is Mr. Rawson’s testimony, which does not support Plaintiffs’ dispute
and instead affirmatively supports SF ¶ 114. Rawson Dep. 56:23–59:1 (Exhibit P2)
(“[Q:] What other meetings are you referring to wherein your duties to monitor
Reliance's trusts were discussed? . . . I would just tell you that there were a lot of --
a lot of meetings over a long period of time”). Plaintiffs’ Response also directly
ignores the Herink testimony cited. See Herink Dep. at 82:3-6 (Ex. 32) (agreeing
“the three members of the board met regularly to discuss the performance of the
investment options and the Plan”). There is no need or requirement to cite
additional documentation in support of SF ¶ 114. The alleged lack of documentation
does not refute testimony that Directors met and provided updates to one another.
Again, Plaintiffs simply offer speculation, while ignoring unrefuted evidence.
Consequently, SF ¶ 114 should be deemed admitted.
115. In addition to the Annual Meetings, representatives of Holdings met
with RTC face-to-face multiple times during the Class Period, either at Insperity’s
headquarters in Kingwood, Texas or at RTC’s headquarters in Atlanta, Georgia.
Stanton Dep. (Ex. 30) at 268:21-269:12 (“We felt it was a good idea to go out and
visit Reliance’s office on an annual basis to see folks who didn’t normally come out
to see us and to make sure that we had everybody on the same page about where we
were going”); Herink Dep. (Ex. 32) at 201:1-202:19 (the relationship was interactive
as “John [Stanton] had a close, working relationship with . . . Reliance in terms of
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performing the operations of the Plan and I knew they were getting information from
Reliance on an – on an interim basis in between the annual meetings”); see, e.g.,
Agenda for June 3, 2013 meeting with Kent Buckles, Executive Vice President of
RTC, in Houston, Texas (NSP-000012816) (Ex. 50); Minutes from July 25, 2013
meeting in Atlanta, Georgia (NSP-000020685) (Ex. 51); Agenda for Insperity and
Reliance Meeting on November 12-14, 2013 (NSP-000070357) (Ex. 52);
Presentation for November 13, 2013 Discussing Plan Performance (NSP-
000020747) (Ex. 53); January 17, 2014 e-mail from John Stanton to Karen Drury
(Retirement Services) regarding Recap of January 15, 2014 Meeting in Atlanta,
Georgia (NSP-000044284) (Ex. 54); Presentation from August 7, 2014 meeting in
Atlanta, Georgia (NSP-000021267) (Ex. 55).
Response: Objection. The term “representatives of Holdings” is vague and
ambiguous. Disputed. The movant’s fact is not material and of no consequence in
determining the action. 29 U.S.C. §1105(a). Meetings occurred between employees
of Retirement Services not as “representatives of Holdings” to primarily discuss
business matters between Retirement Services and Reliance Trust. See, e.g., Exhibit
51 at 2 [Doc. 134-49](“Other goals for Insperity Retirement Services”); Exhibit 52
at 2 [Doc. 134-50](“How Can RTC help RS Grow Their Business”).
Reply: Plaintiffs fail to state a valid objection to SF ¶ 115, and Plaintiffs’
dispute of SF ¶ 115 does not create a genuine issue of material fact. The term
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“representatives of Holdings” is neither vague nor ambiguous in the context of the
cited evidence and the undisputed facts of this case. Plaintiffs’ dispute ignores the
fact that Mr. Stanton and others wore “two hats”: one hat on behalf of Retirement
Services, and a second hat on behalf of Holdings while assisting the Directors of
Holdings in fulfilling Holdings’ monitoring duties. ERISA expressly recognizes and
allows individuals such as Mr. Stanton to wear “two hats.” 29 U.S.C. § 1108(c). It
is undisputed that as a director, Mr. Rawson relied on Mr. Stanton to assist in
monitoring RTC. See Rawson Dep. at 187:19-189:15 (attached hereto as Ex. 94)
(“Mr. Stanton . . . [was a] part of my team, he reported directly to me. Obviously he
was not the fiduciary, but I used his knowledge and his expertise a lot to ask
questions and have, you know, him in many cases go do work and check out things
. . . and he did”). Plaintiffs also fail to show how SF ¶ 115 is not material. The fact
that representatives of Holdings met with RTC face-to-face multiple times during
the Class Period is relevant evidence of Holdings fulfilling its monitoring duties, and
thus is material to the duty to monitor claim. Plaintiffs’ reference to ERISA § 405(c),
29 U.S.C. § 1105(c) does not refute SF ¶ 115 for the reasons stated in the Reply to
SF ¶ 14. Finally, the additional fact that representatives of Retirement Services also
met with RTC to discuss “business matters” other than monitoring of RTC is
irrelevant to the fact that representatives of Holdings met with RTC face-to-face
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multiple times during the Class Period as stated in SF ¶ 115. Consequently, SF ¶ 115
should be deemed admitted.
116. RTC often communicated with representatives of Holdings via phone
and e-mail on a wide range of issues throughout the year, including the plan’s
investment options and reducing expenses for participants. Stanton Aff. (Ex. 17) at
¶ 18; Herink Dep. (Ex. 32) at 56:9-57:21; 215:10-216:6.
Response: Objection. The term “representatives of Holdings” is vague and
ambiguous. Disputed. Mr. Herink does not have personal knowledge to attest
conversations that occurred between Retirement Services and Reliance Trust for
which he was not a party. Fed. R. Evid. 602. His cited testimony only refers to a
single instance that he was apprised of Reliance Trust considering a target date fund
replacement. Exhibit 32 at 215:10–126:6 [Doc. 134-33]. Mr. Stanton declares that
he communicated “frequently” by email but the Insperity Defendants do not provide
documentation of these purported communications and subject matter. The Insperity
Defendants do not provide support that Mr. Stanton was acting as a representative
of Holdings in comparison to Retirement Services. Holdings never authorized Mr.
Stanton to act on its behalf in carrying out its fiduciary obligations. See generally
Exhibit P4 (Daniel Herink Dep. 54:13–20). And Mr. Studdard testified that he
would communicate with Karen Drury or Dustin Boone, not Mr. Stanton. See
Exhibit P6 (Lance Studdard Dep. 43:8–19).
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Reply: Plaintiffs fail to state a valid objection to SF ¶ 116, and Plaintiffs’
dispute of SF ¶ 116 does not create a genuine issue of material fact. The term
“representatives of Holdings” is neither vague nor ambiguous in the context of the
cited evidence and the undisputed facts of this case. Plaintiffs’ dispute that Mr.
Herink lacks personal knowledge of certain conversations is unsupported. As a
Director, Mr. Herink had “personal knowledge” of the monitoring actions
undertaken by others and his testimony confirms this fact. SF ¶ 116 is also supported
by Mr. Stanton’s affidavit. Plaintiffs have not cited any contrary evidence and thus
there was no need to cite additional sample communications. Plaintiffs’ dispute
ignores the fact that Mr. Stanton and others wore “two hats”: one hat on behalf of
Retirement Services, and a second hat on behalf of Holdings while assisting the
Directors of Holdings in fulfilling Holdings’ monitoring duties. ERISA expressly
recognizes and allows individuals such as Mr. Stanton to wear “two hats.” 29 U.S.C.
§ 1108(c). It is undisputed that as a director, Mr. Rawson relied on Mr. Stanton to
assist in monitoring RTC. See Rawson Dep. at 187:19-189:15 (attached hereto as
Ex. 94) (“Mr. Stanton . . . [was a] part of my team, he reported directly to me.
Obviously he was not the fiduciary, but I used his knowledge and his expertise a lot
to ask questions and have, you know, him in many cases go do work and check out
things . . . and he did”). SF ¶ 116 is also supported by Plaintiffs’ response, which
notes Mr. Studdard’s testimony that he communicated with Karen Drury and Dustin
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Boone. Mr. Studdard also testified that he would meet with John Stanton, Karen
Drury, and Dan Pollina. Studdard Dep. 152:5-24 (attached hereto as Ex. 97).
Accordingly, Plaintiffs’ objection should be overruled and SF ¶ 116 should be
deemed admitted.
117. RTC kept representatives of Holdings apprised of upcoming changes to
the fund line-up. See, e.g., January 2, 2014 e-mail from Nick Cotter to John Stanton
regarding Fund Lineup Changes (NSP-000038726) (Ex. 56).
Response: Objection. The term “representatives of Holdings” is vague and
ambiguous. Disputed. The citation does not support the movant’s citation. Exhibit
56 [Doc. 134-54] is an email communication to Mr. Stanton as an employee of
Retirement Services not an authorized representative of Holdings. Holdings never
authorized Mr. Stanton to act on its behalf in carrying out its fiduciary obligations.
See generally Exhibit P4 (Daniel Herink Dep. 54:13–20). The document provides
no evidence that this information from a fund change in 2014 was provided to any
Director of Holdings, or similar information on fund changes was provided to the
Directors in prior or future years.
Reply: Plaintiffs fail to state a valid objection to SF ¶ 117, and Plaintiffs’
dispute of SF ¶ 117 does not create a genuine issue of material fact. The term
“representatives of Holdings” is neither vague nor ambiguous in the context of the
cited evidence and the undisputed facts of this case. Plaintiffs also fail to show how
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the citation does not support SF ¶ 117. The citation includes an e-mail from RTC to
Mr. Stanton and others regarding fund line-up changes. Thus, this e-mail supports
the notion that RTC kept representatives of Holdings apprised of upcoming changes
to the fund line-up. Plaintiffs’ dispute ignores the fact that Mr. Stanton and others
wore “two hats” as explained in the Reply to SF ¶ 116. It is undisputed that as a
director, Mr. Rawson relied on Mr. Stanton to assist in monitoring RTC. See
Rawson Dep. at 187:19-189:15 (attached hereto as Ex. 94) (“Mr. Stanton . . . [was
a] part of my team, he reported directly to me. Obviously he was not the fiduciary,
but I used his knowledge and his expertise a lot to ask questions and have, you know,
him in many cases go do work and check out things . . . and he did”). Plaintiffs
ignore this unrefuted testimony and fail to cite any evidence that refutes SF ¶ 117.
Accordingly, Plaintiffs’ objection should be overruled, and SF ¶ 117 should be
deemed admitted.
118. Representatives of Holdings often pressed RTC for further information
and analysis regarding the performance and fees of the Plan’s investment options.
Herink Dep. (Ex. 32) at 206:20-207:10; see, e.g., November 9, 2010 e-mail from
John Stanton to Nick Cotter questioning the performance of the Davis New York
Venture Fund (NSP-000018356) (Ex. 57); March 5, 2013 e-mail from Nick Cotter
responding to Dan Pollina regarding Pollina’s concerns about a Goldman Sachs
Fund and attaching several pages about active vs. passive management, performance
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in bull vs bear markets, and the cyclicality of performance (NSP-000017734) (Ex.
58); October 3, 2013 e-mail correspondence between John Stanton and Kent Buckles
regarding stable value fund (NSP-000041879) (Ex. 59); August 5, 2014 e-mail
between John Stanton and Kent Buckles regarding Fund Performance Questions
(NSP-000012508) (Ex. 60); December 8, 2015 e-mail between John Stanton and Jay
Mullins regarding Client Complaint (NSP-000048537) (Ex. 61).
Response: Objection. The terms “pressed” and “representatives of Holdings”
are vague and ambiguous. The term “pressed” is also argumentative in violation of
LR 56.1.B.1.(1). See LR 56.1.B.(2)(a)(2). Disputed. The cited email
communications were among employees of Retirement Services. Holdings never
authorized any employee of Retirement Services to act behalf in carrying out its
fiduciary obligations as “representatives”. See generally Exhibit P4 (Daniel Herink
Dep. 54:13–20).
Reply: Plaintiffs fail to state a valid objection to SF ¶ 118, and Plaintiffs’
dispute of SF ¶ 118 does not create a genuine issue of material fact. The term
“representative of Holdings” is neither vague nor ambiguous for the reasons stated
in the Reply to SF ¶ 115. Similarly, Plaintiffs fail to show how the word “pressed”
in SF ¶ 118 is argumentative, vague or ambiguous. “Pressed” is a widely-used term
that does not require a definition, and it is further clarified by reference to the cited
evidence in support of this fact. Plaintiffs also inaccurately identify Mr. Pollina as
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an employee of Retirement Services (as opposed to Holdings). Plaintiffs’ dispute
also ignores the fact that Mr. Stanton and others wore “two hats” as explained in the
Replies to SF ¶ 116 and 117. Plaintiffs do not cite any evidence that refutes SF ¶
118 and, consequently, SF ¶ 118 should be deemed admitted.
119. On June 24, 2011, William Harlow (President of RTC) e-mailed John
Stanton regarding the prospect of establishing a new series of target date funds as
the qualified default investment alternative (QDIA) for the Plan and the many
potential advantages of doing so, relative to the existing J.P. Morgan target date
funds. See June 24, 2011 e-mail from Bill Harlow to John Stanton regarding QDIA
Target Date (NSP-000041113) (Ex. 62).
Response: Objection. The phrase “the many potential advantages of doing so”
is argumentative in violation of LR 56.1.B.1.(1). See LR 56.1.B.(2)(a)(2). Disputed.
Mr. Harlow’s email communication only references the estimated cost of the risk-
adjusted target date funds to that of the J.P. Morgan target date funds. Exhibit 62
[Doc. 134-60].
Reply: Plaintiffs fail to state a valid objection to SF ¶ 119, and Plaintiffs’
dispute of SF ¶ 119 does not create a genuine issue of material fact. Plaintiffs fail to
show how the phrase “the many potential advantages of doing so” in SF ¶ 119 is
argumentative. Reviewing the cited e-mail makes clear that this is an accurate
description of the e-mail and the document speaks for itself. Plaintiffs’ dispute that
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the e-mail “only references the estimated cost” of the funds is factually incorrect.
The e-mail also references the options for low, moderate, and aggressive investors,
the types of investment options, and the collective funds’ unique nature. Plaintiffs
do not cite any evidence that refutes SF ¶ 119 and, consequently, SF ¶ 119 should
be deemed admitted.
120. Mr. Harlow’s June 24, 2011 e-mail suggested (i) building this new
target date fund with low-cost, passive funds, and (ii) using RTC to select, combine
and oversee the component, underlying funds; and thus, significantly reducing the
expense ratio from what participants paid for the J.P. Morgan target date funds. (Id.)
Response: Objection. The phrases “low-cost” and “significantly reducing”
are vague and ambiguous, and is also argumentative in violation of LR 56.1.B.1.(1).
See LR 56.1.B.(2)(a)(2). Disputed. The passive version of the J.P. Morgan target
date funds would have provided participants approximately the same cost savings as
the Plan’s Insperity Horizon Risk-Managed funds, and the lower-cost share class of
the passive version would have been lower cost than the Insperity Horizon funds.
Exhibit P41 at 2 (Depo. Exhibit 184 (NSP-000071572) at *573); Exhibit 65 at 11
[Doc. 134-63].
Reply: Plaintiffs fail to state a valid objection to SF ¶ 120, and Plaintiffs’
dispute of SF ¶ 120 does not create a genuine issue of material fact. Plaintiffs fail to
show how the phrases “low-cost” and “significantly reducing” are vague and
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ambiguous, or argumentative. These are widely-used phrases and do not require a
definition. Reviewing the cited e-mail makes clear that these phrases accurately
describe the contents of the e-mail and the document speaks for itself. For example,
the e-mail notes that the estimated cost of the new fund would be “about half the
expense ratio for the JPMorgan target product.” Plaintiffs’ response is itself
argumentative and simply makes a different argument outside of SF ¶ 120 regarding
an investment fund not at issue in this SF. Plaintiffs do not cite any evidence that
refutes SF ¶ 120 and, consequently, SF ¶ 120 should be deemed admitted.
121. Mr. Harlow’s June 24, 2011 e-mail also attached background
educational materials and explained key concepts involved in developing these
funds. (Id.)
Response: Objection. The phrase “key concepts” is undefined, and vague and
ambiguous. Disputed. The citation does not support movant’s fact because the
attached presentation was not cited for evidentiary support.
Reply: Plaintiffs fail to state a valid objection to SF ¶ 121, and Plaintiffs’
dispute of SF ¶ 121 does not create a genuine issue of material fact. Plaintiffs fail to
show how the phrase “key concepts” is vague and ambiguous. This is a widely-used
phrase and does not require a definition. Plaintiffs’ dispute to SF ¶ 121 is based
solely on the fact that the referenced attachment itself was not separately cited.
However, there was no requirement to separately cite the attachment. The e-mail
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expressly references such “attachment” and the existence of the attachment is not in
dispute. Plaintiffs do not cite any evidence that refutes SF ¶ 121 and, consequently,
SF ¶ 121 should be deemed admitted.
122. On August 9, 2011, RTC presented these ideas to representatives of
Holdings in more detail. Stanton Aff. (Ex. 17) at ¶ 19; see also, Aug. 9, 2011 e-mail
correspondence between Lance Studdard (former Senior Vice President, RTC) John
Stanton, and Dan Pollina regarding Conference Call and Agenda (NSP-000038579)
(Ex. 63); Collective Funds Discussion Agenda (NSP-000038581) (Ex. 64).
Response: Objection. The term “representatives of Holdings” is vague and
ambiguous. Disputed. Holdings never authorized any employee of Insperity or
Retirement Services to act on its behalf in carrying out its fiduciary obligations. See
generally Exhibit P4 (Daniel Herink Dep. 54:13–20). The three Directors were the
employees who carrying out the fiduciary obligations of Holdings. Exhibit P27
(Depo. Exhibit 3 (NSP-000026596)(2010 Plan)); Exhibit 1 [Doc. 134-2] (2014
Plan)(§§2.4, 10.1, 10.2); Exhibit P4 (Daniel Herink Dep. 18:10–19:13). The agenda
for the meeting was for “Insperity Retirement Services”, not for “representatives of
Holdings”. Exhibit 64 [Doc. 134-62].
Reply: Plaintiffs fail to state a valid objection to SF ¶ 122, and Plaintiffs’
dispute of SF ¶ 122 does not create a genuine issue of material fact. The term
“representatives of Holdings” is neither vague nor ambiguous in the context of the
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cited evidence and the undisputed facts of this case. Plaintiffs’ dispute of SF ¶ 122
does not create a genuine issue of material fact for the reasons stated in the Replies
to SF ¶¶ 84 and 116. Plaintiffs offer no evidence contradicting the fact that the
discussions referenced in SF ¶ 122 took place. Accordingly, Plaintiffs’ objection
should be overruled and SF ¶ 122 should be deemed admitted.
123. On August 31, 2011, RTC presented more information about these
possible new target date funds to a larger group of representatives from Holdings,
including Dan Herink and Richard Rawson. See Stanton Dep. (Ex. 30) at 238:2-
239:13; Herink Dep. (Ex. 32) at 240:5-7; see also August 31, 2011 Insperity QDIA
Review (RTCPLEDGER00414666) (Ex 65).
Response: Objection. The term “representatives of Holdings” is vague and
ambiguous. Disputed. Holdings never authorized any employee of Insperity or
Retirement Services to act on its behalf in carrying out its fiduciary obligations. See
generally Exhibit P4 (Daniel Herink Dep. 54:13–20). The three Directors were the
employees who carrying out the fiduciary obligations of Holdings. Exhibit P27
(Depo. Exhibit 3 (NSP-000026596)(2010 Plan)); Exhibit 1 [Doc. 134-2] (2014
Plan)(§§2.4, 10.1, 10.2).
Reply: Plaintiffs fail to state a valid objection to SF ¶ 123 and Plaintiffs’
dispute of SF ¶ 123 does not create a genuine issue of material fact. The term
“representatives of Holdings” is neither vague nor ambiguous in the context of the
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cited evidence and the undisputed facts of this case. Plaintiffs’ dispute of SF ¶ 123
does not create a genuine issue of material fact for the reasons stated in the Replies
to SF ¶¶ 84 and 116. Plaintiffs offer no evidence contradicting the fact that the
discussions referenced in SF ¶ 123 took place. Accordingly, Plaintiffs’ objection
should be overruled and SF ¶ 123 should be deemed admitted.
124. The August 31, 2011 presentation from RTC stated that a purpose and
focus of the discussion was to find ways to reduce expenses for plan participants,
provide a custom approach for target date funds, consider possible alternatives to the
existing, actively managed J.P. Morgan target date funds and get impressions and
feedback from Holdings. (Id.)
Response: Disputed. Exhibit 65 [Doc. 134-63] stated that the objectives for
the QDIA review was to “Explore ways to reduce expenses for plan participants”,
“Provide a customized approach”, “Consider possible alternatives”, and “Get your
impressions and feedback”.
Reply: Plaintiffs’ dispute of SF ¶ 124 does not create a genuine issue of
material fact. As an initial matter, it is not even clear what portion of SF ¶ 124 is
being disputed, if any. SF ¶ 124 summarizes the presentation from RTC, while
Plaintiffs’ response simply re-states the summary with direct quotes. Consequently,
SF ¶ 124 should be deemed admitted.
125. During these August 2011 discussions, RTC presented the pros and
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cons and cost savings of two commercial “off-the-shelf” options: (1) the J.P. Morgan
Passive Blend Funds (with lower expenses due to use of passive investments), and
(2) the Met Life Volatility Managed Funds (which included an actively managed
tactical overlay that reduced equity exposure in periods of high volatility). See, e.g.,
Aug. 9, 2011 e-mail correspondence between Lance Studdard, John Stanton, and
Dan Pollina regarding Conference Call and Agenda (NSP-000038579) (Ex. 63);
Collective Funds Discussion Agenda (NSP-000038581) (Ex. 64); August 31, 2011
Insperity QDIA Review (RTCPLEDGER00414666) (Ex. 65).
Response: Objection. This is an overly broad statement as it is not a “concise”
in violation of LR 56.1 B.(1). See LR 56.1 B.(2)(a)(2). Subject to this objection,
Plaintiffs admit that the August 31, 2011 presentation reflected the information
characterized in the asserted fact.
Reply: Plaintiffs fail to state a valid objection to SF ¶ 125 because Plaintiffs
fail to show how SF ¶ 125 is not concise. Accordingly, Plaintiffs’ objection should
be overruled. Since Plaintiffs do not dispute SF ¶ 125, it should be deemed admitted.
126. RTC also presented a third “custom” option: a combination of risk
adjusted funds, using existing underlying passive third party funds, that RTC
proposed to assemble and manage. (Id.)
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Response: Disputed. The citation does not support movant’s fact that
Reliance Trust presented a “custom” approach. Exhibit 65 [Doc. 134-63] does not
classify the Reliance Trust Risk-Based Target Date Funds as “custom” funds.
Reply: Plaintiffs’ dispute of SF ¶ 126 does not create a genuine issue of
material fact. The only portion of SF ¶ 126 disputed is the term “custom,” presented
in quotation marks to indicate the uniqueness of the fund rather than a direct
quotation of the name of the fund. Since the funds were not previously in existence,
but to be developed by RTC, they, by definition were “custom” funds. Plaintiffs
offer no contradicting evidence. Consequently, SF ¶ 126 should be deemed
admitted.
127. Dan Pollina investigated alternative target date options offered or
adopted by URS and Charles Schwab. See Pollina Dep (Ex. 31) at 30:9-31:4 (stating
he called Charles Schwab because “Reliance was looking at a new set of target date
funds. And so I view it as part of our responsibilities is to monitor them and
understand the market.”); id. at 65:1-66:4 (discussing handwritten notes on or around
September 12, 2011, regarding notes and questions from when “Reliance had come
to talk to us about target date funds”); Herink Dep. (Ex. 32) at 232:22-233:9 (“I
identified [whether or not Reliance would provide a comparison of the costs of their
target date funds compared to other funds] as an issue that I wanted to make sure
Mr. Pollina was alerted to and would make sure he – he reviewed it and did the due
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-- legal due diligence we needed to do on that issue”).
Response: Objection. The term “investigated” is vague and ambiguous.
Disputed. The handwritten notes of Mr. Pollina purport to reflect notes he took of
calls he had with URS and Charles Schwab. Exhibit P41 at 6–8 (Depo. Exhibit 184
at *577–79).
Reply: Plaintiffs fail to state a valid objection to SF ¶ 127, and Plaintiffs’
dispute of SF ¶ 127 does not create a genuine issue of material fact. The term
“investigated” is neither vague nor ambiguous in the context of the cited evidence
and the undisputed facts of this case. This is a widely-used phrase and does not
require a definition. It is not even clear what portion of SF ¶ 129 is being disputed,
if any. Plaintiffs’ dispute simply notes that Mr. Pollina’s handwritten notes include
notes he took of calls with URS and Charles Schwab at pages 6-8—such notes
demonstrate the very investigative efforts identified in SF ¶ 127. Accordingly,
Plaintiffs’ objection should be overruled, and SF ¶ 127 should be deemed admitted.
128. Mr. Rawson and Mr. Stanton also met with RTC in October 2011
where, among other things, they discussed RTC’s target date project. Rawson Dep.
(Ex. 16) at 124:17-133:9; see Agenda for October 13-15, 2011 Reliance Meeting
(NSP-00023517) (Ex. 66).
Response: Admitted.
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Reply: Plaintiffs admit SF ¶ 128, therefore their Response does not create a
genuine issue of material fact.
129. Mr. Rawson recommended RTC move forward with the target date
project. See November 23, 2011 e-mail correspondence between Richard Rawson
and Kent Buckles regarding New Fund Proposal (RTCPLEDGER00156103) (Ex.
67).
Response: Disputed. Mr. Rawson and Reliance Trust agreed to include
Insperity-branded target date funds in the Plan. Exhibit P1 (Depo. Exhibit 67
(RTCPLEDGER000304859)). He responded in Exhibit 67 [Doc. 134-65] that “we
are still moving forward with the new fund ideas.”
Reply: Plaintiffs’ dispute of SF ¶ 129 does not create a genuine issue of
material fact. Plaintiffs offer no evidence actually disputing SF ¶ 129 but instead
again direct the Court to Exhibit P1. For the reasons stated in the Reply to SF ¶ 17,
this document is inadmissible hearsay under Fed. R. Evid. 802 and does not create a
genuine issue of material fact. Plaintiffs’ contention that an agreement was reached
is also belied by testimony of both its author and Mr. Rawson, respectively. Harlow
Dep. at 114:1-115:12 (attached hereto as Ex. 93); Rawson Dep. at 133:11-135:17
(attached hereto as Ex. 94). Plaintiffs admit the fact that Mr. Rawson recommended
“moving forward” in the November 23, 2011 e-mail correspondence. Consequently,
SF ¶ 129 should be deemed admitted.
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130. RTC was not impressed with the Met Life Volatility-Managed Funds’
prior hypothetical performance and its fees were significantly higher than other
options. Declaration of Nick Cotter (“Cotter Decl.”) at ¶ 29 (filed in connection with
RTC’s motion for summary judgment); August 15, 2011 RTC Meeting minutes of
Manager Due Diligence Sub-Committee Meeting, RTCPLEDGER00093557 (Ex.
68) at 93558; see also August 31, 2011 Insperity QDIA Review
(RTCPLEDGER00414666) (Ex. 65) (Summary of QDIA Alternatives).
Response: Objection. The statement, and in particular, the use of the terms
“impressed” and “significantly higher”, is argumentative in violation of LR
56.1.B.1.(1). See LR 56.1.B.(2)(a)(2). Those terms are also vague and ambiguous.
The Court should disregard Nicholas Cotter’s conclusory and unsupported
declaration. [Doc. 138-1]. “On summary judgment, [a Court] must draw all
justifiable inferences in favor of the nonmoving party, including questions of
credibility and of the weight to be accorded particular evidence.” Masson v. New
Yorker Magazine, Inc., 501 U.S. 496, 520 (1991). Thus, a responding party may
“create a genuine dispute concerning an issue of material fact” through “[a] non-
conclusory affidavit which complies with Rule 56.” United States v. Stein, 881 F.3d
853, 858–59 (11th Cir. 2018). To hold otherwise would “flout[] the history of the
right to a jury trial in civil cases” by “prevent[ing] juries from resolving factual
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disputes when a [non-moving party] offered only a self-serving affidavit in support
of his positions.” Id. at 859 (Pryor, J., concurring).
Defendants have a monopoly on all documentary evidence. Instead of relying
on these documents, Reliance Trust constructs a narrative that, more often than not,
is based solely on the conclusory and unsupported declaration of Mr. Cotter. Much
of this narrative is absent from the factual record or directly contradicted by it. At
deposition, Mr. Cotter often could not recall the facts surrounding many of the
subjects to which he now testifies.6 Mr. Cotter’s current narrative must be subject to
cross-examination at trial.
“[C]onclusory allegations without specific supporting facts” like those
presented by Mr. Cotter “have no probative value.” Leigh v. Warner Bros., 212 F.3d
1210, 1217 (11th Cir. 2000)(quoting Evers v. Gen. Motors Corp., 770 F.2d 984, 986
(11th Cir. 1985)). See also, Fed.R.Civ.P. 56(c)(4); Smith v. Bibb Cty. Sch. Dist., No.
6 See e.g., Cotter Tr. at 39:15–40:4, 40:23–41:14, 50:7–51:2, 61:17–62:20, 64:4–
16 (F-Squared’ theoretical performance history and the weight placed on it);
51:23–52:17, 55:24–57:19, 86:14–23, 111:10–112:12 (meetings with F-Squared
regarding the products); 56:15–57:1, 64:17–65:7, 77:20–80:9, 82:10-85:5, 85:22–
86:13, 86:18–23, 149:9–12, 154:11–15, 155:16–24 (disclosures to and discussions
with Insperity regarding F-Squared and the Horizon Funds); 55:24–57:1, 63:2–10,
69:3–70:11, 70:23–71:3, 73:17–25, 94:10–95:16, 106:11–112:4 (internal due
diligence regarding F-Squared and its selection); 34:20–35:5, 97:22-98:5, 98:6-20
(prior business relationship with F-Squared); 221:12-222:16, 222:17-223:13,
241:16–242:6 (due diligence on reasonable fees); 202:6–16, 223:25–225:8,
225:11–226:14 (rebate of revenue sharing funds); 244:25–245:8, 166:10-167:5
(due diligence on share classes and IPS).
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16-213, 2018 U.S.Dist.LEXIS 47036, *30 (M.D. Ga. Mar. 22, 2018). The weight
and credibility of Mr. Cotter’s statements can only be determined at trial. Else, the
Court risks “ignor[ing] the possibility … [of] a credibility determination adverse to
the defendant.” Hampton v. Ga.-Pacific L.L.C., No. 11-0363, 2011 U.S.Dist.LEXIS
123207, *18 n.9 (S.D. Ala. Sep. 26, 2011). See also Berry v. Baca, 379 F.3d 764,
770 (9th Cir. 2004); Smith v. Young, No. 11-573, 2013 U.S.Dist.LEXIS 57174, *38
(N.D.Fla. Mar. 6, 2013); Cunningham v. Higgs, No. 10-042, 2012 U.S.Dist.LEXIS
119780, *5 (S.D.Ga. Aug. 23, 2012). Plaintiffs refer to this objection herein and
throughout as the “Cotter Objection.”
Disputed. Exhibit 68 [Doc. 134-68], the minutes of the Manager Due
Diligence Sub-Committee Meeting on August 15, 2011, states that “Given the spotty
track record of the back-tested performance data, the lack of at least a three year
history of actual (live) performance, and the fact that the funds are still in the
development stage at Met Life, the committee agree that they would not be
appropriate investment vehicles for the Insperity plan at this time.” The Met Life
funds were still presented to Insperity at the August 31, 2011 meeting. Exhibit 65
[Doc. 134-63].
Reply: Plaintiffs fail to state a valid objection to SF ¶ 130. Plaintiffs fail to
show how the terms “impressed and “significantly higher” are argumentative or
vague and ambiguous, as they simply summarize testimony provided in Mr. Cotter’s
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declaration. These are widely-used phrases and do not require a definition. Further,
at nearly two full pages replete with legal arguments, Plaintiffs’ Response is not
concise, as required under LR 56.1(B)(2)(a)(1). In the “Cotter Objection,” Plaintiffs
rely on cases standing for general principles related to resolving motions for
summary judgment. Such general principles are not in dispute, and do not support
the Cotter Objection. Plaintiffs’ reliance on United States v. Stein is misguided. In
that case, the Eleventh Circuit simply held that a non-movant “may create an issue
of material fact and preclude summary judgment” by introducing an affidavit “even
if it is self-serving and uncorroborated.” United States v. Stein, 881 F.3d 853, 854
(11th Cir. 2018). Here, Plaintiffs have not submitted an affidavit and thus cannot
preclude summary judgment under Stein. Furthermore, Plaintiffs’ allegation that
Defendants only rely on a “conclusory and unsupported” affidavit rather than use
the “monopoly of all documentary evidence” is completely without merit.
Defendants collectively have filed hundreds of exhibits demonstrating the full record
of undisputed facts. Plaintiffs’ remaining authority fails to support the Cotter
Objection. Plaintiffs’ reliance on Leigh v. Warner Bros fails for the same reasons
stated in the Reply to SF ¶ 53. Plaintiffs have failed to refute Mr. Cotter’s declaration
“with opposing affidavits setting forth specific facts to show why there is an issue
for trial.” Leigh, 212 F.3d at 1217. Plaintiffs’ reliance on Hampton v. Georgia-
Pacific is similarly misguided. In that case, the district court considered a magistrate
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judge’s recommendation related to a remand on jurisdictional grounds, which it
explicitly distinguished from the analysis of a summary judgment order—and thus
it has no bearing to this dispute. Hampton v. Georgia-Pac. L.L.C., No. 11-0363-
KD-N, 2011 WL 5037403, at *2 (S.D. Ala. Oct. 24, 2011) (“while the analysis is
similar to that of a summary judgment motion, the jurisdictional inquiry ‘must not
subsume substantive determination’ ... ‘[and w]hen considering a motion for
remand, federal courts are not to weigh the merits of a plaintiff's claim beyond
determining whether it is an arguable one under state law’”) (emphasis added)
(citing Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997)). Plaintiffs do not
even offer explanations for the remaining cases, but each is similarly unavailing.
Here, as throughout their responses, Plaintiffs improperly attempt to defeat summary
judgment without showing a material dispute through evidence. See Smith v. Life
Ins. Co. of N. Am., 466 F. Supp. 2d 1275, 1281 (N.D. Ga. 2006) (“the nonmovant
“must do more than simply show that there is some metaphysical doubt as to the
material facts.... Where the record taken as a whole could not lead a rational trier of
fact to find for the nonmoving party, there is no ‘genuine issue for trial.’”) (quoting
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)).
Accordingly, Plaintiffs’ objection (the “Cotter Objection”) should be overruled.
Plaintiffs’ dispute of SF ¶ 130 also does not create a genuine issue of material
fact. Plaintiffs do note cite any evidence that refutes SF ¶ 130, but rather simply
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point out additional facts regarding the evidence cited by the Insperity Defendants
in SF ¶ 130. However, Plaintiffs’ quotation from Ex. 68 corroborates Mr. Cotter’s
declaration and supports SF ¶ 130. Plaintiffs ignore Ex. 65, other than noting it
indicates that the Met Life funds were presented to Insperity at the August 31, 2011
meeting (which is irrelevant to SF ¶ 130). Ex. 65 also explicitly shows that the Met
Life funds carried a higher expense ratio and other weaknesses, and thus supports
SF ¶ 130. Ex. 65 [Doc. 134-63] at 13-16. Consequently, SF ¶ 130 should be deemed
admitted.
131. Although the JPMorgan Passive Blend Funds would charge
significantly lower fees than the existing JPMorgan target date funds in the Plan,
they did not include any features that would ensure risk-reduction in volatile market
conditions to protect against large losses. Cotter Dep. (Ex. 38) at 75:11-76:11;
Cotter Decl. at ¶ 29; see also August 31, 2011 Insperity QDIA Review
(RTCPLEDGER00414666) (Ex. 65) (Summary of QDIA Alternatives).
Response: Objection. See supra “Cotter Objection”. Disputed. The J.P.
Morgan target date funds in the Plan utilized a tactical asset allocation component
that minimized downside risk during market volatility to protect capital and maintain
retirement income. See, e.g., Exhibit P42 at 3, 12 (Depo. Exhibit 36
(RTCPLEDGER218470) at *472, 481).
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Reply: Plaintiffs fail to state a valid objection to the admissibility of SF ¶ 131
with the “Cotter Objection” for the reasons stated in the Reply to SF ¶ 130.
Accordingly, Plaintiffs’ objection should be overruled. Plaintiffs’ dispute of SF
¶ 131 also does not create a genuine issue of material fact. Plaintiffs’ response
simply notes that the J.P. Morgan target date funds contain “a tactical asset allocation
component,” but Plaintiffs fail to acknowledge that “the managers make tactical
moves, but only very small ones” and “management’s tactical bets are fairly
constrained and internal.” Exhibit P42 at 3, 12. Thus, Exhibit P42 supports SF ¶
131 because it notes the numerous limitations with the J.P. Morgan target date funds
which would not ensure risk-reduction in volatile market conditions to protect
against large losses. Consequently, SF ¶ 131 should be deemed admitted.
132. RTC concluded that it was in the best interests of Plan participants to
develop a “custom” suite of target date funds that would provide both downside
protection and significant cost savings, using existing underlying funds offered by
unaffiliated investment managers (the “Horizon Funds”). Cotter Decl. at ¶ 29.
Response: Objection. The statement is argumentative in violation of LR
56.1.B.1.(1). See LR 56.1.B.(2)(a)(2). See supra “Cotter Objection”. Disputed. Prior
to 2011, in 2010, Reliance identified that launching its own proprietary collective
investment trust investments (“CITS”) as the greatest opportunity to maximize
Reliance’s revenue and profit. Exhibit P125 at 2–4 (Depo. Ex. 55 at
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RTCPLEDGER00398261–63). The primary objective in launching Reliance’s CIT
business was to maximize revenue. Exhibit P126 (Harlow Dep. 25:3–26:14);
Exhibit P125 (Depo. Ex. 55). Reliance’s third (or “tertiary”) objective in launching
and growing the CIT business was providing sound investments to participants. Id.
at 2. On June 7, 2011, John Stanton, Director of Retirement Services at Insperity,
requested authority from Mr. Rawson to move forward with the concept of offering
“Insperity-branded CITs as investments in our plans”. Exhibit P45 (Depo. Ex. 137,
NSP-000096538). Mr. Rawson responded “ails [sic] would like you to get things
rolling on our [own] fund.” Id.
Reply: Plaintiffs fail to state a valid objection to SF ¶ 132, and Plaintiffs’
dispute of SF ¶ 132 does not create a genuine issue of material fact. Plaintiffs fail to
show how SF ¶ 132 is argumentative and Plaintiffs fail to state a valid objection to
the admissibility of SF ¶ 132 with the “Cotter Objection” for the reasons stated in
the Reply to SF ¶ 130. In disputing SF ¶ 132, Plaintiffs ignore the cited testimony
from Mr. Cotter, and instead make a different argument related to RTC’s separate
business strategy with respect to CITs. Plaintiffs point to Exhibit P125, which
contains a “Business & Product Overview” drafted by RTC employee Wade Fox.
The document discusses CITs from a business perspective, including “2015
Business Strategies.” It is undisputed that RTC is a business, and further undisputed
that, RTC—like any similarly hired investment trustee—earns money through their
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engagement with Holdings and the Plan. That RTC earned money and had business
reasons for establishing CITs is irrelevant to the question of whether they determined
the Horizon Funds were in the best interests of Plan participants. The objectives are
not mutually exclusive. Exhibit P45 also does not refute SF ¶ 132. That document
reflects correspondence between Mr. Rawson and Mr. Stanton discussing the
potential of including CITs in the Plan. This conversation represents nothing more
than a desire to learn more about the offering and does not refute the fact that RTC
ultimately determined it was in the best interests of participants to develop the
Horizon Funds. Accordingly, Plaintiffs’ objection should be overruled and SF ¶ 132
should be deemed admitted.
133. Dan Herink specifically tasked his most experienced ERISA attorney
(Dan Pollina) with thoroughly researching the legal implications of RTC selecting
itself as the manager/provider of these new funds. Herink Dep. (Ex. 32) at 263:14-
264:3 (RTC selection and implementation of Horizon Funds is “the type of legal
stuff that I have the ERISA lawyers looking at. We want to comply with ERISA and
that’s what he was doing here”).
Response: Objection. The term “thoroughly researching” is vague and
ambiguous, and is also argumentative in violation of LR 56.1.B.1.(1). See LR
56.1.B.(2)(a)(2). Disputed. The citations do not support movant’s fact that Mr.
Herink instructed Mr. Pollina to “thoroughly research[] the legal implications”. Mr.
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Herink does not testify as to the qualifications of Mr. Pollina to demonstrate he is
the “most experienced”.
Reply: Plaintiffs fail to state a valid objection to SF ¶ 133, and Plaintiffs’
dispute of SF ¶ 133 does not create a genuine issue of material fact. Plaintiffs fail to
show how the term “thoroughly researched” in SF ¶ 133 is vague and ambiguous or
argumentative. The term “thoroughly researched” is clear in the context of Mr.
Pollina conducting research as ERISA counsel. Plaintiffs also fail to show how the
citation does not support SF ¶ 133. The cited deposition testimony confirms that
Mr. Herink “h[ad] the ERISA lawyers looking at” RTC selection and
implementation of the Horizon Funds. Thus, Mr. Herink testified that he tasked Mr.
Pollina (ERISA attorney) with the legal research. Plaintiffs offer no evidence to
refute Mr. Herink’s testimony or that Mr. Pollina in fact conducted such an
investigation. Finally, the fact that Mr. Pollina is an experienced ERISA attorney
is not actually in dispute for the reasons stated in the Reply to SF ¶ 90. Accordingly,
Plaintiffs’ objection should be overruled, and SF ¶ 133 should be deemed admitted.
134. In response, Dan Pollina researched the legal issues with RTC selecting
itself as the manager/provider. See Pollina Dep. (Ex. 31) at 126:19-127:18 (Reliance
selecting itself to provide CCT funds was one of a “number . . . of items we that
wanted to have a better understand of the process and what was done. And there was
a fair amount of dialogue going back and forth to make sure we understood the
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process”); id. at 168:11-169:4 (“I talked to outside counsel. From what I remember,
Reliance indicated that they talked to outside counsel around the issue [of what was
required for CCT compliance]”).
Response: Disputed. The citations do not support movant’s fact that Mr.
Pollina “researched the legal issues”. Rather, the citations reflect that Mr. Pollina
talked to outside counsel or received information from Reliance Trust.
Reply: Plaintiffs’ dispute of SF ¶ 134 does not create a genuine issue of
material fact. Plaintiffs’ fail to show how the citations do not support SF ¶ 134.
Working with outside counsel and receiving information from RTC constituted part
of the legal research conducted by Mr. Pollina. Plaintiffs offer no evidence to refute
Mr. Pollina’s testimony or that he in fact conducted such legal research.
Consequently, SF ¶ 134 should be deemed admitted.
135. RTC obtained and provided Holdings with a formal legal opinion from
a law firm (Schiff Hardin) dated December 8, 2011 confirming that ERISA’s
prohibited transaction rules permitted RTC to establish and maintain a collective
trust for which RTC would serve as trustee (the “Schiff Hardin Memorandum”). See
January 9, 2012 e-mail from Lance Studdard to Dan Pollina with attached Schiff
Hardin Memorandum (NSP-000065696-65968) (Ex. 69); Herink Dep. (Ex. 32) at
259:2-260:7 (“Well, my recollection is at some point during our process when we
were asking the questions, Reliance provided us a memo from their outside counsel
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and that’s the Schiff Hardin memo or letter that’s being referenced there . . . I think
got Dan Pollina’s attention from a technical standpoint, and I think Dan [Pollina]
was really following up on that because he thought it was an issue that needed to be
resolved”).
Response: Objection. This statement is not concise in violation of LR
56.1.B.1.(1). See LR 56.1.B.(2)(a)(2). It also calls for a legal conclusion as to
whether the selection of the Insperity Horizon funds constituted a prohibited
transaction. Disputed. Exhibit 69 [Doc. 134-67] provides an analysis of the
prohibited transaction exemption under §408(b)(8) and notes that if certain
conditions are satisfied, “Reliance should be able to avail itself of the exemption”.
Id. at 6. It also “caution[ed]” Reliance Trust if the collective trust fund consists of
assets of a single plan and noted that “even if there is no prohibited transaction
caused by investing in the collective trust, ERISA’s normal prudence standards
would apply.” Id. at 7–8.
Reply: Plaintiffs fail to state a valid objection to SF ¶ 135, and Plaintiffs’
dispute of SF ¶ 135 does not create a genuine issue of material fact. Plaintiffs fail to
show how SF ¶ 135 is not concise. Furthermore, SF ¶ 135 does not call for a legal
conclusion, but rather simply states that the Schiff Hardin Memo confirmed that
ERISA’s prohibited transaction rules permitted RTC to establish and maintain a
collective trust for which RTC would serve as trustee. The document speaks for
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itself in this regard. Plaintiffs’ dispute simply identifies additional provisions in the
Schiff Hardin Memo, but does not contradict SF ¶ 135. Accordingly, Plaintiffs’
objection should be overruled, and SF ¶ 135 should be deemed admitted.
136. The Schiff Hardin Memorandum squarely addressed whether ERISA’s
prohibited transaction rules permitted RTC to: “(1) establish and maintain a
collective trust for which Reliance would serve as trustee, (2) in the exercise of its
discretion as trustee of the [Plan] invest assets of the Plan in the collective trust, and
(3) receive trustee fees from both the collective trust fund and the Plan.” See January
9, 2012 e-mail from Lance Studdard to Dan Pollina with attached Schiff Hardin
Memorandum (NSP-000065696-65968) (Ex. 69).
Response: Objection. The term “squarely addressed” is argumentative in
violation of LR 56.1.B.1.(1). See LR 56.1.B.(2)(a)(2). It also calls for a legal
conclusion as to whether the selection of the Insperity Horizon funds constituted a
prohibited transaction. Disputed. Exhibit 69 [Doc. 134-67] notes the above-
referenced items under “Questions”.
Reply: Plaintiffs fail to state a valid objection to SF ¶ 136, and Plaintiffs’
dispute of SF ¶ 136 does not create a genuine issue of material fact. Plaintiffs fail to
show how the term “squarely addressed” is argumentative. Plaintiffs also fail to
state a valid objection that SF ¶ 136 calls for a legal conclusion for the reasons stated
in the Reply to SF ¶ 135. Plaintiffs’ dispute simply identifies that the quoted
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language appears in the paragraph titled “Questions” that details the issues to be
addressed in the Schiff Hardin Memo. This additional fact does not contradict that
the Schiff Hardin Memo squarely addressed the identified issues. The document
speaks for itself in this regard. Accordingly, Plaintiffs’ objection should be
overruled and SF ¶ 136 should be deemed admitted.
137. The Schiff Hardin Memorandum concluded that under the Section
408(b)(8) exemption, RTC could serve as discretionary trustee of the Plan and
charge it a reasonable fee for its trustee services to the Plan, while also causing the
Plan to invest in a RTC collective trust fund and receiving a reasonable
administration fee for that collective trust fund. (Id.)
Response: Objection. This statement is not concise in violation of LR
56.1.B.1.(1). See LR 56.1.B.(2)(a)(2). It also calls for a legal conclusion as to
whether the selection of the Insperity Horizon funds constituted a prohibited
transaction. Disputed. Exhibit 69 [Doc. 134-67] notes that if certain conditions are
satisfied, “Reliance should be able to avail itself of the exemption”. Id. at 6. It also
“caution[ed]” Reliance Trust if the collective trust fund consists of assets of a single
plan and noted that “even if there is no prohibited transaction caused by investing in
the collective trust, ERISA’s normal prudence standards would apply.” Id. at 7–8.
Reply: Plaintiffs fail to state a valid objection to SF ¶ 137, and Plaintiffs’
dispute of SF ¶ 137 does not create a genuine issue of material fact. Plaintiffs’
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objection fails for the reasons stated in the Reply to SF ¶ 135. Plaintiffs’ dispute
again simply identifies additional provisions in the Schiff Hardin Memo, but does
not contradict SF ¶ 137. The document speaks for itself in this regard. Accordingly,
Plaintiffs’ objection should be overruled and SF ¶ 137 should be deemed admitted.
138. On December 23, 2011, Dan Pollina directed John Stanton to send RTC
a series of “questions regarding its selection process and the development and
proposed management” of the Horizon Funds. See December 23, 2011 e-mail from
Dan Pollina to John Stanton outlining questions for RTC (NSP-000066938) (Ex.
70).
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 138, therefore their Response does not create a
genuine issue of material fact.
139. These questions sought a better understanding of RTC’s due diligence
process to identify the possible collective trust investment options being considered,
RTC’s methodology and analysis in evaluating investment providers, and the
support RTC intended to use to undertake the effort internally, as opposed to using
a third party. (Id.)
Response: Objection. Disputed. Mr. Pollina sought additional information
“due to the appearance of a conflict of interest”. Exhibit 70 [Doc. 134-68]. Mr.
Pollina’s email does not indicate he was seeking a “better understanding” but rather
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information “in the due diligence process that Reliance undertook to identify the
possible CCT investments being considered.” Id.
Reply: Plaintiffs fail to state a valid objection to SF ¶ 139, and Plaintiffs’
dispute of SF ¶ 139 does not create a genuine issue of material fact. Plaintiffs do not
identify any basis for their objection. Plaintiffs’ dispute simply quotes from Mr.
Pollina’s e-mail and makes the semantic argument that seeking information “in the
due diligence process” is materially different from the stated fact that he “sought a
better understanding.” This dispute is meritless. Furthermore, the additional fact
that Mr. Pollina sought information “due to the appearance of a conflict of interest”
does not contradict SF ¶ 139. Accordingly, Plaintiffs’ objection should be overruled
and SF ¶ 139 should be deemed admitted.
140. Mr. Pollina indicated that “this documentation [was] especially
important considering the appearance of a conflict of interest when [RTC] is offering
one of the [collective trust] investments under consideration.” (Id.)
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 140, therefore their Response does not create a
genuine issue of material fact.
141. On February 9, 2012, RTC sent John Stanton a memorandum in
response to Holdings’ “Due Diligence” questions (the “Original Memorandum”).
NSP-000068673 (Ex. 71).
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Response: Disputed. The memorandum was sent to Mr. Stanton of
Retirement Services in response to Mr. Stanton’s questions, which were prepared by
Mr. Pollina. Exhibit 71 [Doc. 134-71]. The questions were not sent by “Holdings”
or the Directors of Holdings. The citation does not support movant’s fact that Mr.
Stanton sent the questions on behalf of Holdings.
Reply: Plaintiffs’ dispute of SF ¶ 141 does not create a genuine issue of
material fact. Plaintiffs fail to show how the citation does not support SF ¶ 141.
Plaintiffs’ dispute ignores the fact that Mr. Stanton wore “two hats” as explained in
the Reply to SF ¶ 116. It is undisputed that Mr. Stanton relayed information to the
Directors of Holdings as part of the due-diligence process. E.g., Rawson Dep. at
187:19-189:15 (attached hereto as Ex. 94) (“Mr. Stanton . . . [was a] part of my team,
he reported directly to me. Obviously he was not the fiduciary, but I used his
knowledge and his expertise a lot to ask questions and have, you know, him in many
cases go do work and check out things . . . and he did”). Plaintiffs do not cite any
evidence that refutes SF ¶ 141 and, consequently, SF ¶ 141 should be deemed
admitted.
142. After reading the Original Memorandum, Doug Sivula responded to
Lance Studdard on March 2, 2012 with additional questions. See March 2, 2012
email from Doug Sivula to Lance Studdard regarding Due Diligence and Fee
Disclosure Questions (NSP-000013003) (Ex. 72).
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Response: Admitted.
Reply: Plaintiffs admit SF ¶ 142, therefore their Response does not create a
genuine issue of material fact.
143. In response to Mr. Sivula’s March 2, 2012 e-mail, on March 6, 2012,
Mr. Studdard sent an updated version of the Original Memorandum to respond to
Holdings’ additional questions (the Updated Memorandum”). See March 6, 2012 e-
mail from Lance Studdard to John Stanton regarding Updated Due Diligence
Memorandum (NSP-000068663) and attached Updated Memorandum (NSP-
000068664) (Ex. 73).
Response: Disputed. The memorandum was sent to Mr. Stanton of
Retirement Services in response to additional questions sent on behalf of Mr. Pollina.
Exhibit 73 [Doc. 134-71]; Exhibit 72 [Doc. 134-70]. The questions were not sent by
“Holdings” or the Directors of Holdings. The citation does not support movant’s fact
that Mr. Studdard provided an updated version in response to “Holdings’” questions.
Reply: Plaintiffs’ dispute of SF ¶ 143 does not create a genuine issue of
material fact. Plaintiffs fail to show how the citation does not support SF ¶ 143.
Plaintiffs’ dispute ignores the fact that Mr. Stanton and others wore “two hats” as
explained in the Reply to SF ¶ 116. It is undisputed that Mr. Stanton relayed
information to the Directors of Holdings as part of the due-diligence process. E.g.,
Rawson Dep. at 187:19-189:15 (attached hereto as Ex. 94) (“Mr. Stanton . . . [was
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a] part of my team, he reported directly to me. Obviously he was not the fiduciary,
but I used his knowledge and his expertise a lot to ask questions and have, you know,
him in many cases go do work and check out things . . . and he did”). Plaintiffs do
not cite any evidence that refutes SF ¶ 143 and, consequently, SF ¶ 143 should be
deemed admitted.
144. This Updated Memorandum explained RTC’s process for selecting the
tactical overlay adviser, consistent with the selection process outlined in the prior
letter, and explained that particular emphasis was given to long-term historical
returns, performance in up and down markets, and cost. (Id.)
Response: Objection. This not “concise” statement and use of the phrase
“particular emphasis” is argumentative in violation of LR 56.1 B.(1). See LR 56.1
B.(2)(a)(2). Disputed. Exhibit 73 [Doc. 134-71] did not fully disclose Reliance
Trust’s process for selecting the tactical overlay provider. For instance, Reliance
Trust did not use “an RFP process combing the market, instead opting for two
managers/advisors that we have a relationship with” to select an advisor for the
Insperity Horizon funds. Exhibit P43 (Depo. Exhibit 107
(RTCPLEDGER00217706)). Reliance Trust stated in the memorandum that
“Particular consideration was given to long-term historical returns, performance in
up and down equity markets, and cost” but the Insperity Horizon funds did not have
a reported performance history and had not performed in up and down markets.
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Exhibit 5 at 54 [Doc. 134-6] . The Met Life Volatility Managed Funds were
previously determined by Reliance Trust not to be appropriate due to this factor,
which was not disclosed in the memoranda. Exhibit 68 [Doc. 134-68]. The J.P.
Morgan passive target date funds also provided cost savings [Doc. 134-63 at 11],
and the J.P. Morgan target date funds in the Plan had a tactical asset-allocation
component to protect against downside risk, Exhibit P42 at 3, 12 (Depo. Exhibit 36
(RTCPLEDGER218470) at *472, 481).
Reply: Plaintiffs fail to state a valid objection to SF ¶ 144, and Plaintiffs’
dispute of SF ¶ 144 does not create a genuine issue of material fact. Plaintiffs fail to
show how SF ¶ 144 is not concise or how the phrase “particular emphasis” is
argumentative. Indeed, Plaintiffs’ dispute notes that the similar phrase “particular
consideration” was used in the Updated Memorandum. Plaintiffs’ response does not
refute that the Updated Memorandum explained RTC’s process for selecting the
tactical overlay advisor, but instead makes different arguments outside of SF ¶ 137.
Specifically, Exhibit P43 does not refute that RTC explained its selection process in
the Updated Memorandum. Instead, Exhibit P43 simply documents
communications between Holdings and RTC, as well as internal discussions within
RTC related to the Updated Memorandum. The fact that RTC did not use an RFP
process is irrelevant. Similarly, Plaintiffs’ arguments regarding the Met Life
Volatility Managed Funds and J.P. Morgan passive target date funds are irrelevant.
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Additionally, these arguments are misplaced for the reasons discussed in the Replies
to SF ¶¶ 130 and 131. Plaintiffs do not cite any evidence that refutes SF ¶ 144 and,
consequently, SF ¶ 144 should be deemed admitted.
145. This Updated Memorandum explained how RTC engaged in multiple
interviews with the chosen adviser, both by telephone and in person, over the course
of a year and also cited its experience with the firm. (Id.)
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 145, therefore their Response does not create a
genuine issue of material fact.
146. On March 14, 2012, RTC and Holdings held the Annual Meeting,
which included, among other things, a specific presentation from RTC about
replacing the existing J.P. Morgan target date funds with the Horizon Funds. See
March 2012 Annual Report (NSP-000011037) (Ex. 5) at p. 36.
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 146, therefore their Response does not create a
genuine issue of material fact.
147. RTC explained at the March 2012 Annual Meeting that it planned to
remove the target date funds managed by J.P. Morgan in order to reduce costs to
participants and enhance risk management. (Id.)
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Response: Disputed in part. The citation does not support the movant’s fact.
The Trustee’s Report noted that the reasons for removing the J.P. Morgan target date
funds was for “a desire for a more cost-effective approach” and “a desire for more
robust risk-management capabilities”. Exhibit 5 at 37 [Doc. 134-6].
Reply: Plaintiffs’ dispute of SF ¶ 147 does not create a genuine issue of
material fact. SF ¶ 147 does not purport to quote the Annual Report, but instead
summarizes the discussions at the Annual Meeting. Plaintiffs’ quotation from the
Annual Report only supports this summary. Plaintiffs provide no evidentiary basis
to dispute that “a desire for a more cost-effective approach” and “a desire for more
robust risk-management capabilities” are materially distinct from an effort to
“reduce costs to participants and enhance risk management.” Consequently, SF ¶
147 should be deemed admitted.
148. Rather than buying a target date fund “off the shelf,” RTC explained
that it intended to construct a custom series of target date funds, which would be
more conservative and less expensive, and have more control over equity risk. (Id.)
Response: Disputed. The citation does not support the movant’s fact. The
Trustee’s Report [Doc. 134-6] does not report that Reliance Trust intended to
construct a “custom series of target date funds” that would be “more conservative
and less expensive” and have “more control over equity risk”. The report noted the
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146
a “[f]ocus on low expenses” and “[s]eeks to reduce equity exposure during down
markets while participating in up markets”. Id. at 37.
Reply: Plaintiffs’ dispute of SF ¶ 148 does not create a genuine issue of
material fact. SF ¶ 148 does not purport to quote the Annual Report, but instead
summarizes the discussions at the Annual Meeting. Plaintiffs’ quotation from the
Annual Report only supports this summary. Plaintiffs provide no evidentiary basis
to dispute that “a “[f]ocus on low expenses” and “[s]eeks to reduce equity exposure
during down markets while participating in up markets” are materially distinct from
the statement that RTC explained that it intended to construct a custom series of
target date funds, which would be more conservative and less expensive, and have
more control over equity risk. Consequently, SF ¶ 148 should be deemed admitted.
149. By using collective trusts (as opposed to mutual funds), RTC explained
that it would be able to offer lower cost funds than the J.P. Morgan and Fidelity
target date funds which had previously been offered in the Plan. (Id.)
Response: Disputed. The citation does not support the movant’s fact. The
Trustee’s Report [Doc. 134-6] does not report that using collective trusts would be
lower cost than the J.P. Morgan and Fidelity mutual funds used in the Plan. Id. at
37. It also does not disclose passively-managed target date funds, such as those
offered by Vanguard, would be lower cost than the Insperity Horizon collective trust.
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See Exhibit P42 at 11 (Depo. Exhibit 36 (RTCPLEDGER218470) at *480)(19 bps);
Exhibit 5 at 55 [Doc. 134-6](average expense ratio of 52 bps).
Reply: Plaintiffs’ dispute of SF ¶ 149 does not create a genuine issue of
material fact. The Annual Report states that one of the reason for removing the J.P.
Morgan fund was “a desire for a more cost-effective approach.” (Ex. 5) [Doc. 134-
6 at p. 37]. This carries the same meaning as a desire for “lower cost funds” as stated
in SF ¶ 149. Plaintiffs also make a different argument related to the hypothetical
selection of Vanguard funds, which is not at issue in SF ¶ 149. Whether RTC could
have selected Vanguard funds is irrelevant to the fact that the Horizon Funds were
lower cost than the J.P. Morgan and Fidelity funds previously in the Plan. Plaintiffs
do not cite any evidence that refutes SF ¶ 149 and, consequently, SF ¶ 149 should
be deemed admitted.
150. RTC explained that by adding a tactical de-risking strategy, RTC hoped
to “reduce equity exposure during down markets while participating in up markets.”
(Id.)
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 150, therefore their Response does not create a
genuine issue of material fact.
151. The March 2012 Annual Report provided extensive details regarding
the proposed Horizon Funds, including: (1) the anticipated asset allocation for each
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target date and associated glide path (at p. 49); (2) the equity de-risking model,
including its objective and key inputs, such as price of stocks by sector, volatility of
those prices and changes in such volatility, as well as the results or “output” of the
model (at p. 50); (3) historic allocations to different equity sectors, going back to
April 2001 (at p. 51); (4) an explanation of risk metrics (such as maximum
drawdown, standard deviation, upside/downside capture ratio and asymmetry) and
back-testing the comparative performance of a sample J.P. Morgan target date funds
vs. the target date funds enhanced with the equity de-risking strategy (at p. 53); and
(5) a summary of the reasons for and results of shifting to the Horizon Funds,
namely, lower cost (reducing the expense ratio approximately 40%), enhancing the
conservatism of the target date funds, consistent with QDIA regulations, better risk
management for a “smoother ride and better outcomes for participants,” and more
downside protection in bear markets, particularly important for participants nearing
retirement (at p. 54). (Id.)
Response: Objection. This is an overly broad statement and not “concise”, as
it contains numerous conclusory statements, and is argumentative due to use of
“extensive details” and “key inputs”, among others, in violation of LR 56.1 B.(1).
See LR 56.1 B.(2)(a)(2). Disputed. The Trustee’s Report [Doc. 134-6] only provided
7 slides on the Reliance Risk Managed Target Date Funds. Id. at 48–56. The slide
on the tactical model provided general information, as the Insperity Defendants later
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admitted a lack of understanding of the model. See, e.g., Exhibit 88 at 6 [Doc. 134-
86](“What does the portfolio go to when it is down side risk?”). The tactical overlay
historical allocations “going back to April 2001” was false as the F-Squared tactical
overlay model did not exist until 2008. P111; In the Matter of F-Squared
Investments, Inc., Securities and Exchange Commission, Admin. Proceeding File
No. 3-16325 (Dec. 22, 2014), at ¶4 and Exhibit 1,
https://www.sec.gov/litigation/admin/2014/ia-3988.pdf. The summary of the target
date fund change (at 54) in the Trustee’s report does not indicate the self-interested
reasons of Reliance Trust for including the Insperity Horizon funds in the Plan. See
Plaintiffs’ Additional Statement of Material Facts submitted with their Opposition
to Reliance Trust’s Motion for Summary Judgment, e.g., ¶¶164–181. It also does not
indicate that the J.P. Morgan actively or passively managed target date funds would
have achieved the benefits noted in the slide, such as downside protection. See, e.g.,
Exhibit P42 at 3, 12 (Depo. Exhibit 36 (RTCPLEDGER218470) at *472, 481).
Reply: Plaintiffs fail to state a valid objection to SF ¶ 151, and Plaintiffs’
dispute of SF ¶ 151 does not create a genuine issue of material fact. Plaintiffs fail to
show how SF ¶ 151 is overly broad and not concise, and also fail to show how the
terms “extensive details” and “key inputs” are argumentative. SF ¶ 151 does not
contain “numerous conclusory statements,” but instead simply reflects the contents
of the March 2012 Annual Report. The document speaks for itself in this regard.
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Plaintiffs seek to minimize the detail provided in the March 2012 Annual Report, by
noting it “only provided 7 slides on the Reliance Risk Managed Target Date Funds”
rather than disputing the fact that the details described in the SF were provided in
those seven slides. Furthermore, the additional fact that the Insperity Defendants
later asked further questions does not negate the level of detail provided in the March
2012 Annual Report. In addition, Plaintiffs ignore testimony on the level of detail
provided by RTC to Holdings regarding the Horizon Funds. See, e.g., Rawson Dep.
at 191:16-195:10 (attached hereto as Ex. 94) (“[w]e did spend a lot of time trying to
understand this model, not just in this meeting but even, you know, before that,
because it was something that was being talked about with Reliance Trust as a -- as
a -- as a fund option for us”); Herink Dep. at 250:25-251:11 (attached hereto as Ex.
99) (“[a]s part of what the information we were requesting from Reliance in t[the
due diligence memos] we were certainly trying to get information regarding how
Reliance selected their advisor. And they did provide that information”).
Because Plaintiffs cannot refute SF ¶ 151, they instead raise a host of
additional alleged facts, which are irrelevant and do not create a genuine dispute. It
is undisputed that F-Squared was later investigated for fraud. Plaintiffs cannot
credibly insinuate that Holdings should have known of F-Squared’s alleged fraud.
It is also undisputed that upon learning of the alleged fraud, RTC replaced F-Squared
as its advisor, as stated in SF ¶ 170. Plaintiffs cross-reference to No. 18 of their own
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additional material facts in response to RTC’s Motion for Summary Judgment, as
well as the additional alleged facts related to the sufficiency of the details provided
in the March 2012 Annual Report, are argumentative and irrelevant to the fact that
the March 2012 Annual Report provided the details stated in SF ¶ 151. Plaintiffs do
not cite any evidence that refutes SF ¶ 151 and, accordingly, their objection should
be overruled and SF ¶ 151 should be deemed admitted.
152. After the March 2012 Annual Meeting, representatives from RTC and
Holdings participated in a conference call on March 15, 2012 to discuss “outstanding
issues on the CITs.” See March 16, 2012 e-mail from John Stanton to Doug Sivula
regarding Updated IPS and Conference Call with RTC (NSP-000068650) (Ex. 74).
Response: Objection. The term “representatives of Holdings” is vague and
ambiguous. Disputed in part. Holdings never authorized an employee of Insperity or
Retirement Services to act on its behalf in carrying out its fiduciary obligations. See
generally Exhibit P4 (Daniel Herink Dep. 54:13–20). The citation does not support
movant’s statement because the email communication does not confirm that a
conference call occurred. Exhibit 71 [Doc. 134-72].
Reply: Plaintiffs fail to state a valid objection to SF ¶ 152, and Plaintiffs’
dispute of SF ¶ 152 does not create a genuine issue of material fact. The term
“representatives of Holdings” is neither vague nor ambiguous in the context of the
cited evidence and the undisputed facts of this case. Plaintiffs’ dispute also ignores
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the fact that Mr. Stanton and others wore “two hats” as explained in the Reply to SF
¶ 116. Plaintiffs do not cite any evidence that refutes SF ¶ 152 and, consequently,
SF ¶ 152 should be deemed admitted.
153. On March 20, 2012, RTC sent a “second set of revisions” to the
Original Memorandum (the “Second Update Memorandum.”). See March 20, 2012
e-mail from Lance Studdard to John Stanton, Doug Sivula, and Dan Pollina
regarding Revised Due Diligence Memorandum (NSP-000040862) and attached
Second Update Memorandum (NSP-000040862-68) (Ex. 75).
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 153, therefore their Response does not create a
genuine issue of material fact.
154. In the Second Update Memorandum, RTC explained that it conducted
a thorough search of potential target date replacements currently available in the
marketplace. RTC stated that it had considered numerous factors, including active
and passive strategies, both mutual funds and collective trusts, the total expenses of
each strategy (net of offsetting revenue sharing reimbursed to the Plan), varying
asset allocations and glidepaths, long-term risk adjusted returns, depth and breadth
of the various management teams, the governance policies of the different
organizations, their investment philosophies, and their risk management processes.
(Id.)
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Response: Objection. This is an overly broad statement and not “concise”, as
it contains numerous conclusory statements, and is argumentative due to use of
“thorough” and “numerous”, among others, in violation of LR 56.1 B.(1). See LR
56.1 B.(2)(a)(2). Disputed. Reliance Trust did not conduct a “thorough search” as it
did not use “an RFP process combing the market, instead opting for two
managers/advisors that we have a relationship with” to select an advisor for the
Insperity Horizon funds. Exhibit P43 (Depo. Exhibit 107
(RTCPLEDGER00217706)). This was in contrast to the target date fund manager
search that it conducted in 2010 to identify J.P. Morgan as the target date fund
provider for the Plan. Exhibit P42 (Depo. Exhibit 36 (RTCPLEDGER218470)).
Reply: Plaintiffs fail to state a valid objection to SF ¶ 154, and Plaintiffs’
dispute of SF ¶ 154 does not create a genuine issue of material fact. Plaintiffs fail to
show how SF ¶ 154 is not concise or overly broad. SF ¶ 154 does not contain
“numerous conclusory statements,” but instead simply reflects the contents of the
Second Update Memorandum. For this same reason, Plaintiffs fail to show how the
terms “thorough” and “numerous” are argumentative. Plaintiffs’ dispute does not
address the contents of the Second Update Memorandum at issue in SF ¶ 154, but
instead, simply disputes the accuracy of RTC’s representations in this document.
Plaintiffs’ dispute is irrelevant to SF ¶ 154, which addresses the contents of the
Second Update Memorandum. The document speaks for itself in this regard.
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Plaintiffs do not cite any evidence that refutes SF ¶ 154 and, accordingly, their
objection should be overruled, and SF ¶ 154 should be deemed admitted.
155. In the Second Update Memorandum, RTC explained that none of the
candidates offered a sufficient risk-management process coupled with low expenses,
and that therefore the most efficient approach was for RTC to create and manage a
series of target date collective investment trusts. (Id.)
Response: Disputed in part. The J.P. Morgan passive or active target date
funds would have provided a sufficient risk-management process with lower
expenses. See, e.g., Exhibit P42 at 3, 12 (Depo. Exhibit 36 (RTCPLEDGER218470)
at *472, 481); savings [Doc. 134-63 at 11].
Reply: Plaintiffs’ partial dispute of SF ¶ 155 does not create a genuine issue
of material fact. Plaintiffs’ dispute does not address the contents of the Second
Update Memorandum at issue in SF ¶ 155, but instead makes a different argument
outside of SF ¶ 155. Thus, Plaintiffs’ argument regarding the J.P. Morgan funds is
irrelevant. Additionally, this argument is misplaced for the reasons discussed in the
Reply to SF ¶ 131. Plaintiffs do not cite any evidence that refutes SF ¶ 155 and,
consequently, SF ¶ 155 should be deemed admitted.
156. On March 22, 2012, John Stanton pressed Lance Studdard further,
identifying that the Insperity legal team required additional clarification and
information. See March 22, 2012 e-mail from John Stanton to Lance Studdard
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regarding Additional Requests from Legal Department (NSP-000041263) (Ex. 76).
Response: Objection. The use of the statement “pressed” is argumentative in
violation of LR 56.1 B.(1). See LR 56.1 B.(2)(a)(2). Disputed. The citation does not
support the movant’s fact as the email from Mr. Stanton questions whether legal
asked Reliance Trust for “additional clarification of the PT portion of your memo?”
Exhibit 76 [Doc. 134-74].
Reply: Plaintiffs fail to state a valid objection to SF ¶ 156, and Plaintiffs’
dispute of SF ¶ 156 does not create a genuine issue of material fact. Plaintiffs fail to
show how the word “pressed” in SF ¶ 156 is argumentative for the reasons stated in
the Reply to SF ¶ 118. Furthermore, Plaintiffs fail to show how the citation does not
support the fact and Plaintiffs’ partial quotation of Ex. 76 is misleading. In Ex. 76,
Mr. Studdard emailed Mr. Stanton regarding whether additional information was
required. Mr. Stanton responded by stating: “Didn’t Legal ask RTC for some
additional clarification of the PT portion of your memo?” In other words, Mr.
Stanton pressed Mr. Studdard further, identifying that the Insperity legal team
required additional clarification and information. Plaintiffs do not cite any evidence
that refutes SF ¶ 156 and, consequently, SF ¶ 156 should be deemed admitted.
157. On March 30, 2012, RTC sent another, “third set of revisions” to the
Original Memorandum (the “Third Update Memorandum.”). See March 30, 2012
e-mail from Lance Studdard to John Stanton (NSP-000068624) and attached Third
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Update Memorandum (NSP-000068624-30) (Ex. 77).
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 157, therefore their Response does not create a
genuine issue of material fact.
158. The Third Update Memorandum explained that, as part of its due
diligence, RTC considered the fee structures of other asset allocation funds using
collective trusts. (Id.)
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 158, therefore their Response does not create a
genuine issue of material fact.
159. The Third Update Memorandum stated that RTC would charge a fee of
no greater than 10 bps per annum for trustee, audit, and operational services, and
would waive its fee for investment management of the trust. (Id.)
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 159, therefore their Response does not create a
genuine issue of material fact.
160. The Third Update Memorandum stated that RTC – as a fiduciary to the
trusts and the Plan – had determined that both its fee and the fee to the third-party
adviser were reasonable. (Id.)
Response: Admitted.
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Reply: Plaintiffs admit SF ¶ 160, therefore their Response does not create a
genuine issue of material fact.
161. John Stanton and Dan Pollina kept Richard Rawson and Dan Herink
informed throughout this legal due diligence process. See, e.g., March 4, 2012 e-
mail from John Stanton to Richard Rawson regarding RTC Responses to Legal
Questions (NSP-000041266) (Ex. 78); March 13, 2012 e-mail from Doug Sivula to
Dan Herink regarding Additional Responses from RTC on Horizon Funds Questions
(NSP-000040869) (Ex. 79).
Response: Disputed. The citations do not support the movant’s fact. The
Insperity Defendants provide one email to Mr. Rawson and one email to Mr. Herink
but Reliance Trust provided multiple revisions to the original February 9, 2012
memorandum. Exhibit 71 [Doc. 134-69].
Reply: Plaintiffs’ dispute of SF ¶ 161 does not create a genuine issue of
material fact. Insperity Defendants intentionally chose the signal “see, e.g.” to offer
the citations as sample communications. In response, Plaintiffs offer speculation,
while ignoring unrefuted testimony. See also Pollina Dep. at 170:15-172:15
(attached hereto as Ex. 98) (testimony that he updated Mr. Rawson with possible
solutions to the questions in the due diligence memoranda); Herink Dep. at 259:2-
260:7 (Ex. 32) (testimony that Dan Pollina discussed the issues in the due diligence
memoranda with him); Rawson Dep. at 188:22-189:15 (attached hereto as Ex. 94)
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(testimony that he had “lots of conversations” with Mr. Stanton providing updates
on the target date fund due diligence process). Plaintiffs do not cite any evidence
that refutes SF ¶ 161 and, consequently, SF ¶ 161 should be deemed admitted.
162. Mr. Rawson and Mr. Herink both thought the dual objectives proposed
by RTC would benefit Plan participants. See Rawson Dep. (Ex. 16) at 196:5-23
(“[Q:] Why would you believe it was in the best interest of participants to offer
Target-Date Funds using a tactical overlay model that has never been tested in the
marketplace? . . . [A:] what I thought about and what we talked about and what we
spent a lot of time was -- was the concept that if the market crashed again and this
tactical overlay was in place, participants wouldn't lose the kind of money that they
had lost in the -- 2008 and '9 and '10 . . . it was a strategy to say this is a way we
could protect participants from a real -- another meltdown”); Herink Dep. (Ex. 32)
at 244:18-245:5 (“[Reliance] went through the . . . the cost aspect, the risk aspect,
they talked about the process. I satisfied myself that – that Reliance had done their
job in terms of doing – you know, doing what was in the best interest of the
participants when they made their decision through my monitoring”).
Response: Disputed. There are no meeting minutes to reflect the rationale of
Mr. Herink or Mr. Rawson at the time that the Insperity Horizon were considered
for inclusion in the Plan. Exhibit P4 (Daniel Herink Dep. 132:1–17). Mr. Rawson
also approved the addition of Insperity-branded target date funds in the Plan before
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the March 14, 2012 Trustee’s Report that provided the reported reasons for
including the Reliance Trust Risk-Managed Funds in the Plan. Exhibit P1 (Depo.
Exhibit 67 (RTCPLEDGER000304859)); Exhibit P44 (Depo. Exhibit 64 (NSP-
000018061)).
Reply: Plaintiffs’ dispute of SF ¶ 162 does not create a genuine issue of
material fact. SF ¶ 162 contains unrefuted deposition testimony from Messrs. Herink
and Rawson confirming that they both thought the dual objectives of cost control
and risk protection would benefit Plan participants. Plaintiffs cite no evidence to
refute this testimony, which is based on personal knowledge. Instead, Plaintiffs
essentially argue that, in the absence of written meeting minutes, SF ¶ 162 is
unknowable despite sworn testimony supporting it. However, there was no legal
requirement for Holdings to keep written minutes, and Plaintiffs’ argument is
contrary to common sense and Fed. R. Evid. 602. Plaintiffs also again direct the
Court to Exhibit P1. For the reasons stated in the Reply to SF ¶ 17, this document
is inadmissible hearsay under Fed. R. Evid. 802 and does not create a genuine issue
of material fact. Plaintiffs’ contention that an agreement was reached in October
2011 between RTC and Holdings regarding the Horizon Funds, which did not exist
on that date, is belied by testimony of both its author and Mr. Rawson, respectively.
Harlow Dep. at 114:1-115:12 (attached hereto as Ex. 93); Rawson Dep. at 133:11-
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135:17 (attached hereto as Ex. 94). Plaintiffs do not cite any evidence that refutes
SF ¶ 162 and, consequently, SF ¶ 162 should be deemed admitted.
163. After the March 2012 Annual Meeting, Holdings’ legal counsel
remained deeply involved with the tax, reporting and other regulatory issues
surrounding implementation of the Horizon Funds. See, e.g., July 12, 2012 e-mail
from Kent Buckles to John Stanton regarding CIT Follow-up Responses (NSP-
000013250) (Ex. 80); July 18, 2012 e-mail from Kent Buckles to Doug Sivula
regarding RTC Collective Fund Series Six Overview (NSP-000013204) (Ex. 81);
August 13, 2012 e-mail from Doug Sivula to Kent Buckles regarding Additional
Questions related to IRS Compliance of CCT (NSP-000013267) (Ex. 82); August
17, 2012 e-mail from Kent Buckles to Doug Sivula regarding Additional Responses
to Insperity legal questions on Horizon Funds (NSP-000013274) (Ex. 83).
Response: Objection. The use of the statement “deeply involved” is
argumentative in violation of LR 56.1 B.(1). See LR 56.1 B.(2)(a)(2). It also is vague
and ambiguous. Disputed. The citation does not support the movant’s statement that
legal counsel remained “deeply involved” based on selected email communications.
Reply: Plaintiffs fail to state a valid objection to SF ¶ 163, and Plaintiffs’
dispute of SF ¶ 163 does not create a genuine issue of material fact. Plaintiffs fail to
show how the term “deeply involved” in SF ¶ 163 is argumentative or vague and
ambiguous. This is a widely-used phrase and does not require a definition. That
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fact that Holdings’ legal counsel remained “deeply involved” with the tax, reporting
and other regulatory issues related to the Plan is clear and non-controversial.
Insperity Defendants intentionally chose the signal “see, e.g.” to offer the citations
as sample communications. In response, Plaintiffs offer speculation, but do not cite
any evidence that refutes SF ¶ 163. Consequently, SF ¶ 163 should be deemed
admitted.
164. By letter dated August 13, 2012, RTC formally notified Holdings of its
decision to replace the various J.P. Morgan target date funds with the Horizon Funds.
See August 13, 2012 letter from Nick Cotter to Karen Drury (NSP-000014159) (Ex.
84).
Response: Disputed. The decision to remove the J.P. Morgan target date
funds in favor of Insperity-branded funds was initially discussed in early June 2011,
and Mr. Rawson approved the decision in October 2011.
Exhibit P45 (Depo. Exhibit 137 (NSP-000096538)); Exhibit P46 (Depo. Exhibit
56 (RTCPLEDGER00423242)); Exhibit P1 (Depo. Exhibit 67
(RTCPLEDGER000304859)); Exhibit P44 (Depo. Exhibit 64 (NSP-000018061)).
The August 13, 2012 letter was sent to Karen Drury of Retirement Services and does
not provide evidence that the Directors of “Holdings” received such notification.
Exhibit 84 [Doc. 134-82].
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Reply: Plaintiffs dispute of SF ¶ 164 does not create a genuine issue of
material fact. SF ¶ 164 addresses the contents of the August 13, 2012 letter. The
document speaks for itself in this regard. Plaintiffs do not cite any evidence that
refutes SF ¶ 164 and instead make different arguments by relying on exhibits that
are irrelevant to the contents of the August 13, 2012 letter at issue in SF ¶ 164.
Plaintiffs’ reliance on Exhibit P45 fails for the reasons stated in the Reply to SF ¶
132. Exhibit P46 is similarly unavailing. Whether discussions took place regarding
the possible creation of target date funds in 2011 is irrelevant to the fact that RTC
formally notified Holdings of its decision to replace the various J.P. Morgan target
date funds with the Horizon Funds by the letter dated August 13, 2012 as stated in
SF ¶ 164. Plaintiffs also again direct the Court to Exhibit P1. For the reasons stated
in the Reply to SF ¶ 17, this document is inadmissible hearsay under Fed. R. Evid.
802. Plaintiffs’ contention that an agreement was reached in October 2011 between
RTC and Holdings regarding the Horizon Funds, which did not exist on that date, is
belied by testimony of both its author and Mr. Rawson, respectively. Harlow Dep.
at 114:1-115:12 (attached hereto as Ex. 93); Rawson Dep. at 133:11-135:17
(attached hereto as Ex. 94). Consequently, SF ¶ 164 should be deemed admitted.
165. The Trust Agreement was amended effective January 1, 2012 to allow
the Plan to invest in collective trusts. See First Amendment to the Trust Agreement
for Insperity 401(k) Plan (NSP-000010906). (Ex. 85).
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Response: Disputed. The First Amendment to the Trust Agreement was not
fully executed until January 2013. Exhibit P47 (Depo. Exhibit 150 (NSP-
000047505), and Depo. Exhibit 151 (NSP-000047506); Exhibit P48 (NSP-
000040710 and NSP-000040712) (email and attached amendment). It also was not
approved through a unanimous written consent. Contra Exhibit P49 (Depo. Exhibit
154 (NSP-000032853)).
Reply: Plaintiffs’ dispute of SF ¶ 165 does not create a genuine issue of
material fact. Plaintiffs’ alleged additional fact that the First Amendment to the
Trust Agreement was not fully executed until January 2013 is irrelevant. SF ¶ 165
explicitly identifies that the Trust Agreement was amended effective January 1,
2012. Section 8.1 of the Trust Agreement explicitly provides that “any such
amendment by its terms may be retroactive.” Ex. 2. Plaintiffs’ alleged additional
fact that there was no unanimous written consent is irrelevant and immaterial. There
was no legal requirement for a unanimous written consent. Consequently, SF ¶ 165
should be deemed admitted.
166. RTC kept representatives of Holdings apprised of the performance of
the Horizon Funds via e-mail. See, e.g., January 2, 2014 e-mail from Nick Cotter to
John Stanton regarding Change in Fund Lineup and Associated Fees (NSP-
000038726) (Ex. 86); January 15, 2014 e-mail from Nick Cotter to Karen Drury
regarding Updated Performance Reports of Horizon Funds (NSP-000014763) (Ex.
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87).
Response: Disputed. Objection. The term “representatives of Holdings” is
vague and ambiguous. Disputed. The citation does not support the movant’s fact as
the email communications were not sent to any Director of Holdings. They do not
indicate that they were shared with any Director of Holdings. And Holdings never
authorized an employee of Insperity or Retirement Services to act on its behalf in
carrying out its fiduciary obligations. See generally Exhibit P4 (Daniel Herink Dep.
54:13–20).
Reply: Plaintiffs fail to state a valid objection to SF ¶ 166, and Plaintiffs’
dispute of SF ¶ 166 does not create a genuine issue of material fact. The term
“representatives of Holdings” is neither vague nor ambiguous in the context of the
cited evidence and the undisputed facts of this case. Plaintiffs’ dispute of SF ¶ 166
does not create a genuine issue of material fact for the reasons stated in the Replies
to SF ¶¶ 84 and 116. Plaintiffs do not cite any evidence that refutes SF ¶ 166 and,
consequently, SF ¶ 166 should be deemed admitted.
167. In the March 2014 Annual Report, RTC reported returns of each of the
Horizon Funds against relevant benchmarks, the difference in actual returns vs. the
benchmark by asset class and subclass, and the impact of that difference on the whole
portfolio, after considering the proportion of the total portfolio invested in such class
or subclass. See March 2014 Annual Report (NSP-000011039) (Ex. 7) at p. 43.
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Response: Disputed. The Trustee’s Report reported returns of the Horizon
Funds against relevant benchmarks. Exhibit 7 at 24 [Doc. 134-8]. The last three
pages of Exhibit 7 were not included in the Trustee’s Report. See Exhibit P50
(Depo. Exhibit 51).
Reply: Plaintiffs’ dispute of SF ¶ 167 does not create a genuine issue of
material fact. Plaintiffs’ alleged additional fact that the final three pages of Ex. 7
were not included in a particular copy in the Trustee’s Report does not refute that
RTC presented the information contained therein, or that they were contained in
other versions of the report. Plaintiffs do not cite any evidence that refutes SF ¶ 167
and, consequently, SF ¶ 167 should be deemed admitted.
168. Representatives of Holdings and RTC met in November 2013 and
discussed, among other things, the Horizon Funds. See Agenda for Insperity and
Reliance Meeting on November 12-14, 2013 (NSP-00070357) (Ex. 52);
Presentation titled “Insperity Horizon Funds: The Value Proposition,” Explaining
the Importance of Protecting against Stock Market Losses) (NSP-000031847) (Ex.
88).
Response: Objected. The term “representatives of Holdings” is vague and
ambiguous. Disputed. The citation does not support the movant’s fact. The agenda
[Doc. 134-50] does not indicate who was in attendance, and the attached email does
not indicate that any Director of Holdings was present. The presentation is undated
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to confirm when it was presented, and to whom, as the agenda does not reference
the presentation or the Insperity Horizon funds. Exhibit 52 [Doc. 134-50]; Exhibit
88 [Doc. 134-86].
Reply: Plaintiffs fail to state a valid objection to SF ¶ 168, and Plaintiffs’
dispute of SF ¶ 168 does not create a genuine issue of material fact. The term
“representatives of Holdings” is neither vague nor ambiguous in the context of the
cited evidence and the undisputed facts of this case. Contrary to Plaintiffs’ dispute,
the agenda references a presentation on the Horizon Funds on Wednesday,
November 13, 2013. The cited email also confirms that several representatives of
Holdings were invited to Wednesday’s presentation, and that “legal” also attended.
Ex. 52 [134-50] at 3. Plaintiffs’ dispute also ignores the fact that Mr. Stanton and
others wore “two hats” as explained in the Replies to SF ¶¶ 116 and 117. Plaintiffs
do not cite any evidence that refutes SF ¶ 168 and, consequently, SF ¶ 168 should
be deemed admitted.
169. In the March 2015 Annual Report, RTC reported the returns of the
Horizon Funds against relevant benchmarks, explained that the disappointing
performance resulted from “equity de-risking” and stated that RTC not only
continued reviewing F-Squared, but had placed it on the watch list and intended to
remove it. See March 2015 Annual Report (NSP-000011040) (Ex. 8) at pp. 28, 31.
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Response: Disputed. The Trustee’s report [Doc. 134-6] noted that Reliance
Trust “believed it was in the plan’s best interest to remove F-Squared as the tactical
overlay provider”. Id. at 31. It did state that the Horizon Funds would be removed,
since that did not occur until 2017. Exhibit 10 [Doc. 134-11].
Reply: Plaintiffs’ dispute of SF ¶ 169 does not create a genuine issue of
material fact. The first sentence of Plaintiffs’ dispute quotes from the March 2015
Annual Report and supports the summary provided in SF ¶ 169 (specifically, that
RTC placed F-Squared on the watch list and intended to remove it). The remainder
of Plaintiffs’ dispute is irrelevant. SF ¶ 169 does not concern the removal of the
Horizon Funds—only F-Squared. SF ¶ 169 simply notes that RTC reported on the
returns of the Horizon Funds and explained performance. Plaintiffs do not cite any
evidence that refutes SF ¶ 169 and, consequently, SF ¶ 169 should be deemed
admitted.
170. In the May 2016 Annual Report, RTC updated Holdings on its
replacement of F-Squared with Allianz, after favorably evaluating its dynamic multi-
asset plus process and track record. See May 2016 Annual Report (NSP-000011041)
(Ex. 9) at pp. 35-36.
Response: Objection. The term “favorably evaluating” is argumentative in
violation of LR 56.1.B.1.(1). See LR 56.1.B.(2)(a)(2). Disputed. The Trustee’s
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report [Doc. 134-10], and the cited slide (at 37), noted that Allianz’s “process and
strong track record determined to be an enhancement to the target-date funds.”
Reply: Plaintiffs fail to state a valid objection to ¶ 170, and Plaintiffs’ dispute
of SF ¶ 170 does not create a genuine issue of material fact. Plaintiffs fail to show
how the term “favorably evaluating” in SF ¶ 170 is argumentative. The term
“favorably evaluating” is clear in the context of RTC’s decision to replace F-Squared
with Allianz. Plaintiffs do not dispute the accuracy of the fact that RTC evaluated
and ultimately selected Allianz to replace F-Squared. Plaintiffs’ quotation of slide
37 of the May 2016 Annual Report is consistent with the summary contained in SF
¶ 170. Consequently, SF ¶ 170 should be deemed admitted.
171. Also in the May 2016 Annual Report, RTC updated Holdings that it
had placed the Horizon Funds on the watch list. See May 2016 Annual Report (NSP-
000011041) (Ex. 9) at p. 37 (“Given the underperformance of most of the target
maturities since their inception, we have placed the [Horizon] funds on watch status
(effective April 2016) consistent with the monitoring criteria of the IPS.”).
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 171, therefore their Response does not create a
genuine issue of material fact.
172. In 2017, RTC replaced the Horizon Funds with the American Funds
Target Date Retirement Series. See March 2017 Annual Report (NSP-000011042)
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(Ex. 10); April 19, 2017 Letter from Mark Teichner to Karen Drury regarding
Replacement of Horizon Funds with American Funds (NSP-000036329) (Ex. 89).
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 172, therefore their Response does not create a
genuine issue of material fact.
173. Plaintiffs’ expert, Michael Geist, does not offer an opinion that any of
the specific expenses reimbursed by the Plan to Retirement Services were improper,
excessive, or unreasonable. See Deposition of Michael Geist (“Geist Dep.”) (Ex. 90)
at 183:15-19 (“[Q:] Did you perform a separate analysis to determine whether or not
the wages paid by Insperity were reasonable for the market? A. I don’t – yeah, I did
not do that specific analysis.”); id. at 189:19-22 (“[Q:] You did not, for example,
conduct any specific analysis of any specific expense to determine whether that
particular expense was unreasonable, did you, sir? A. If you’re asking whether I
looked at it – a receipt and then looked at ERISA law and then tried to figure out
whether it was reasonable or appropriate, I did not do that”).
Response: Disputed. Mr. Geist opined that based on his analysis of the
recordkeeping and administrative services required for the Plan, and the competitive
marketplace for such services, the Plan paid unreasonable fees.
Exhibit P163 (April 10, 2018 Corrected Expert Report of Michael Geist, ¶15). He
explained that one of factors that led to unreasonable fees was the Retirement
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Services’ lack of scale to efficiently spread its fixed costs, and thus, Plan participants
paid a higher allocation of those costs than they would paid if a large recordkeeper
serviced the Plan. Id. ¶¶71, 88. He also explained that there were efficiencies
inherent in the Plan’s structure but Retirement Services charged expenses that
exceeded a reasonable fee that would have been obtained through a competitive
bidding process. Id. ¶¶73–74, 98. He also pointed out that Retirement Services
submitted reimbursement for time that was previously compensated through direct
charges to covered entities. Exhibit P164 (April 10, 2018 Corrected Rebuttal Report
of Michael Geist, ¶12).
Reply: Plaintiffs’ dispute of SF ¶ 173 does not create a genuine issue of
material fact. SF ¶ 173 states that Mr. Geist did not offer an opinion that any of the
specific expenses reimbursed by the Plan to Retirement Services were improper,
excessive, or unreasonable. Plaintiffs’ response does not refute this fact or cite any
evidence to the contrary. Instead, Plaintiffs’ response refers to a different opinion
proffered by Mr. Geist regarding whether the Plan paid unreasonable fees (without
contesting any of the specific expenses reimbursed by the Plan; thus not disputing
the fact asserted in SF ¶ 173). Plaintiffs also offer other opinions from Mr. Geist,
which may be relevant to Mr. Geist’s opinion regarding aggregate expenses, but are
irrelevant to SF ¶ 173. All of Mr. Geist’s opinions should be excluded for the reasons
stated in the Insperity Defendants’ Motion to Exclude Proffered Testimony of
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Plaintiffs’ Expert Michael Geist (“Geist Daubert Motion”), filed contemporaneously
herewith. Other responses to these opinions will be provided infra in response to
Plaintiffs’ Statement of Additional Material Facts. See responses to SF ¶¶ 434-455.
Consequently, SF ¶ 173 should be deemed admitted.
174. Plaintiffs’ expert, Jania Stout, does not offer an opinion that any of the
specific expenses reimbursed by the Plan to Retirement Services were improper,
excessive, or unreasonable. Deposition of Jania Stout (“Stout Dep.”) (Ex. 92) at
140:8-22 (“Q. But my question is: You’re not offering any opinions about whether
the expenses reimbursed to Retirement Services are reasonable, correct? A.
Correct”); id. at 140:23-141:3 (“Q. And you’ve never analyzed the reasonableness
of any of those fees -- or any of those expenses, correct? A. No. The only time where
-- yeah, let me just back up. Right, that is correct”); id. at 218:15-20 (“[Q:] Did
Reliance approve any expenses that you believe shouldn’t have been approved? . . .
[A:] I’m not – I’m not a – creating an opinion on that.”).
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 174, therefore their Response does not create a
genuine issue of material fact.
175. In his Expert Report, Mr. Jim Scheinberg stated that “small companies
benefit greatly from participating in the Plan” because they “receive services and
economies of scale that would not otherwise be available to them if they sponsored
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their own 401(k) plans.” Expert Report of Jim Scheinberg (“Scheinberg Rep.”) (Ex.
11) at ¶ 65.
Response: Disputed. Mr. Geist offered rebuttal opinions to contradict this
opinion expressed by Mr. Scheinberg. Exhibit P164 (April 10, 2018 Corrected
Rebuttal Report of Michael Geist, ¶21).
Reply: Plaintiffs’ dispute of SF ¶ 175 does not create a genuine issue of
material fact. SF ¶ 175 states a fact regarding Mr. Scheinberg’s expert opinions, and
Plaintiffs do not dispute that Mr. Scheinberg proffered such opinions or cite any
evidence to the contrary. Instead, Plaintiffs’ response simply points to rebuttal
opinions proffered by Mr. Geist. All of Mr. Mr. Geist’s rebuttal opinions should be
excluded for the reasons stated in the Geist Daubert Motion, filed
contemporaneously herewith. Other responses to these opinions will be provided
infra in response to Plaintiffs’ Statement of Additional Material Facts. See responses
to SF ¶¶ 434-455. Consequently, SF ¶ 175 should be deemed admitted.
176. In his Expert Report, Mr. Scheinberg explained how collecting data and
performing extensive IRS-required tests and analyses separately for each of the
thousands of individual client-employers who participate in the Plan (hundreds of
which move into and out of the Plan each year), make administration and
recordkeeping for this Plan extremely complicated and, therefore, significantly more
time consuming and expensive than for a typical single-employer 401(k) plan with
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a similar number of participants and assets. Scheinberg Rep. (Ex. 11) at ¶¶ 17, 32-
33, 43-65.
Response: Disputed. Under Article 18 of the Plan, covered entities can elect
the safe harbor provisions, which exempts Retirement Services from conducting
discrimination testing for these employers. Exhibit 1 at 71, Article 18 [Doc. 134-18];
Exhibit P27 at 62 (Depo. Exhibit 3 (NSP-000026596) at *657, Article 18 (2010
Plan)); Exhibit P51 (RTCPLEDGER00346281)(Client Election Agreement). From
2009 through 2014, 63% or more covered entities were safe harbor. Exhibit P52
(Depo. Exhibit 128, “Testing (2007-2015)” tab) (2009: 64%; 2010: 64%; 2011:
66%; 2012: 64%; 2013: 68%; 2014: 63%). Therefore, Retirement Services did not
perform compliance testing (noted as ADP/ACP testing) on the majority of active
covered entities who participated in the Plan during that period. Id.
Reply: Plaintiffs’ dispute of SF ¶ 176 does not create a genuine issue of
material fact. SF ¶ 176 states a fact regarding Mr. Scheinberg’s expert opinions, and
Plaintiffs do not dispute that Mr. Scheinberg proffered such opinions or cite any
evidence to the contrary. Instead, Plaintiffs’ response makes a different argument
outside of SF ¶ 176. Specifically, Plaintiffs’ response concerns the number of
covered entities that were safe harbor and whether testing was required for such
entities. However, Plaintiffs’ response is not supported by the cited evidence.
Specifically, Plaintiffs state that: “From 2009 through 2014, 63% or more covered
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entities were safe harbor.” Plaintiffs cite Exhibit P52, which contradicts this
statement. Exhibit P52 reflects that, in 2009, 1,462 of 3,077 covered entities were
Safe Harbor or SIMPLE—i.e., 47.5%. Similar numbers are reflected in the
remaining years at issue. Thus, Plaintiffs’ statement that “63% or more covered
entities were safe harbor” is not supported by the cited evidence and, instead, is
demonstrably false. Furthermore, contrary to Plaintiffs’ response, even Plaintiffs’
expert, Mr. Geist, agrees that testing for safe harbor plans may be appropriate. Geist
Dep. at 361:2-15 (attached hereto as Ex. 102). Thus, the number of safe harbor plans
alone does not indicate the amount of testing done. Furthermore, Plaintiffs’ response
ignores top heavy compliance testing. In sum, Plaintiffs do not offer evidence that
contradicts the statements in Mr. Scheinberg’s report. Consequently, SF ¶ 176
should be deemed admitted.
177. Mr. Geist agrees that administration for the Plan is more complex, time
consuming, and expensive than for a single employer plan of a similar size. See
Geist Dep. (Ex. 90) at 419:16-422:14; see Geist Corrected Damages Analysis from
Rebuttal Report (Ex. 91) at p. 1 (the row marked “Insperity-specific and Market
Adjustments to Recordkeeping Fees / pps” effectively doubles his estimate of a
reasonable fee for a similar single employer plan).
Response: Disputed. Mr. Geist opined that the primary differences from the
recordkeeper’s perspective is the greater quantity of certain recordkeeping services
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that were required to be performed for the Plan. Exhibit P163 (April 10, 2018
Corrected Expert Report of Michael Geist, ¶¶91–97); Exhibit P164 (April 10, 2018
Corrected Rebuttal Report of Michael Geist, ¶¶4, 21).
Reply: Plaintiffs’ dispute of SF ¶ 177 does not create a genuine issue of
material fact. Plaintiffs’ response does not directly refute SF ¶ 177 or cite any
evidence to the contrary. Instead, Plaintiffs’ response simply points to a different
opinion proffered by Mr. Geist. Furthermore, Plaintiffs’ citation to Mr. Geist’s April
10, 2018 Corrected Expert Report (“Geist Report”) supports SF ¶ 177. In Paragraph
91 of the Geist Report, Mr. Geist opines that there are “four primary areas in which
the Plan required additional service.” Exhibit P163, ¶ 91. In Paragraphs 92-97, Mr.
Geist details these four primary areas as: (1) additional compliance testing; (2)
additional meeting requirements; (3) implementation and termination of covered
entities; and (4) client touchpoints. Exhibit P163, ¶¶ 92-97. Thus, in addition to the
evidence cited in SF ¶ 177, the evidence cited in Plaintiffs’ response supports the
fact in SF ¶ 177 that Mr. Geist agrees that administration for the Plan is more
complex, time consuming, and expensive than for a single employer plan of a similar
size. Consequently, SF ¶ 177 should be deemed admitted.
178. Mr. Scheinberg performed a comparison of the Plan’s recordkeeping
expenses with other large providers of PEO services/competitors, including TriNet,
ADP and Oasis. Scheinberg Rep. (Ex. 11) at ¶ 80, Table 4.
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Response: Disputed. Mr. Scheinberg compared the Plan’s recordkeeping,
administrative and trustee expenses to three PEO providers’ plans. Exhibit 11 ¶80
[Doc. 134-12]. His comparison also included direct participant transactional fees that
would increase the amounts reported for ADP, Oasis, and Trinet, Id., but those
amounts were excluded by Mr. Geist. Exhibit P53 (Michael Geist Dep. 151:16–
152:7).
Reply: Plaintiffs’ dispute of SF ¶ 178 does not create a genuine issue of
material fact. Plaintiffs’ Response does not directly refute SF ¶ 178 or cite any
evidence to the contrary. Instead, the first sentence of Plaintiffs’ response simply
restates SF ¶ 178, while the second sentence points to a different opinion proffered
by Mr. Geist. Mr. Geist did not do any similar comparisons of the expenses of other
PEO provider’s plans, and thus Mr. Scheinberg’s benchmarking/comparisons are
unrebutted. Moreover, Plaintiffs’ statement that Mr. Geist did not include direct
participant transaction fees in his analysis is incorrect. Mr. Geist included over $2
million in participant loan maintenance fees (which are direct participant transaction
fees) in calculating the Plan’s recordkeeping fees. Scheinberg Rebuttal Report (Ex.
12) at ¶ 36. And in any event, Mr. Geist’s opinions should be excluded for the
reasons stated in the Geist Daubert Motion, filed contemporaneously herewith.
Other responses to these opinions will be provided infra in response to Plaintiffs’
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Statement of Additional Material Facts. See responses to SF ¶¶ 434-455.
Consequently, SF ¶ 178 should be deemed admitted.
179. Mr. Scheinberg’s comparison confirmed that the Plan’s cost per
participant was similar to (but lower than) the reported expenses of TriNet, nearly
20% less costly than ADP, and nearly 40% less than Oasis. Sch. Rep. (Ex. 11) at ¶
80, Table 4.
Response: Disputed. Mr. Scheinberg did not account for the $1,517,660.79 in
customer service fees that were received by Retirement Services, which would
increase the per participant fee to over $23 higher than TriNet. Exhibit P164 (April
10, 2018 Corrected Rebuttal Report of Michael Geist, ¶29). Mr. Scheinberg admits
that the fees reported for Oasis may be understated. Exhibit 11 ¶80, Table 4 [Doc.
134-12]. Mr. Scheinberg’s analysis is further inaccurate because Retirement
Services concedes that it was unable to analyze the fees charged by TriNet and ADP
because “PEO’s don’t disclose fees to employers.” Exhibit P52 (Depo. Exhibit 128
(NSP-000011874)(“Fee Disclosure Analysis” tab). Mr. Geist also explained that Mr.
Scheinberg’s analysis does not confirm that the Plan paid reasonable fees because
differences in service requirements were not taken into account. Exhibit P164 (April
10, 2018 Corrected Rebuttal Report of Michael Geist, ¶30).
Reply: Plaintiffs’ dispute of SF ¶ 179 does not create a genuine issue of
material fact. SF ¶ 179 states a fact regarding Mr. Scheinberg’s expert opinions, and
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Plaintiffs do not dispute that Mr. Scheinberg proffered such opinions or cite any
evidence to the contrary. Instead, Plaintiffs’ response refers to other opinions from
their expert that do not refute or contradict the opinions of Mr. Scheinberg. Mr.
Geist did not do similar comparisons of the Plan’s expenses to other PEO plans’ fees
or expenses. Geist Dep. at 203:20-22 (attached hereto as Ex. 102). Moreover,
Plaintiffs’ criticism of Mr. Scheinberg’s opinions are unfounded. Mr. Geist admitted
at his deposition that the customer service fees, which were paid by client employers
– not the Plan, should not have been included in his calculation of the Plan’s
recordkeeping reimbursements for purposes of comparison to his hypothetical
numbers. Geist 154:24-158:10. The potential understatement of Oasis fees could
only support Mr. Scheinberg’s opinion, because any such understatement means that
Oasis’s fees would be higher when compared to the Plan’s reimbursed expenses.
Plaintiffs also mischaracterize Deposition Exhibit 128, which says nothing about
Scheinberg’s analysis or his opinions. Plaintiffs then criticize Mr. Scheinberg’s
opinion with regard to a comparison of service levels, which he did not attempt
beyond the fact that these PEO plans would also be subject to the Rev. Proc. that
requires additional recordkeeping services that normal single employer plans are not
required to perform. Mr. Geist likewise made no attempt to compare the Plan’s
service levels with the service levels of similar PEO plans. And in any event, Mr.
Geist’s opinions should be excluded for the reasons stated in the Geist Daubert
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Motion, filed contemporaneously herewith. Other responses to these opinions will
be provided infra in response to Plaintiffs’ Statement of Additional Material Facts.
See responses to SF ¶¶ 434-455. Consequently, SF ¶ 179 should be deemed
admitted.
180. Mr. Scheinberg also performed a benchmarking study to determine
similar costs that small plans (similar in size to Insperity’s PEO clients) would
experience. Scheinberg Rep. (Ex. 11) at ¶¶ 81-82.
Response: Disputed. Mr. Scheinberg compared the Plan’s expenses for
recordkeeping, administrative and trustee services to the “average” of a plan with
11–25 participants. Exhibit 11 ¶¶81–82 [Doc. 134-12]. Mr. Scheinberg did not
analyze the services that were provided to these smaller plans in comparison to the
Plan to determine the fee these clients would experience for the same services. Id.
The benchmarking analysis is immaterial to any fact of consequence in determining
this action because Mr. Scheinberg admits that the type of benchmarking analysis
he performed was of “limited value” and he was unable to identify a reasonable
benchmark to compare the costs of the Plan. Id. ¶81. He also concedes that the
“average” in a benchmark universe does not reflect the competitive marketplace.
Exhibit P36 (Scheinberg Depo. Exhibit 16, ¶36).
Reply: Plaintiffs’ dispute of SF ¶ 180 does not create a genuine issue of
material fact. Plaintiffs’ response does not directly refute SF ¶ 180 or cite any
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evidence to the contrary. Instead, the first sentence of Plaintiffs’ response simply
rephrases SF ¶ 180, while the remainder of Plaintiffs’ response criticizes Mr.
Scheinberg’s benchmarking study. SF ¶ 180 merely states the fact that Mr.
Scheinberg performed the benchmarking study at issue. Plaintiffs’ expert, Mr. Geist,
did not do any similar study or comparison, and thus Scheinberg’s analysis and
opinions in this regard are uncontradicted and unrebutted. Furthermore, Plaintiffs’
criticisms are irrelevant and incorrect. First, Plaintiffs claim Mr. Scheinberg did not
compare the services provided to the Plan with the services provided to small
employers. This is patently incorrect. Upon his examination of documents and
through direct interviews with Insperity employees, Mr. Scheinberg “concluded that
the burden for recordkeeping and administering a PEO 401(k) like Insperity’s is
more akin to recordkeeping and administering thousands of small plans than it is to
recordkeeping and administering one large single-employer plan.” Scheinberg Rep.
(Ex. 11) at ¶ 43. Mr. Scheinberg then details the unique, burdensome, and costly
requirements related to the Plans, which are similar to the requirements of small
plans. Id. at ¶¶ 43-65. Plaintiffs next argue that Mr. Scheinberg’s benchmarking
study is immaterial because they claim he admitted it was of “limited value.”
However, Mr. Scheinberg never made such an admission. Instead, this quote is
taken from a discussion regarding certain resources that provide only total plan costs
(and thus cannot be used to compare the cost of each individual component of the
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necessary services that Retirement Services provides to the Plan). Scheinberg Rep.
(Ex. 11) at ¶ 81. Finally, Plaintiffs include the irrelevant observation that average
numbers do not “reflect the competitive marketplace.” But this is true with regard
to any and all benchmarking analyses and obviously does not render them
meaningless or of no relevance with regard to a comparison for determining whether
the expenses were reasonable. The law is clear that “reasonable” does not mean the
lowest possible. See, e.g., Renfro v. Unisys Corp., No. 07-2098, 2010 WL 1688540,
at *6 (E.D. Pa. Apr. 26, 2010) (“ERISA does not require fiduciaries to get the best
deal imaginable for the Plan. . . . it does not support a lawsuit that simply claims the
fiduciaries could have done better had they worked harder to leverage their market
power.”), aff’d, 671 F.3d 314 (3d Cir. 2011); Sweda v. Univ. of Pennsylvania, No.
CV 16-4329, 2017 WL 4179752, at *8 (E.D. Pa. Sept. 21, 2017) (“Even if there were
cheaper options available for recordkeeping fees, ERISA mandates that fiduciaries
consider options besides cost. Fiduciaries must balance ‘providing benefits to
participants and their beneficiaries’ and ‘defraying reasonable expenses of
administering the plan.’”) (quoting 29 U.S.C. § 1104(a)(1)); Patterson v. Capital
Grp. Companies, Inc., No. CV-17-4399 DSF (PJWX), 2018 WL 748104, at *5 (C.D.
Cal. Jan. 23, 2018) (“Unquestionably, fiduciaries need not choose the cheapest fees
available . . .”). Consequently, SF ¶ 180 should be deemed admitted.
181. Mr. Scheinberg’s benchmarking study showed that the average plan
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similar in size to the typical Insperity PEO client (average of 15.8 participants in
2015) would be paying over 1% of their plan balance for services, compared to just
.27% for the expenses charged to the Plan. Scheinberg Rep. (Ex. 11) at ¶¶ 81-82.
Response: Disputed. The benchmarking analysis is immaterial to any fact of
consequence in determining this action because Mr. Scheinberg admits that the type
of benchmarking analysis he performed was of “limited value” and he was unable
to identify a reasonable benchmark to compare the costs of the Plan. Id. ¶81. He also
concedes that the “average” in a benchmark universe does not reflect the competitive
marketplace. Exhibit P36 (Scheinberg Depo. Exhibit 16, ¶36). The average fee does
not provide him with “information that’s actionable” in practice. Exhibit P54 (James
Scheinberg Dep. 150:9–19). The data upon which he relies is also higher that other
data he cited in support of his opinions. See Exhibit P55 (Eric Droblyen, (Possibly)
The Biggest Small Business 401(k) Fee Study Ever!, Aug. 24, 2018 (Employee
Fiduciary All-In Fee of 46 bps). Ms. Stout also opined that comparison to small plan
pricing is not a reliable method to benchmark the Plan’s fees because the Plan had
significant bargaining power and recordkeeping efficiencies to obtain lower costs
than much smaller plans. Exhibit P157 (March 1, 2018 Expert Report of Jania Stout,
¶¶152–57).
Reply: Plaintiffs’ dispute to SF ¶ 181 does not create a genuine issue of
material fact. SF ¶ 181 concerns the results of Mr. Scheinberg’s benchmarking
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study. Plaintiffs’ response does not refute that SF ¶ 181 correctly reports such results
or cite any evidence to the contrary. Instead, Plaintiffs’ response simply criticizes
Mr. Scheinberg’s benchmarking study. However, Plaintiffs’ criticisms are irrelevant
and unfounded for the reasons stated in the Reply to SF ¶ 180. Additionally,
Plaintiffs’ citation to Exhibit P55 (Eric Droblyen, (Possibly) The Biggest Small
Business 401(k) Fee Study Ever!, Aug. 24, 2018 (Employee Fiduciary All-In Fee of
46 bps) supports Mr. Scheinberg’s opinions. This study calculated average costs per
participant as $366, roughly four times the cost of the Plan. Scheinberg Rebuttal
Report (Ex. 12) at ¶ 26. Ms. Stout improperly dismisses comparisons to small plans.
Scheinberg Rebuttal Report (Ex. 12) at ¶¶ 16-22. As detailed in Mr. Scheinberg’s
Rebuttal Report, the Plan is more similar to a collective of thousands of smaller plans
than it is to a mega plan. Id. And in any event, Ms. Stout’s opinions should be
excluded for the reasons stated in the Stout Daubert Motion, filed
contemporaneously herewith. Other responses to these opinions will be provided
infra in response to Plaintiffs’ Statement of Additional Material Facts. See responses
to SF ¶¶ 398-433. Consequently, SF ¶ 181 should be deemed admitted.
182. Mr. Geist’s damages analysis begins with a specific dollar amount that
he opines is the only “reasonable fee” for a hypothetical, similarly-sized, single
employer plan for each year of the Class Period (Mr. Geist’s “baseline” amount).
See Geist Dep. (Ex. 90) at 178:18-180:3 (identifying and authenticating Damages
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Analysis in his report); Geist Corrected Damages Analysis from Rebuttal Report
(Ex. 91).
Response: Disputed. Mr. Geist opined that the baseline fee is the fee “for a
standard product offering for a 401(k) plan with similar participants with account
balances, cash flows and average account balance.” Exhibit P164 (April 10, 2018
Corrected Rebuttal Report of Michael Geist, ¶80).
Reply: Plaintiffs’ dispute to SF ¶ 182 does not create a genuine issue of
material fact. Plaintiffs’ response does not directly refute SF ¶ 182 or cite any
evidence to the contrary. Instead, Plaintiffs’ response simply restates and thus tries
to soften the description of Mr. Geist’s “baseline fee.” Plaintiffs cite Exhibit P164
(April 10, 2018 Corrected Rebuttal Report of Michael Geist, ¶80), however there is
no Paragraph 80 in this report. Furthermore, Mr. Geist described his baseline
amount as the “reasonable [recordkeeping] fee for typical single $1B+ Plan with
30k+ pps,” which supports SF ¶ 182. Geist Corrected Damages Analysis from
Rebuttal Report (Ex. 91). Furthermore, Mr. Geist’s opinions should be excluded for
the reasons stated in the Geist Daubert Motion, filed contemporaneously herewith.
Consequently, SF ¶ 182 should be deemed admitted.
183. Mr. Geist’s “baseline” amount for such a single employer plan is not
based on any benchmarking data, reference to the actual pricing for any other plan,
or any other source – merely his “recollection” and “experience.” See Geist Dep.
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(Ex. 90) at 239:10-23 (“A. I definitely didn’t use benchmarking probably in the way
that you’re using that phrase, no. Q. You didn’t use -- you didn’t use any objective
source of pricing information from a third party to form your opinions in this case,
correct? A. I did – I did not. I used my knowledge of the marketplace.”).
Response: Disputed. Mr. Geist provided data on the total compensation paid
by T. Rowe Price 401(k) plans to validate the range of standard pricing that could
be obtained in the market by 401(k) plans that did not require additional quantity of
services. Exhibit P164 (April 10, 2018 Corrected Rebuttal Report of Michael Geist
¶27 n. 32); Exhibit P165 (Exhibit 2 to Geist Rebuttal). He also provided data on
pricing for other multiple employer plans. Exhibit P167 (Exhibit 4 to Geist
Rebuttal).
Reply: Plaintiffs’ dispute to SF ¶ 183 does not create a genuine issue of
material fact. SF ¶ 183 notes that Mr. Geist’s “baseline” amount in his original
report is not based on any data. In response, Plaintiffs refer to cherry-picked Form
5500s that Mr. Geist cites in his rebuttal report. However, Mr. Geist admits that he
did not consider such data in forming his initial opinions and, thus, his “baseline”
amount is not based on such data. Geist Dep. at 107:6-108:19 (attached hereto as
Ex. 102). Moreover, these exhibits contradict Mr. Geist’s “baseline” amount that he
invented without any data. Exactly none of the plans referenced in these exhibits to
his rebuttal report paid the fees that Mr. Geist uses each year of his analysis, and
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many of them paid more in fees for many of the years at issue. Likewise, his multiple
employer plans are not comparable to the Plan, as none involved more than 20
employers, and most included only a few employers, in comparison to the thousands
of client-employers included in the Plan. Thus, Plaintiffs’ response does not refute
SF ¶ 183 or cite any evidence to the contrary. And in any event, Mr. Geist’s opinions
should be excluded for the reasons stated in the Geist Daubert Motion, filed
contemporaneously herewith. Other responses to these opinions will be provided
infra in response to Plaintiffs’ Statement of Additional Material Facts. See responses
to SF ¶¶ 434-455. Consequently, SF ¶ 183 should be deemed admitted.
184. Mr. Geist then adds an additional amount to “adjust” his “baseline” to
account for the admitted complexities and additional expense involved in
recordkeeping this PEO plan (Mr. Geist’s “adjustments”). See Geist Dep. (Ex. 90)
80:12-21 (“[Q:] My understanding is what you did here was you started with a mega
or giga plan price . . . [a]nd then you added the things that you deemed to be
incrementally in addition to that, correct, to come up with what you deem a
reasonable price; is that fair? A. It’s fair enough, yes.”).
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 184, therefore their Response does not create a
genuine issue of material fact.
185. Mr. Geist’s “adjustments” include numbers that relied upon NSP –
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000062988 as their basis, including numbers for 2014 (the year of the data at issue)
and similar numbers for other years which he extrapolated from the numbers for
2014. In other words, his “adjustments” are based on his assumption that these 2014
numbers accurately reflected numbers that would be reflected in similar data for
other years. See Geist Corrected Damages Analysis from Rebuttal Report (Ex. 91)
at pp. 4-8 (relying on and extrapolating from 2014 data as evidenced in NSP-
000062988); Geist Dep. (Ex. 90) at 119:7-121:2 (“Q. Okay. And so would you agree
with me, sir, that it would have been more precise to have used data for other years
instead of just extrapolating for 2014? . . .[A: ] I think that it -- if -- it would certainly
be something that would add a little bit -- you know, another perspective. However,
the differences probably wouldn't be material . . .”).
Response: Disputed. Mr. Geist utilized numerous documents and reports of
Retirement Services as the bases for his opinions. See, e.g., Exhibit P164 (April 10,
2018 Corrected Rebuttal Report of Michael Geist, ¶¶93–97); see also Exhibit P166
(Michael Geist Corrected Rebuttal Reliance Spreadsheet, all tabs). Mr. Geist
explained that he relied on NSP-000062988 for assumptions based on the amount of
time devoted by Retirement Services employees to perform recordkeeping and
administrative tasks because he did access to similar data for prior years and using
2014 data would benefit the Insperity Defendants because Retirement Services
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would have gained efficiencies in 2014 that it did not have in earlier years. Exhibit
P53 (Michael Geist Dep. 119:7–120:8).
Reply: Plaintiffs’ dispute to SF ¶ 185 does not create a genuine issue of
material fact. SF ¶ 185 notes that Mr. Geist’s “adjustments” are based on
extrapolated 2014 data. In response, Plaintiffs state that Mr. Geist looked at other
documents and attempt to justify Mr. Geist’s reliance on NSP-000062988.
However, while Mr. Geist may have looked at other documents for portions of his
report, his calculations of the Plan’s service requirements related to testing,
meetings, new plan implementation and termination activities, and client
communications, are based on extrapolations of the 2014 data. Geist Corrected
Damages Analysis from Rebuttal Report (Ex. 91). Thus, his “adjustments” are based
on the extrapolated 2014 data. Mr. Geist admits that using actual data from the entire
Class Period (rather than just extrapolating from the 2014 data), “would certainly be
something that would add a little bit – you know, another perspective,” yet claims
“the differences probably wouldn’t be material.” Geist Dep. at 119:13-120:8
(attached hereto as Ex. 102). But then he concedes that he has absolutely no basis
for this belief. Id. 120:10-18. Thus, Plaintiffs’ response does not refute SF ¶ 185 or
cite any evidence to the contrary. And in any event, Mr. Geist’s opinions should be
excluded for the reasons stated in the Geist Daubert Motion, filed
contemporaneously herewith. Other responses to these opinions will be provided
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infra in response to Plaintiffs’ Statement of Additional Material Facts. See responses
to SF ¶¶ 434-455. Consequently, SF ¶ 185 should be deemed admitted.
186. The 2014 hours data contained in NSP-000062988, and relied upon by
Mr. Geist, was preliminary, not final, 2014 hours data, and it is inaccurate. Stanton
Aff. (Ex. 17) at ¶¶ 23-24.
Response: Disputed. Mr. Stanton does not articulate or describe how the 2014
hours were inaccurate or otherwise impacted Mr. Geist’s analysis. Exhibit 17 [Doc.
134-18]. He also does not attach the claimed final version to demonstrate the
differences between the two versions.
Reply: Plaintiffs’ dispute to SF ¶ 186 does not create a genuine issue of
material fact. SF ¶ 186 is an exact quote from the Affidavit of John Stanton. Stanton
Aff. (Ex. 17) at ¶ 24. Plaintiffs’ response does not refute SF ¶ 186 or cite any
evidence to the contrary. Thus, the Affidavit of John Stanton is uncontroverted
evidence. Plaintiffs’ response simply criticizes the Affidavit of John Stanton.
However, Plaintiffs’ criticisms are irrelevant. Mr. Stanton was under no obligation
in his Affidavit to offer a more detailed explanation regarding the 2014 data. The
final data for 2014 was produced through expense reimbursement requests during
discovery. Mr. Geist apparently chose to take an incomplete and inaccurate shortcut
for his calculations. See, e.g., Stanton Aff. (Ex. 17), Attachment A (sample of the
monthly expense reimbursement requests). Consequently, SF ¶ 186 should be
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deemed admitted.
187. Mr. Geist’s “adjustments” are based on opinions, such as the average
number of meetings per year and the average number of terminations and mergers
of new sub-plans for a similarly sized plan, for which he has no data or support. See
Geist Dep. (Ex. 90) at 368:19-369:18 (claiming, without data or other evidence, that
a comparably sized plan typically has eleven hours per week in “touchpoint client
communications time”); id. at 370:5-23 (claiming, without data or other evidence,
that the average typical new plan implementation activities includes nine new client
setups per year); id. at 371:8-13 (claiming, without data or other evidence, that a
similar plan typically has seven de-conversions or spinoff activities per year; id. at
366:11-367:24 (claiming, without data or other evidence, that a similar plan typically
has 12 meetings per year).
Response: Disputed. Mr. Geist utilized numerous documents and reports of
Retirement Services as the bases for his opinions. See, e.g., Exhibit P164 (April 10,
2018 Corrected Rebuttal Report of Michael Geist, ¶¶93–97); see also Exhibit P166
(Michael Geist Corrected Rebuttal Reliance Spreadsheet, all tabs). He also applied
his extensive expertise derived from developing, creating and/or governing
thousands of pricing proposals for thousands of plans. E.g., Exhibit P163 (April 10,
2018 Corrected Expert Report of Michael Geist, ¶80).
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Reply: Plaintiffs’ dispute to SF ¶ 187 does not create a genuine issue of
material fact. SF ¶ 187 notes that Mr. Geist’s “adjustments” are based opinions
regarding the service requirements of a similarly sized plan, for which he has no data
or support. In response, Plaintiffs state that Mr. Geist looked at “numerous
documents and reports” in forming his opinions. However, he admitted in his
deposition that the numbers at issue in SF ¶ 187 are not based on any data or
authority. Geist Dep. at 366:11-371:13 (attached hereto as Ex. 102). Instead, as
confirmed by the last sentence in Plaintiffs’ response, Mr. Geist’s numbers are based
solely on his purported personal experience. Thus, Plaintiffs’ response does not
refute SF ¶ 187 or cite any evidence to the contrary. And in any event, Mr. Geist’s
opinions should be excluded for the reasons stated in the Geist Daubert Motion, filed
contemporaneously herewith. Other responses to these opinions will be provided
infra in response to Plaintiffs’ Statement of Additional Material Facts. See responses
to SF ¶¶ 434-455. Consequently, SF ¶ 187 should be deemed admitted.
188. Mr. Geist adds together his “baseline” number and his “adjustments” to
come up with a total number that he opines is the total amount of fees or
reimbursements the Plan could reasonably charge in each year of the Class Period
(Geist’s “total reasonable fee”). See Geist Corrected Damages Analysis from
Rebuttal Report (Ex. 91) at p. 1 (executive summary of damages).
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Response: Objection. The statement “is the total amount or reimbursements
the Plan could reasonably charge” is vague and ambiguous. Disputed. Mr. Geist
opined that based on the service requirements for this Plan and the inherent
efficiencies embedded in the specific delivery model for the Plan, the Plan paid
unreasonable fees for the level of recordkeeping and administrative services
provided. Exhibit P163 (April 10, 2018 Corrected Expert Report of Michael Geist,
¶¶15, 98); Exhibit P164 (April 10, 2018 Corrected Rebuttal Report of Michael
Geist, ¶¶24–28).
Reply: Plaintiffs’ objection should be overruled since they fail to show how
SF ¶ 188 is vague and ambiguous. Mr. Geist’s Corrected Damages Analysis (Ex.
91) adds together his “baseline” number (i.e., “Reasonable RK Fee for Typical
Single $1B+ Plan with 30k+ pps”) and “adjustments” (i.e., “Insperity-specific and
Market Adjustments to Recordkeeping Fee / pps”) to come up his “Reasonable Per
Participant Recordkeeping Fee for Insperity Plan”—i.e., his opinion regarding the
total amount of fees the Plan could reasonably charge in each year of the Class
Period. Of course, since the Plan does not charge “fees” and instead is only
reimbursed for expenses, SF ¶ 188 refers to “fees or reimbursements.” Given that
SF ¶ 188 is a summary of Plaintiffs’ own expert’s opinion, Plaintiffs’ objection is
disingenuous. Accordingly, Plaintiffs’ objection should be overruled. Plaintiffs’
dispute to SF ¶ 188 also does not create a genuine issue of material fact. Plaintiffs’
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response does not refute that SF ¶ 188 has correctly summarized Mr. Geist’s
damages calculation or cite any evidence to the contrary. Instead, Plaintiffs’
response simply points to a different opinion proffered by Mr. Geist that is irrelevant
to SF ¶ 188. And in any event, Mr. Geist’s opinions should be excluded for the
reasons stated in the Geist Daubert Motion, filed contemporaneously herewith.
Other responses to these opinions will be provided infra in response to Plaintiffs’
Statement of Additional Material Facts. See responses to SF ¶¶ 434-455.
Consequently, SF ¶ 188 should be deemed admitted.
189. Mr. Geist then calculates what he contends was the Plan’s average cost
per participant for recordkeeping services in each year of the class period, but he
uses an amount that he admits is different than what Retirement Services was
actually paid that year (Mr. Geist’s “hypothetical total expense amount”). See Geist
Corrected Damages Analysis from Rebuttal Report (Ex. 91) at p. 1 (executive
summary of damages); see also Geist Dep. (Ex. 90) at 167:7- 170:11 (Geist’s
determination that “the service requirements of the plan did not justify the
compensation that Insperity Retirement Services received” was based on calculation
of “all the compensation that [Retirement Services] received” and not just
compensation from the Plan itself); id. at 372:6-373:2 (in calculating “total
recordkeeping and admin fees” on page 2 of his Damages Analysis, Geist admits he
“does not include what Retirement Services received. Instead [he] starts with the
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revenue sharing amount . . . “).
Response: Disputed. Mr. Geist calculated the amount that the Plan
participants paid in a calendar year for recordkeeping and administrative services,
which was primarily the function of revenue sharing and participant fees. Exhibit
P166 at 2 (Michael Geist Rebuttal Reliance Spreadsheet, “Summary tab”). He then
subtracted any amounts returned to Plan participants. Id. This method replicates the
true cost that Plan participants paid for recordkeeping and administrative services
because excess revenue sharing was not rebated to Plan participants on an annual
basis. Id. He also included the amount Retirement Services received from covered
entities to determine the total compensation it earned for providing Plan services,
and for which Retirement Services previously sought reimbursement from the Plan
for time spent by employees in performing these tasks. Id.; Exhibit P164 (April 10,
2018 Corrected Rebuttal Report of Michael Geist, ¶12).
Reply: Plaintiffs’ dispute to SF ¶ 189 does not create a genuine issue of
material fact. Plaintiffs’ response does not directly refute SF ¶ 189 or cite any
evidence to the contrary. Instead, Plaintiffs’ response is argumentative and simply
restates SF ¶ 189. Plaintiffs’ response admits that Mr. Geist’s calculation “was
primarily the function of revenue sharing and participant fees” and “also included
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the amount Retirement Services received from covered entities.”7 Thus, Plaintiffs
admit the premise of SF ¶ 189—that Mr. Geist’s calculation is not based the amount
that Retirement Services was actually paid, and instead is based on the amount of
revenue sharing (not just that portion paid to Retirement Services) and the fees from
covered entities that were not paid by the Plan. And in any event, Mr. Geist’s
opinions should be excluded for the reasons stated in the Geist Daubert Motion, filed
contemporaneously herewith. Other responses to these opinions will be provided
infra in response to Plaintiffs’ Statement of Additional Material Facts. See responses
to SF ¶¶ 434-455. Consequently, SF ¶ 189 should be deemed admitted.
190. Mr. Geist’s hypothetical total expense amount includes amounts
identified on his spreadsheet as “Retirement Services Customer Services Fees.” See
Geist Corrected Damages Analysis from Rebuttal Report (Ex. 91) at p. 2; Geist Dep.
(Ex. 90) at 145:22-146:2 (Geist assumes that the Plan pays customer service fees in
his damages analysis).
7 The Insperity Defendants dispute Plaintiffs’ argument that Mr. Geist’s calculation
“replicates the true cost that Plan participants paid.” The true cost is the amount
actually received by Retirement Services. Since excess revenue sharing was rebated
to participants, it was never received by Retirement Services and should not have
been used in Mr. Geist’s calculation. There was no requirement to rebate the excess
revenue sharing more frequently than it was rebated. Similarly, there was no basis
for Mr. Geist to include the fees from covered entities—which were not paid by the
Plan or participants.
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Response: Disputed. Mr. Geist included “Retirement Services Customer
Service Fees”. He did not assume that the Plan paid the customer service fees but
only testified that the record was unclear. Exhibit P53 (Michael Geist Dep. 145:17–
21).
Reply: Plaintiffs’ dispute to SF ¶ 190 does not create a genuine issue of
material fact. Plaintiffs’ response does not directly refute SF ¶ 190 or cite any
evidence to the contrary. The first sentence of Plaintiffs’ response simply restates
SF ¶ 190. The second sentence of Plaintiffs’ response disputes the parenthetical
from one of the citations (but not SF ¶ 190 itself). However, Plaintiffs ignore Mr.
Geist’s testimony on this issue. Mr. Geist expressly admitted that he included the
“Retirement Services Customer Services Fees” “as though they were received by
Retirement Services from the plan.” Geist Dep. at 154:9-22 (Ex. 90); see also
Scheinberg Rebuttal Report (Ex. 12) at ¶ 43. As confirmed in SF #191, he also
admitted they should not have been included in his analysis. See Geist Dep. at
156:12:-157:9 (Ex. 90). Furthermore, Mr. Geist’s opinions should be excluded for
the reasons stated in the Geist Daubert Motion, filed contemporaneously herewith.
Consequently, SF ¶ 190 should be deemed admitted.
191. Mr. Geist admitted in his deposition that if such amounts were paid by
the client employers, not the Plan or its participants, then they should not be included
in his damages numbers. See Geist Dep. (Ex. 90) 156:12:-157:9.
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Response: Disputed. He testified that under the hypothetical presented by the
Insperity Defendants’ counsel, those amounts would not be included in the
“Retirement Services Plan Reimbursements” item. Exhibit P53 (Michael Geist Dep.
156:24–157:10. He did not admit that under that hypothetical it would affect his
damage analysis as he first calculated the total amount paid by Plan participants and
received by Retirement Services, to arrive at the true cost of recordkeeping and
administrative services paid by the Plan. Exhibit P166 at 2 (Michael Geist Rebuttal
Reliance Spreadsheet, “Summary tab”).
Reply: Plaintiffs’ dispute to SF ¶ 191 does not create a genuine issue of
material fact. Plaintiffs’ response misstates Mr. Geist’s deposition testimony. As
discussed in the Reply to SF ¶ 190, Mr. Geist assumed that the “Retirement Services
Customer Service Fees” were paid by the Plan. Further, he agreed (under a
hypothetical that was an accurate description of the facts), that if the “Retirement
Services Customer Services Fees” were actually paid by clients, and not the plan,
then “the only money that Retirement Services received from the plan each year is
th[e] line ‘Retirement Services plan reimbursements.” Geist Dep. at 156:12:-157:9
(Ex. 90). Thus, under this admission, the “Retirement Services Customer Services
Fees” should not have been included in his damages calculation. Furthermore, Mr.
Geist’s opinions should be excluded for the reasons stated in the Geist Daubert
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Motion, filed contemporaneously herewith. Consequently, SF ¶ 191 should be
deemed admitted.
192. The amounts identified as “Retirement Services Customer Services
Fees” on Mr. Geist’s spreadsheets were paid by the client employers who
participated in the Plan, and not paid by the Plan itself or its participants. Stanton
Aff. (Ex. 17) at ¶ 25.
Response: Disputed in part. Retirement Services was indirectly paid by the
Plan because it was reimbursed for the time spent by its employees in performing
the services that were directly billed to covered entities. E.g., Exhibit 17 at 23–29
[Doc. 134-18] and Exhibit P10 at 73–128 (Depo. Exhibit 93
(RTCPLEDGER00386280) at *351–406).
Reply: Plaintiffs’ dispute to SF ¶ 192 does not create a genuine issue of
material fact. Plaintiffs’ response does not directly refute SF ¶ 192 or cite any
evidence to the contrary. SF ¶ 192 concerns the fact that the “Retirement Services
Customer Services Fees” were paid by the client employers, and not the Plan or
participants. Plaintiffs do not dispute this fact, but instead make a different argument
outside of SF ¶ 192—specifically, that the Plan separately paid Retirement Services
for certain services that were allegedly also paid by the client employers. SF ¶ 192
does not concern the fees paid by the Plan. There is also no genuine dispute that the
fees paid by client-employers did not fully compensate Retirement Services for
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overhead expenses that were not reimbursed by the Plan. See Duffy Dep. (Ex. 33),
at 10:18-11:17; Retirement Services Summary by Year (NSPFINANCE-000001-
154) (Ex. 34); Ratner Rep. (Ex. 35), Schedule 2. Thus, Plaintiffs’ response is
irrelevant and argumentative. Consequently, SF ¶ 192 should be deemed admitted.
193. Mr. Geist’s damages numbers are derived from the difference between
his “hypothetical total expense amount” and his “total reasonable fee.” See Geist
Corrected Damages Analysis from Rebuttal Report (Ex. 91); Geist Dep. (Ex. 90) at
181:10-21 (“[Q:] in order to determine whether you’ve got a reasonable
recordkeeping fee that Insperity charged, you would compare the first line on the
first page, the “Average recordkeeping fees and interest” that you calculated per
participant, per year . . . and then your reasonable number . . . and the difference is
what you would attribute to being the unreasonable excess recordkeeping fees paid
by Insperity? A. That’s correct.”).
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 193, therefore their Response does not create a
genuine issue of material fact.
194. For Mr. Geist’s “hypothetical total expense amount,” he uses the
amount of revenue sharing collected in that calendar year, not the amount of such
revenue sharing that was actually paid to Retirement Services. See Geist Corrected
Damages Analysis from Rebuttal Report (Ex. 91) at p. 2; Geist Dep. (Ex. 90) at
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153:22-156:4.
Response: Admitted.
Reply: Plaintiffs admit SF ¶ 194, therefore their Response does not create a
genuine issue of material fact.
195. Mr. Geist’s “hypothetical total expense amount” includes all
“participant fees.” See Geist Corrected Damages Analysis from Rebuttal Report
(Ex. 91) at p. 2; Geist Dep. (Ex. 90) at 149:15-150:21 (admitting he does not actually
know what the participant fees were).
Response: Disputed. Mr. Geist excluded participant transaction fees from his
analysis. Exhibit P53 (Michael Geist Dep. 152:4–14); Exhibit P166 at 2 (Michael
Geist Rebuttal Reliance Spreadsheet, “Summary tab”); Exhibit P164 (April 10,
2018 Corrected Rebuttal Report of Michael Geist, ¶33).
Reply: Plaintiffs’ dispute of SF ¶ 195 does not create a genuine issue of
material fact. Mr. Geist’s spreadsheet contains separate entries for both “participant
fees” and fees he identifies as “participant transaction.” Geist Corrected Damages
Analysis from Rebuttal Report (Ex. 91) at p. 2. SF ¶ 195 refers to the former.
Plaintiffs’ response refers to the latter, and thus it does not contradict this fact.
Moreover, contrary to Plaintiffs’ response, Mr. Geist admitted he included all
“participant fees,” including over $2 million in participant loan maintenance fees
(which are direct participant transaction fees) in his “hypothetical total expense
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amount.” Geist Dep. at 149:15-153:16 (attached hereto as Ex. 102). Scheinberg
Rebuttal Report (Ex. 12) at ¶ 36. Mr. Geist also admitted at his deposition that the
loan maintenance fees should not have been included in his “hypothetical total
expense amount.” Geist 151:16-153:16. And in any event, Mr. Geist’s opinions
should be excluded for the reasons stated in the Geist Daubert Motion, filed
contemporaneously herewith. Other responses to these opinions will be provided
infra in response to Plaintiffs’ Statement of Additional Material Facts. See responses
to SF ¶¶ 434-455. Consequently, SF ¶ 195 should be deemed admitted.
196. The “participant fees” Mr. Geist included in his hypothetical total
expense amount included fees collected from individual participants related to loans
such participants received from the Plan. Stanton Aff. (Ex. 17) at ¶ 26.
Response: Disputed. All of the fees billed to participants and the covered
entities are used to reimburse Retirement Services for expenses incurred in providing
all recordkeeping and administrative services to the Plan. Exhibit P56 at 1 (NSP-
000067480) at *480 (Retirement Services “take all fees–amounts billed to plan
sponsor, deducted from accounts and revenue sharing–and pay all costs”).
Retirement Services does not keep contemporaneous records to itemize the portion
of the fees associated with services provided to individual participants. Id. at *481
(Retirement Services “bundle all the fees together and offset all the costs of
providing services” and “can’t definitely tie the quarterly participant fee to the
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cost…to a specific plan administration service”); see also Exhibit P54 (James
Scheinberg Dep. 227:5–228:3)(Insperity Defendants’ expert, James Scheinberg
admitted that he was not aware of any documentation that would itemize the portion
of participant fees attributed to participant loans). Retirement Services discloses that
the direct expenses billed to the covered entities and participant accounts, and the
revenue sharing derived from Plan investments, are used to pay for all services
provided to the Plan. Exhibit 17, Attachment B at 133–34 [Doc. 134-18]. Reliance
Trust did not know what was referred to a participant maintenance fees and
participant transaction fees referenced in the Trustee’s Reports. Exhibit P57 (Trey
Carter Dep. 83:17–22); Exhibit P23 (Depo. Exhibit 167
(RTCPLEDGER00304710)).
Reply: Plaintiffs’ dispute of SF ¶ 196 does not create a genuine issue of
material fact. Plaintiffs’ response does not directly refute SF ¶ 196 or cite any
evidence to the contrary. Instead, Plaintiffs’ response makes a different argument
involving facts unrelated to SF ¶ 196. Specifically, Plaintiffs’ response concerns
whether the portion of the “participant fees” that represented loan maintenance fees
were separately identified in Retirement Services’ internal records. This might help
explain why Mr. Geist made this error, but it does not change the fact of what he
did. The point of SF ¶ 196 is that Mr. Geist included participants’ loan maintenance
fees in calculating the Plan’s total expenses for purposes of his comparisons. See
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also Scheinberg Rebuttal Report (Ex. 12) at ¶ 36. Plaintiffs’ response does not refute
this fact or cite any evidence to the contrary. Consequently, SF ¶ 196 should be
deemed admitted.
197. At his deposition, Mr. Geist conceded such loan fees should not be
included in his hypothetical total expense amount. See Geist Dep. (Ex. 90) at 153:3-
11 (“Q. Okay. And if those fees [not actually paid by all participants] were included
in "Participant fees," the forth line, like loan fees, for example, if that was included
in that line, you would want to know that and take that out of your number, right?
A. Yeah. To the extent that there's more clarity related to exactly the process related
to these fees and what they represented, then I would make adjustments to this.”).
Response: Disputed. Mr. Geist testified that based on his review of the record
the portion of the participant fees that were attributable to loans is not clear, and thus
were not excluded from his analysis. Exhibit P53 (Michael Geist Dep. 149:15–
153:11). Retirement Services does not keep contemporaneous records to itemize the
portion of the fees associated with services provided to individual participants. ).
Exhibit P56 at 2 (NSP-000067480) at *481 (Retirement Services “bundle all the
fees together and offset all the costs of providing services” and “can’t definitely tie
the quarterly participant fee to the cost…to a specific plan administration service”);
see also Exhibit P54 (James Scheinberg dep. 227:5–228:3)(Insperity Defendants’
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expert, James Scheinberg admitted that he was not aware of any documentation that
would itemize the portion of participant fees attributed to participant loans).
Reply: Plaintiffs’ dispute of SF ¶ 197 does not create a genuine issue of
material fact. Plaintiffs’ response does not directly refute SF ¶ 197 or cite any
evidence to the contrary. Indeed, Plaintiffs’ response concedes SF ¶¶ 195-196 by
noting that “participant fees that were attributable to loans . . . were not excluded
from [Mr. Geist’s] analysis.” Plaintiffs attempt to justify Mr. Geist’s calculation by
stating that it was “not clear” what portion of such fees were attributable to loans.
However, this does not change the fact that Mr. Geist included the fees (SF ¶¶ 195-
196) and later conceded that such fees should not have been included (SF ¶ 197).
As discussed in the Reply to SF ¶ 196, the remainder of Plaintiffs’ response is
irrelevant. Consequently, SF ¶ 197 should be deemed admitted.
198. In his Rebuttal Expert Report, Mr. Scheinberg calculated the impact of
the errors in Mr. Geist’s damages model. See Scheinberg Rebuttal Report (Ex. 12)
at ¶¶ 45-46.
Response: Disputed. The adjustments that Mr. Scheinberg made were not
“errors” in Mr. Geist’s methodology. For instance, Mr. Scheinberg reduces the
amounts calculated by Mr. Geist for participant fees but Mr. Scheinberg admits that
there was no documentation that would itemize the portion of participant fees
attributed to participant loans, and thus, he had to assume an amount for loan
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services. Exhibit P54 (James Scheinberg Dep. 227:5–232:5). He also allocates 90%
of time recorded in the “all plans” category, Exhibit 12 ¶37 [Doc. 134-13], but he
admits that those entries were not for specific tasks performed for the Plan. Exhibit
P54 (James Scheinberg Dep. 101:15–103:1).
Reply: Plaintiffs’ dispute of SF ¶ 198 does not create a genuine issue of
material fact. As discussed in the Replies to SF ¶¶ 195-197, Mr. Geist included
participant fees (such as loan fees) in his calculation, and later conceded that such
fees should not have been included. Thus, this was an “error” in Mr. Geist’s
damages model, and Mr. Scheinberg calculated the impact of such error. Mr.
Scheinberg also noted that Mr. Geist missed 3,000 hours from 2010-2016 for
additional service requirements of the Plan (well over $1 million). Scheinberg
Rebuttal Report (Ex. 12) at ¶¶ 37-39. Plaintiffs’ response claims that Mr. Scheinberg
“admits that those entries were not for specific tasks performed for the Plan.”
However, this mischaracterizes Mr. Scheinberg’s testimony and is irrelevant. Mr.
Scheinberg testified that while some of the tasks at issue “are not specific only to the
plan . . . they have to be performed in order for the Plan to function.” Exhibit P54
(Scheinberg Dep. 101:15–103:1) (emphasis added). Thus, it again was an “error” in
Mr. Geist’s damages model to ignore these hours. As discussed in the Geist Daubert
Motion, Mr. Geist makes additional errors not at issue in Plaintiffs’ response.
Consequently, SF ¶ 198 should be deemed admitted.
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199. After identifying and correcting Mr. Geist’s numerous errors and
mathematical mistakes (but still using Mr. Geist’s questionable methodology), Mr.
Scheinberg demonstrated that Retirement Services’ expense reimbursements are
actually lower each year than Mr. Geist’s “total reasonable fee” for the Plan in each
year of the Class Period. See Scheinberg Rebuttal Report (Ex. 12) at ¶¶ 45-46.
Response: Disputed. Mr. Scheinberg relies on the NEPC survey as the
reasonable fee to replace Mr. Geist’s baseline fee. Exhibit 12 ¶45 [Doc. 134-13]. He
admits that this survey is not a benchmarking, and “is not a vehicle in which to
perform benchmarking”. Exhibit P54 (James Scheinberg Dep. 151:6–152:2). He
admitted that the average cost reported in the NEPC survey is not reflective of the
fee that a plan would obtain in a competitive bidding process. Exhibit P54 (James
Scheinberg Dep. 152:14–153:15, 232:23–233:20).
Reply: Plaintiffs’ dispute of SF ¶ 199 does not create a genuine issue of
material fact. SF ¶ 199 states a fact regarding Mr. Scheinberg’s expert opinions, and
Plaintiffs do not dispute that Mr. Scheinberg proffered such opinions or cite any
evidence to the contrary. Instead, Plaintiffs’ response offers misplaced criticisms of
Mr. Scheinberg’s reference to the NEPC survey. The NEPC survey is a completely
independent annual survey of large and mega plans. Scheinberg Rebuttal Report
(Ex. 12) at ¶ 29. Thus, it was an appropriate data source to use in determining the
baseline number for purposes of Mr. Geist’s calculation. As discussed in the Geist
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Daubert Motion, Mr. Geist’s calculation is not based on any data or other reliable
methodology. Furthermore, Plaintiffs misrepresent Mr. Scheinberg’s testimony
regarding the NEPC survey. Mr. Scheinberg testified that while the NEPC survey
would not necessarily reflect the fee that could be obtained through a competitive
bidding process, “[w]hether [such fee] would be higher or lower, depends on the
facts and circumstances of the market at the time.” Exhibit P54 (Scheinberg Dep.
153:7-15). Thus, Plaintiffs’ criticisms are misplaced. Consequently, SF ¶ 199
should be deemed admitted.
RESPONSE TO PLAINTIFFS’ STATEMENT OF ADDITIONAL
MATERIAL FACTS
I. Plan fiduciary governance
200. The Board of Directors of Holdings carries out the fiduciary obligations
set forth under the Plan on behalf of Holdings. Exhibit P27 (Depo. Exhibit 3 (NSP-
000026596)(2010 Plan)), and Exhibit 1 [Doc. 134-2] (2014 Plan)(§§2.4, 10.1, 10.2);
Exhibit P4 (Daniel Herink Dep. 18:10–19:13).
Response: Objection. The evidence cited does not support the fact. Under
the Plan provisions cited, Holdings—and not the Board of Directors—is the Plan’s
named fiduciary. Exhibit P27 (Depo. Exhibit 3 (NSP-000026596) (2010 Plan)), and
Ex. 1 [Doc. 134-2] (2014 Plan) (§§2.4, 10.1, 10.2). Mr. Herink did not testify that
the Board of Directors alone carries out the fiduciary duties of Holdings. In the
deposition testimony cited, Mr. Herink was asked whether the “monitoring duty
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applies to the board of directors for Insperity Holdings.” In response, he testified: “.
. . the board did play a role in the monitoring of Reliance. . .” Herink Dep. at 18:10–
19:13 (Exhibit P4) (emphasis added). As stated in SF ¶¶ 83 and 84 [Doc. 134],
Holdings performed its role as the Plan’s named fiduciary primarily through its three
Directors, with the assistance of other employees of Insperity’s subsidiaries.
201. Under Section 10.2 of the Plan, Holdings had the authority to “appoint
such accountants, counsel, specialists, and other persons as it deems necessary or
desirable in connection with the administration of the Plan.” E.g., Exhibit 1 [Doc.
134-2](§10.2).
Response: Conceded that the Court may consider the evidence cited for
purposes of summary judgment.
202. To the extent that Holdings determined that a fund decision by Reliance
Trust was not in the best interest of Plan participants, it had the authority to take
corrective action to prevent the decision from being implemented. Exhibit P2
(Richard Rawson Dep. 135:18–136:11).
Response: Objection. The fact is not material to the Motion and does not
comply with LR 56.1.B.(1) because it is hypothetical. Plaintiffs offer no evidence,
because there is none, that Holdings made such a determination. Moreover, this
statement is not an admissible fact but is instead a legal issue/conclusion.
203. Holdings never conducted an independent investigation of a fund that
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Reliance Trust selected to be added to the Plan. Exhibit P4 (Daniel Herink Dep.
199:13–22).
Response: Objection. The fact is vague and ambiguous in its use of the term
“independent investigation,” since it does not explain what Plaintiffs suggest
Holdings should have done. The fact is not material to the Motion. As a matter of
law, the duty to monitor does not require the monitoring fiduciary to duplicate the
work of the fiduciary they have appointed. E.g., Howell v. Motorola, Inc., 633 F.3d
552, 573 (7th Cir. 2011) cert. denied, 565 U.S. 816 (2011). In addition, the evidence
cited does not support the fact. In the cited deposition testimony, Mr. Herink
testified only that he did not “recall us ever trying to independently go and do other
work other than what Reliance was -- was tasked to do.” Exhibit P4 at 199:20-22.
204. Insperity, Inc. represents to Plan participants and client companies
that it “assumes all of the responsibilities inherent in plan sponsorship, including
fiduciary obligations.” Exhibit P58 (NSP-000054182 at p. 1). It also states publicly
that it “assumes all plan sponsor responsibilities and obligations from start to finish.”
See https://www.insperity.com/services/human-resources-outsourcing/.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The evidence cited does not support the facts. Plaintiffs
cite marketing materials where the name “Insperity®”–– the common, colloquial
name known by clients –– was used instead of the more formal “Insperity Holdings,
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Inc.” when referencing the Plan’s sponsor and administrator. Based on the nature of
the documents and their respective roles with regard to the Plan, Insperity Holdings,
Inc., and not Insperity, Inc., made the representations at issue in AMF ¶ 204.
205. From 2009 through 2016, Paul Sarvadi, Chairman and CEO of Insperity
Inc. and Holdings; Richard Rawson, President of Insperity Inc. and Holdings, and
President of Retirement Services; and Daniel Herink, General Counsel of Insperity,
Inc., served as Directors of Holdings. Exhibit P59 (Depo. Exhibit 2 (NSP-
000011003)); Doc. 51-1 (2016 Foreign Profit Corporation Annual Report); Exhibit
P4 (Daniel Herink Dep. 37:22–40:11).
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts regarding these individuals’ roles with Insperity,
Inc. is not material to the issues presented by the Motion. Conceded that the Court
may consider the evidence cited regarding these individuals’ roles with Holdings for
purposes of summary judgment.
206. In 2016, Jim Allison, Senior Vice President of Pricing and Cost
Analysis at Insperity, Inc. replaced Mr. Sarvadi. Exhibit P4 (Daniel Herink Dep.
38:3–23).
Response: Objection. The term “replaced” is vague and ambiguous. The fact
regarding Mr. Allison’s role with Insperity, Inc. is not material to the issues
presented by the Motion. Conceded that the Court may consider the evidence cited
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regarding Mr. Allison’s role with Holdings for purposes of summary judgment.
207. Mr. Rawson and Mr. Herink served as Directors of Holdings through
2017. Exhibit P4 (Daniel Herink Dep. 17:18–23); Exhibit P2 (Richard Rawson
Dep. 12:1–3).
Response: Conceded that the Court may consider the evidence cited for
purposes of summary judgment.
208. Since at least 2009, Mr. Rawson and Mr. Sarvadi served as Directors
of Insperity, Inc. See 2009 Insperity, Inc. annual report,
https://www.sec.gov/Archives/edgar/data/1000753/000095012310011398/c96049e
10vk.htm); 2017 Insperity, Inc. annual report,
https://www.sec.gov/Archives/edgar/data/1000753/000100075318000015/a123120
17-documentx10k.htm); Exhibit P2 (Richard Rawson Dep. 11:4–21).
Response: Objection. The facts regarding these individuals’ roles with
Insperity, Inc. is not material to the issues presented by the Motion.
209. Mr. Herink was appointed to serve on the Board due to his title as
General Counsel of Insperity, Inc. Exhibit P4 (Daniel Herink Dep. 40:23–41:10).
Response: Objection. The fact is not material to the Motion. In addition, the
evidence cited does not support the fact. During his deposition, Mr. Herink was
asked whether he was “appointed [to Holdings’ Board] by virtue of [his] title as
general counsel?” In response, he stated: “I don’t think I would say it quite that
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way.” Id.
210. Messrs. Sarvadi and Rawson served as Directors of Holdings based on
their positions at Insperity, Inc. See generally id.
Response: Objection. The fact is not material to the Motion. In addition, the
evidence cited does not support the fact. Plaintiffs do not cite any evidence that
Messrs. Sarvadi and Rawson served as Directors of Holdings based on their
positions at Insperity, Inc., nor does Mr. Herink’s testimony cited in AMF ¶ 209
support this statement. See also Response to AMF ¶ 209.
211. John Stanton, Director of Retirement Services, earned a bonus and did
not recall a single year that he did not receive a bonus. Exhibit P5 (John Stanton
Dep. 149:2–8).
Response: Objection. The fact is not material to the Motion. In addition, the
evidence cited does not support the fact regarding Mr. Stanton’s title. Mr. Stanton’s
title was Managing Director throughout the time period at issue.
212. Mr. Herink did not know if any Director of Holdings had any formal
education or training in investment management or investing retirement plan assets.
Exhibit P4 (Daniel Herink Dep. 202:24–203:5).
Response: Objection. The fact is not material to the Motion.
213. Mr. Rawson did not receive any formal training to invest retirement
plan assets and has not received any certifications related to investment
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management. Exhibit P2 (Richard Rawson Dep. 171:7–13).
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. The only possible
relevance or materiality of this fact is that the lack of such training and certifications
were part of the reason for engaging RTC as an expert, independent fiduciary to
make investment decisions for the Plan.
214. Daniel Herink admits that he is no “ERISA expert”. Exhibit P4 (Daniel
Herink Dep. 233:10–14).
Response: Objection. The fact is not material to the Motion. Such expertise
is not required in the role of a monitoring fiduciary. Moreover, an additional reason
the fact is not material is that Mr. Herink relied upon attorneys with ERISA expertise
on his staff when he needed such expertise. Herink Dep. at 23:14-25:23; 95:15-
97:18 (Ex. 32).
215. From at least 2009 until his announced retirement in 2018, Mr. Rawson
was the head of Insperity, Inc.’s Gross Profit Enhancement Division, which included
Retirement Services. Exhibit P2 (Richard Rawson Dep. 29:21–24, 31:5–14).
Response: Objection. The fact is not material to the Motion.
216. The Gross Profit Enhancement Division was responsible for all pricing
and direct costs of Insperity, Inc., and thereby the gross profit for the company. Id.
31:15–32:23. Mr. Rawson was responsible for the financial results of Retirement
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Services. Id. 55:7–13, 31:8–10, 45:2–46:12.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion for the reasons
stated in the Response to AMF ¶ 215. In addition, the evidence cited does not
support the fact. Plaintiffs’ description of the Gross Profit Enhancement Division
does not match Mr. Rawson’s testimony.
217. Since 2009, Insperity, Inc.’s profits have enhanced and Mr. Rawson
assisted in that process. Id. 33:19–34:6.
Response: Objection. The fact is not material to the Motion. These “profits”
are lower because of the services provided to the Plan. Furthermore, evidence
confirms that Retirement Services operated at a loss each year of the Class Period.
See SF ¶ 68 [Doc. 135-2].
218. At the time that Holdings hired Reliance Trust for Reliance Trust as
trustee, Exhibit 2 at 5 [Doc. 134-3], Reliance Trust was the only entity who would
serve in the dual role of selecting, monitoring and removing investments, and
reviewing and approving expense reimbursements to Retirement Services. Exhibit
P14 at 3 (Depo. Exhibit 101 (NSP-000035546) at *548).
Response: Objection. The fact is not material to the Motion. Further this
“fact” relates to events that occurred long before the Class Period at issue.
219. Insperity was the only client of Reliance Trust for which it served as
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discretionary trustee tasked with approving expenses for recordkeeping and
administrative services. Exhibit P26 (William Harlow Dep. 128:3–6); Exhibit P60
at 6 (Depo. Exhibit 171 (RTCPLEDGER00259544) at *549 (Reliance Trust
provides “expense approval services to one client”); Exhibit P57 (Trey Carter Dep.
68:6–9).
Response: Objection. The fact is not material to the Motion. Plaintiffs offer
no evidence that this fact had any impact on RTC’s performance of its duties that
are at issue.
220. Sections 1.8 and 5.3 of the Trust Agreement defined the authorized
investments that may be included in the Plan. Exhibit 2 [Doc. 134-3] (§§1.8, 5.3).
Response: Conceded that the Court may consider the evidence cited for
purposes of summary judgment.
221. Holdings had the fiduciary duty to monitor the actions of Reliance
Trust, for whom it delegated authority to make investment selections and approve
expense reimbursements submitted by Retirement Services under the Trust
Agreement. Exhibit P4 (Daniel Herink Dep. 122:20–123:13); Exhibit P2 (Richard
Rawson Dep. 56:23–57:5); Exhibit P25 (Depo. Exhibit 12 (NSP-000036163) at
*167).
Response: Objection. The first half of the sentence is a legal issue/conclusion
(“Holdings had the fiduciary duty to monitor the actions of Reliance Trust”).
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Conceded that the Court may consider the evidence cited for purposes of summary
judgment with regard to the remainder of the sentence.
222. Holdings never delegated by written instrument its duties to monitor
Reliance Trust’s actions. See Exhibit P4 (Daniel Herink Dep. 54:13–20).
Response: Objection. The evidence cited does not support the fact. The cited
deposition testimony concerns a question to Mr. Herink regarding whether, aside
from the Trust Agreement, he was aware of any written delegation from Holdings
of its responsibilities under the Plan. In response, Mr. Herink testified: “There may
be other written documents, but I can’t – I can’t – I can’t think of any right now as
I’m sitting here.” Exhibit P4 at 54:18-20.
223. Holdings never adopted a charter to govern the oversight of the Plan.
Exhibit P4 (Daniel Herink Dep. 33:1–34:12).
Response: Objection. The fact is not material to the Motion. There is no
legal authority suggesting that a “charter” is required, or even appropriate, in
connection with a corporate sponsor’s and/or administrator’s duties under an ERISA
plan. In addition, the evidence cited does not support the fact. The cited deposition
testimony concerns a question to Mr. Herink regarding whether there was a charter
related to the Board of Holdings. Mr. Herink responded by noting that “the entity
Insperity Holdings, Inc. is a Delaware company, and I believe that entity has a
charter.” Mr. Herink was then asked whether “[o]utside of the law, is there a specific
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document that was created to outline what role and responsibilities the board of
directors for Insperity Holdings had?” To that question, Mr. Herink simply
responded “I’m not aware of such a document.” Exhibit P4 at 33:1-34:12.
224. There is no written policy or documentation that delineated the roles
and responsibilities of the Board of Directors of Holdings, the Directors, and any
staff tasked with assisting the Directors in carrying out their monitoring obligations
of Reliance Trust. See generally id.
Response: Objection. The fact is not material to the Motion. There is no
legal authority suggesting that such a “written policy or documentation” is required,
or even appropriate, in connection with a corporate sponsor’s and/or administrator’s
duties under an ERISA plan. In addition, the evidence cited does not support the
fact for the reasons stated in the Responses to AMF ¶¶ 222-223.
225. The Directors never authorized by unanimous written consent an
employee to carry out Holdings’ responsibilities as named fiduciary. Cf. Exhibit
P28 (NSP-000011004).
Response: Objection. The fact is not material to the Motion. There is no
legal authority suggesting that a unanimous written consent is required for Directors
to seek assistance in performing their functions. In addition, the evidence cited does
not support the fact. The only evidence cited is a unanimous written consent
regarding authority to execute certain election agreements. This document is not
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evidence that the Directors never authorized by unanimous written consent an
employee to carry out Holdings’ responsibilities as named fiduciary. Nonetheless,
the Insperity Defendants concede that no such document exists.
226. Holdings never established a formal Investment Committee, despite
references to do so. Exhibit P4 (Daniel Herink Dep. 110:17–111:6); Exhibit P2
(Richard Rawson Dep. 228:10–21); Exhibit P57 (Trey Carter Dep. 56:7–21);
Exhibit P17 at 3 (Depo. Exhibit 162 (RTCPLEDGER00093162) at *164).
Response: Objection. The fact is not material to the Motion. There is no
legal authority suggesting that “Investment Committee” is required, or even
appropriate, in the context of a corporation with the duty to monitor an expert,
independent fiduciary to whom the corporation has formally delegated all
responsibility for the Plan’s investment decisions.
227. Other than a fiduciary training that occurred on April 10, 2017, Exhibit
P25 at 5 (Depo. Exhibit 12 (NSP-000036163) at *167), the Directors of Holdings
never received formal fiduciary training regarding their fiduciary obligations owed
to the Plan and their duties to monitor Reliance Trust’s actions.
Response: Objection. The fact is not material to the Motion. The evidence
cited confirms attorneys with ERISA expertise assisted the Directors and
participated in the monitoring function. In addition, the evidence cited does not
support the fact. The only evidence cited is the presentation for the fiduciary training
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that occurred on April 10, 2017. This document is not evidence that the Directors
of Holdings never received other formal fiduciary training regarding their fiduciary
obligations owed to the Plan and their duties to monitor Reliance Trust’s actions.
Further, the evidence demonstrates the Directors received fiduciary training/legal
updates from RTC at Annual Meetings during the Class Period. E.g., Exhibit 3 at 9
[Doc. 134-4]; Exhibit 4 at 9 [Doc. 134-5]; Exhibit 5 at 9 [Doc. 134-6]; Exhibit 6 at
9 [Doc. 134-7].
228. The annual meeting between Reliance Trust and Holdings was the
means by which the Directors of Holdings monitored the actions of Reliance Trust.
Exhibits 3–10 [Docs. 134-03 – 134-11].
Response: Objection. The evidence cited does not support that the annual
meetings were the only means by which the Directors of Holdings, and others on
behalf of Holdings, monitored the actions of Reliance Trust, but instead only that
the annual meetings were one of the means. See also SF ¶¶ 115, 116 [Doc. 134].
229. Mr. Herink did not recall any documents other than the Trustee’s report
that the Directors of Holdings reviewed and considered in monitoring Reliance
Trust’s actions. Exhibit P4 (Daniel Herink Dep. 129:3–131:8). He did not recall any
documents that were prepared by Mr. Stanton or Retirement Services and provided
to him to assist in monitoring Reliance Trust. Id. 120:25–121:11.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
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it contains multiple facts. The facts are not material to the Motion. That Mr. Herink
could not recall any specific document authored by Mr. Stanton and provided to him
is irrelevant to the fact that Mr. Herink kept apprised of Plan investments and
monitored RTC, as stated in SF ¶ 113 [Doc. 134]. In addition, the evidence cited
does not support the fact. The deposition testimony cited by Plaintiffs actually
confirms the Directors of Holdings reviewed and considered documents other than
the Trustee’s report in monitoring RTC. Herink Dep. at 129:3–131:8) (Exhibit P4)
(“[i]f you're asking me about [this Trustee Report], that this is the only document
that we have got? I disagree. There's other documents . . . every year there's going
to be a written report that's provided . . . there were interim meetings that would
occur between Reliance and others at Insperity and -- and information from those
meetings would be reported up to Richard as -- and me on an as-needed basis.”).
230. The three Directors of Holdings only meet annually to discuss decisions
related to the Plan. Exhibits 3–10 [Docs. 134-03 – 134-11]. They never met outside
of the annual meeting to monitor Reliance Trust’s actions. E.g., Exhibit P2 (Richard
Rawson Dep. 56:23–59:1).
Response: Objection. The evidence cited does not support the fact. The
deposition testimony cited by Plaintiffs supports that the Directors of Holdings met
more than annually. Rawson Dep. at 56:23–59:1 (Exhibit P2) (“[Q:] What other
meetings are you referring to wherein your duties to monitor Reliance's trusts were
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discussed? . . . I would just tell you that there were a lot of -- a lot of meetings over
a long period of time”). See also Herink Dep. at 82:3-6 (Exhibit P4) (agreeing “the
three members of the board met regularly to discuss the performance of the
investment options and the Plan”).
231. Although Section 3.2 of the Trust Agreement required that Reliance
Trust provide quarterly investment performance reports to Holdings, supra ¶77, the
Directors of Holdings did not receive these reports. Exhibit P4 (Daniel Herink Dep.
82:23–83:20); Exhibit P57 (Trey Carter Dep. 97:18–99:4).
Response: Objection. The evidence cited does not support the fact. The cited
deposition testimony from Mr. Herink confirms that Mr. Rawson and others received
the quarterly investment performance reports, and that Mr. Herink was uncertain
regarding whether the reports were also provided to himself and/or Mr. Sarvadi.
Similarly, the cited deposition testimony from Mr. Carter confirms that the reports
were sent to Mr. Stanton, and that Mr. Carter was uncertain regarding whether the
reports were also directly provided to Messrs. Sarvadi, Herink and/or Rawson. In
both instances, Messrs. Herink and Carter lacked foundation to testify as to whether
other individual Directors also received the reports. Id. Furthermore, it is not
material whether the individual Directors of Holdings received the reports because
it is undisputed that such reports were received and analyzed by staff who were
assisting the individual Directors of Holdings with their fiduciary monitoring duty.
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SF ¶¶ 107-108.
232. Holdings did not prepare meeting minutes to reflect the deliberations
that occurred during the annual Trustee meeting. Exhibit P4 (Daniel Herink Dep.
132:1–17).
Response: Objection. The fact is not material to the Motion. There is no
legal authority requiring Holdings, as monitoring fiduciary, to prepare formal
“meeting minutes” in connection with performing the duty to monitor. Further,
Plaintiffs’ fact ignores that the meeting materials prepared by RTC described the
topics covered and the information provided in these meetings, and thus constitute a
sufficiently detailed contemporaneous record of same. In addition, the evidence
cited does not support the fact. In the cited deposition testimony, Mr. Herink simply
testified that he was not “aware” of “type-up formal minutes” from the annual
meetings. Id.
II. Retirement Services and Plan recordkeeping services
233. In 2003, Insperity, Inc. “formed Administaff Retirement Services, L.P.”
to provide recordkeeping and administrative services to the Plan and other defined
contribution clients. See (Administaff, Inc., Form 10-K (Dec. 31, 2003),
https://www.sec.gov/Archives/edgar/data/1000753/000095012904000788/h12965e
10vk.htm).
Response: Objection. The fact is not material to the Motion. It is immaterial
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which corporate entity technically formed Retirement Services in 2003.
234. Effective October 1, 2003, Holdings through a Unanimous Written
Consent of the Board of Holdings appointed Retirement Services as the recordkeeper
for the Plan. Exhibit P61 (Depo. Exhibit 9 (NSP-000032854)).
Response: Conceded that the Court may consider the evidence cited for
purposes of summary judgment.
235. Retirement Services is a wholly-owned subsidiary of Holdings. Exhibit
P62 (Depo. Exhibit 1 (NSP-000026565)).
Response: Conceded that the Court may consider the evidence cited for
purposes of summary judgment.
236. There is no written agreement between Retirement Services and the
Plan and/or Holdings for the provision of recordkeeping and administrative services
or the amount of compensation that Retirement Services would receive for Plan
services. Exhibit P4 (Daniel Herink Dep. 150:13–153:18); Exhibit P5 (John
Stanton Dep. 87:14–89:8); Exhibit P6 (Lance Studdard Dep. 62:11–64:10).
Response: Objection. The fact is not material to the Motion because there is
no legal requirement for any “written agreement.” 29 U.S.C. § 1108(b)(2). In
addition, the evidence cited does not support the fact. In the cited deposition
testimony, Messrs. Herink, Stanton, and Studdard all testified that they did not know
if the recordkeeping arrangement with Retirement Services was reduced to writing,
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but that such a document may have existed. Furthermore, as explained in SF ¶¶ 43-
50 [Doc. 134], Retirement Services and RTC entered into a Credit Agreement which
includes a non-exhaustive list of the types of operating expenses for which
Retirement Services may seek reimbursement. See Credit Agreement between
Administaff Retirement Services, L.P. and RTC (NSP-000016856-0004) (Ex. 19).
237. Holdings never negotiated a fixed amount to be paid to Retirement
Services on an annual basis for recordkeeping and administrative services provided
to the Plan. Id.; Exhibit P8 (Depo. Exhibit 85 (RTCPLEDGER00093411).
Response: Objection. The fact is not material to the Motion. Allowing
Retirement Services to receive a “fixed amount” would have been potentially illegal
under ERISA’s prohibited transaction rules, which permit fiduciaries to only receive
reimbursement of direct “expenses properly and actually incurred,” with no profit or
overhead included. 29 U.S.C. § 1108(b)(2) and (c)(2).
238. Retirement Services determined what recordkeeping and administrative
services to be provided to the Plan. See generally Exhibit P2 (Richard Rawson Dep.
236:4–24).
Response: Objection. The evidence cited does not support the fact. In the
cited deposition testimony, Mr. Rawson testified that “‘we’. . . in concert with
Retirement Services” determined what services would be provided to the Plan. Id.
Thus, Retirement Services alone did not determine what recordkeeping and
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administrative services would be provided to the Plan.
239. Retirement Services determined the method for allocating expenses to
the Plan. Exhibit 21 [Doc. 134-22]; Exhibit P12 (Depo. Exhibit 17 (NSP-
000017768); Exhibit P18 (Depo. Exhibit 15 (NSP-000078080)); Exhibit 17,
Attachment A at 16, 118 [Doc. 134-18](showing allocation of expenses).
Response: Objection. The evidence cited does not support the fact. Plaintiffs
do not cite evidence that Retirement Services alone determined the method for
allocating expenses to the Plan. All such allocations were approved by RTC. See,
e.g., Studdard Dep. at 110:7-112:16 (attached hereto as Ex. 97) (allocations were
approved both as categories determined by Reliance and later as specific reviewed
expenses).
240. The Plan was the largest client of Retirement Services. Exhibit P2
(Richard Rawson Dep. 53:2–23).
Response: Conceded that the Court may consider the evidence cited for
purposes of summary judgment.
241. The Plan represented the significant majority of total participants and
assets recordkept by Retirement Services. Exhibit P5 (John Stanton Dep. 103:24–
104:11); Exhibit P2 (Richard Rawson Dep. 53:2–23).
Response: Conceded that the Court may consider the evidence cited for
purposes of summary judgment.
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242. From 2009 through 2015, the Plan represented between 79% and 85%
of the total assets recordkept by Retirement Services. Exhibit P52 at 3 (Depo.
Exhibit 128 “Assets & Expenses” tab).
Response: Conceded that the Court may consider the evidence cited for
purposes of summary judgment.
243. From 2006 through 2015, expense reimbursements from the Plan
represented between 70% and 82% of the total revenue to Retirement Services.
Exhibit P52 at 3 (Depo. Exhibit 128 “Assets & Expenses” tab). This represented
the primary source of revenue from the Plan. E.g., Exhibit P23 (Depo. Exhibit 167
(RTCPLEDGER00304710)).
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The fact is vague and ambiguous. The second sentence
of the fact is also not material to the Motion. Furthermore, the data prior to 2009 is
not relevant under Fed. R. Evid. 401 and 402 because it is outside the statute of
limitations and Class Period.
244. The Plan generated the largest reduction in net operating expenses to
Retirement Services. Exhibit P5 (John Stanton Dep. 106:8–11).
Response: Objection. The fact is vague and ambiguous. The fact is also not
material to the Motion.
245. Without the Plan as a client, Retirement Services could not sustain its
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recordkeeping business. Exhibit P4 (Daniel Herink Dep. 209:18–210:12).
Response: Conceded that the Court may consider the evidence cited for
purposes of summary judgment. In the cited deposition testimony, Mr. Herink
testified that “if we didn’t have the Insperity retirement Plan, we would have never
had, you know, Insperity Retirement Services.” Herink Dep. at 210:9-12 (Exhibit
P4). Thus, this fact confirms the employees of Retirement Services that performed
services for the Plan were indeed “but for” employees.
246. For certain years, the trial balance for Retirement Services reflects a
positive net income. E.g., Exhibit 34 at 55, 74, 131, 154 [Doc. 134-6]; see also
Exhibit P22 (Depo. Exhibit 131).
Response: Objection. The fact is not material to the Motion and not relevant
under Fed. R. Evid. 401 and 402. Exhibit 34, is an internal, non-public document
that does not include a complete representation or allocation of all expenses
associated with Retirement Services. Duffy Dep. at 6:2-14 (attached hereto as Ex.
101) (identifying he conducted the financial analysis in Exhibit 34 “at the direction
of counsel” for this litigation). Plaintiffs’ response ignores unrebutted testimony
from Mr. Duffy explaining that a “positive net income” in the trial balance on page
54 of Exhibit 34 did not reflect a profit for Retirement Services. Id. at 44:7-45:6
(explaining the positive net income did not demonstrate a profit, because “[t]he [net
positive income] number that's included on Page 54 doesn't include all the costs of
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the business . . .”). Mr. Duffy further testified that the trial balance figures included
a “Non-Cash Intercompany Allocation” – which in 2012 was $1.447 million. Id.
(including the intercompany allocation “caus[ed] that net income number to be
higher than what it would be had we not included that non-cash intercompany
amount”). As Mr. Duffy explained, the intercompany allocation was a hypothetical
revenue allocation to establish a “baseline budget” for Retirement Services to
measure its future financial performance relative to this budget. Id. at 45:19-46:24
(“to manage the business going forward, management agreed to allocate $1 to that
business unit to create a break-even budget scenario so they could easily measure
the results of the business going -- from that point forward”). Thus, the documents
cited by Plaintiffs include hypothetical income and fail to include all appropriately
allocable expenses.
247. Retirement Services is compensated through expense reimbursements
and revenue received from direct expenses billed to client companies for the
provision of recordkeeping and administrative services provided to the Plan. Exhibit
P63 (NSP-000017885)(disclosure); Exhibit P20 (Depo. Exhibit 114) (fee schedule);
Exhibit P64 (NSP-000062186) (fee schedule); Exhibit 34 at 2 [Doc. 135-6]
(customer service fees).
Response: Objection. The fact is not material to the Motion. The fact that
certain fees are paid by client companies is not material. These fees are not paid by
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the Plan. In addition, Mr. Duffy testified that they were covering overhead that could
not be reimbursed. Duffy Dep. at 36:6-37:10 (attached hereto as Ex. 101).
Furthermore, as admitted by Plaintiffs in response to SF ¶ 66 [Doc. 160-1], only
some of the Unreimbursed Costs are covered by the fees charged to client-
employers.
248. The Fee Schedule representing standard services and fees provided by
Retirement Services was amended over time. In 2012, Retirement Services instituted
additional direct charges to client companies for plan setup, annual base
recordkeeping fee and annual per participant fee, among others, to assist in offsetting
its expenses for services provided on behalf of the Plan. Exhibit P2 (Richard
Rawson Dep. 19:15–21:13); Exhibit P20 (Depo. Exhibit 114)(fee schedule);
Exhibit P65 at 7 (NSP-000051891 at p. vi) (2012 implementation guide).
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The first sentence of the fact is conceded. However, the
evidence cited does not support the second sentence of the fact. Plaintiffs have not
cited any evidence that the referenced direct charges were added in 2012. Further,
the second sentence is not material to the Motion. The fact that certain fees are paid
by client companies is not material. These fees are not paid by the Plan. In addition,
Mr. Duffy testified that they were covering overhead that could not be reimbursed.
Duffy Dep. at 36:6-37:10 (attached hereto as Ex. 101). Furthermore, as admitted by
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Plaintiffs in response to SF ¶ 66 [Doc. 160-1], only some of the Unreimbursed Costs
are covered by the fees charged to client-employers.
249. Retirement Services charged participant accounts for loan maintenance,
and distribution/withdrawals, and until January 1, 2014, a $1.50 per quarter
participant account service fee. Exhibit P20 (Depo. Exhibit 114 (fee schedule));
Exhibit P66 at 6 (NSP-000048162 at p. vi (2015 implementation guide); Exhibit
P67 (RTCPLEDGER00066114).
Response: Conceded that the Court may consider the evidence cited for
purposes of summary judgment. As discussed below in the Response to AMF ¶ 250,
these amounts were deposited in the revenue sharing account.
250. Despite being compensated through direct charges to participant
accounts for loan and account maintenance and through direct charges to client
companies for certain recordkeeping and administrative services, such as plan setup,
participant education, and ERISA testing, Retirement Services was reimbursed from
the Plan for the time spent by its employees in performing these services. E.g.,
Exhibit 17 at 23–29 [Doc. 134-18] and Exhibit P10 at 73–128 (Depo. Exhibit 93
(RTCPLEDGER00386280) at *351–406) (noting time entries for participant
account maintenance, participant education, ERISA testing, loan processing, and
plan setup, among others).
Response: Objection. The evidence cited does not support the fact. The
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referenced participant fees were not paid directly to Retirement Services, but instead
were deposited into the revenue sharing account. Stanton Dep. at 131:4-133:4
(attached hereto as Ex. 100) (“[expense] reimbursement comes out of an account
which is held at Reliance Trust which receives certain asset-based revenue from our
investments, as well as certain fees that are charged to participants for things such
as loans and distributions”). Retirement Services was then reimbursed from the
revenue sharing account only for its direct expenses. Thus, Retirement Services did
not receive double-payments as Plaintiffs insinuate. Furthermore, as admitted by
Plaintiffs in response to SF ¶ 66 [Doc. 160-1], only some of the Unreimbursed Costs
are covered by the fees charged to client-employers.
251. The direct charges to covered entities were used to reimburse
Retirement Services for expenses it was otherwise unable to recover from the Plan.
See supra ¶66.
Response: Objection. The evidence cited does not support the fact as phrased.
The direct charges did not reimburse Retirement Services for all Unreimbursed
Costs, but only “some.” Stanton Aff. at ¶ 16 (Ex. 17).
252. Retirement Services contracted with “subservice organizations” in
performing recordkeeping and administrative services to the Plan, such as Sungard
Employee Benefits Systems for recordkeeping software for data processing and
related services, Relius for assistance in preparing plan documents, ASC for testing
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and government reporting, NewKirk for enrollment kits, and Pinnacle for pricing
and mailing participant statements, among others. Exhibit P3 (NSP-000081625);
e.g., Exhibit P68 (RTCPLEDGER00412785)(Sungard agreement).
Response: Objection. The fact is not material to the Motion. The fact that
Retirement Services––like countless business organizations––utilizes
subcontractors for tasks such as data processing and mailing is immaterial. See also
SF ¶ 38 [Doc. 134].
253. Retirement Services allocated to the Plan up to 93% of the expense
charged by SunGard to maintain its recordkeeping platform. Exhibit P69
(RTCPLEDGER00385563); Exhibit 17, Attachment A at 16, 118 [Doc. 134-
18](approximately 90%).
Response: Objection. The fact is not material to the Motion. The fact that
Retirement Services sought reimbursement for expenses charged by SunGard is
immaterial. Likewise, the percentage of these costs allocated to the Plan is
immaterial, since Plaintiffs have offered no evidence, or even expert opinion, that
such allocation was improper.
254. These charges for software maintenance represented the substantial
majority or approximately three-fourths (75%) of the total general and
administrative expenses that were submitted by Retirement Services for
reimbursement. E.g., Exhibit 17 at 14, 116 [Doc. 134-18](of $279,433.95 for general
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and administrative expenses submitted, $214,958.02 was reported for software
maintenance for the quarter).
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Response to AMF ¶ 253.
255. Under Article 18 of the Plan, covered entities can elect the safe harbor
provisions, which exempts Retirement Services from conducting discrimination
testing for these employers. Exhibit 1 at 71, Article 18 [Doc. 134-18]; Exhibit P27
at 62 (Depo. Exhibit 3 (NSP-000026596) at *657, Article 18 (2010 Plan)); Exhibit
P51 at 2 (RTCPLEDGER00346281)(Client Election Agreement).
Response: Objection. The fact is not material to the Motion. In addition, the
evidence cited does not support the fact. Plaintiffs’ expert, Mr. Geist, agrees that
testing for safe harbor plans may be appropriate. Geist Dep. at 361:2-15 (attached
hereto as Ex. 102). And Plaintiffs offer no evidence that such testing for safe harbor
plans was not performed for other required tests, such as top heavy and coverage
testing.
256. From 2009 through 2014, 63% or more covered entities were safe
harbor. Exhibit P52 at 1 (Depo. Exhibit 128, “Testing (2007-2015)” tab) (2009:
64%; 2010: 64%; 2011: 66%; 2012: 64%; 2013: 68%; 2014: 63%).
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Response to AMF ¶ 255. In addition, the evidence cited does not
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support the fact. Plaintiffs cite Exhibit P52, which contradicts the fact. Exhibit P52
reflects that, in 2009, 1,462 of 3,077 covered entities were Safe Harbor or
SIMPLE—i.e., 47.5%. Similar numbers are reflected in the remaining years at issue.
Thus, Plaintiffs’ statement that “63% or more covered entities were safe harbor” is
not supported by the evidence cited and, instead, is demonstrably false.
257. Retirement Services did not perform compliance testing (noted as
ADP/ACP testing) on the majority of active covered entities who participated in the
Plan during that period. Id.
Response: Objection. The evidence cited does not support the fact. Plaintiffs
cite Exhibit P52, which contradicts the fact. Exhibit P52 reflects that, in 2009,
Retirement Services performed ADP/ACP Testing for 1,308 out of 2,301 active
clients—i.e., 57%, which is a “majority” of the active clients. Similar numbers are
reflected in the remaining years at issue. Thus, the fact is not supported by the
evidence cited and, instead, is demonstrably false. In addition, Plaintiff’s attempt to
equate compliance testing with ADP/ACP testing is misleading and demonstrates a
patent disregard of well-established IRS requirements for qualified retirement plans,
including Safe Harbor and SIMPLE plans, to satisfy other compliance tests.
258. Covered entities who elect to participate in the Plan execute an Election
Agreement. Exhibit P51 at 2 (RTCPLEDGER00346281)(Client Election
Agreement); Exhibit 17, Attachment B at 138–41 [Doc. 134-18]. The Election
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Agreement provides limited options for a covered entity to modify Plan provisions
in terms of participation, automatic enrollment and employer contributions. Id.
Response: Objection. The fact is not material to the Motion. Plaintiffs’
expert, Mr. Geist, admits that there are additional expenses involved in administering
the Plan in view of, inter alia, the number of client-employers and the many
hundreds of additions and terminations of such employers each year. Exhibit P163
(April 10, 2018 Corrected Expert Report of Michael Geist, ¶¶91–97). His analysis
shows that such additional expenses more than doubled what he viewed as the
“baseline” expense for a single employer plan with a similar number of participants.
Geist Corrected Damages Analysis from Rebuttal Report (Ex. 91). In addition, the
evidence cited does not support Plaintiffs’ use of the term “limited.” The client
election agreements speak for themselves regarding the quantity of options for
customization.
259. Insperity Retirement Services has fully integrated its payroll services
into its 401(k) recrordkeeping platform. Exhibit P58 at 2 (NSP-000054182 at p. 2).
Exhibit P3 at 4 (NSP-000081625) at *628.
Response: Objection. The fact is not material to the Motion. The Plan
requires daily payroll processing. Scheinberg Rebuttal Report (Ex. 12) at ¶ 37. In
addition, Plaintiffs’ expert, Mr. Geist, admits that there are additional expenses
involved in administering the Plan in view of, inter alia, the number of client-
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employers and the many hundreds of additions and terminations of such employers
each year. Exhibit P163 (April 10, 2018 Corrected Expert Report of Michael Geist,
¶¶91–97). His analysis shows that such additional expenses more than doubled what
he viewed as the “baseline” expense for a single employer plan with a similar
number of participants. Geist Corrected Damages Analysis from Rebuttal Report
(Ex. 91). Thus, the integration of the payroll services is immaterial.
260. The Plan has a single Plan document rather than a separate plan
document for each covered entity that participates in the Plan. Exhibit 1 [Doc. 134-
2].
Response: Objection. The fact is not material to the Motion. The evidence
cited does not support Plaintiffs’ contention of their not being a separate plan
document for each covered entity. The plan highlights document is specific to each
covered entity. In addition, by Plaintiffs’ own admission in SF ¶ 258, the Plan
Election Agreement is specific to each covered entity.
261. Retirement Services provides standardized participant communications
and account statements to Plan participants. E.g., Exhibit 39 [Doc. 134-40]; Exhibit
36 [Doc. 134-34]; Exhibit P70 (NSP-000048921); Exhibit P71 (INSPERITY-
PLTF-0000187); Exhibit 17, Attachment A at 127 [Doc. 134-18].
Response: Objection. The fact is not material to the Motion. Plaintiffs’
expert, Mr. Geist, admits that there are additional expenses involved in administering
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the Plan in view of, inter alia, the number of client-employers and the many
hundreds of additions and terminations of such employers each year. Exhibit P163
(April 10, 2018 Corrected Expert Report of Michael Geist, ¶¶91–97). His analysis
shows that such additional expenses more than doubled what he viewed as the
“baseline” expense for a single employer plan with a similar number of participants.
Geist Corrected Damages Analysis from Rebuttal Report (Ex. 91). In addition, the
evidence cited does not support the fact. Plaintiffs simply cite sample
communications, but participant communications must be customized for each
Participating Entity. Scheinberg Rebuttal Report (Ex. 12) at ¶ 19.
III. The reimbursement of expenses to Retirement Services
262. At or around 2010 through April 2014, Lance Studdard, a former
employee of Reliance Trust and fiduciary consultant, was responsible for verifying
the expenses submitted by Retirement Services that would be later be approved by
Reliance Trust. Exhibit P6 (Lance Studdard Dep. 16:17–18:12).
Response: Objection. The fact is not material to the Motion. Plaintiffs have
offered no evidence, or even expert opinion, that any expenses approved by Mr.
Studdard or anyone else at RTC were unnecessary, improper, or unreasonable. In
addition, the evidence cited does not support that Mr. Studdard was the only
individual at RTC involved in the expense approval process. Mr. Studded testified
that there were other more “senior” individuals than him involved in the “policy”
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discussions to evaluate whether expenses were properly reimbursable, including
outside counsel. Studdard Dep. at 130:12-l31:8; 178:10-179:13 (attached hereto as
Ex. 97).
263. Jay Mullins, Larry Goldbrum and Trey Carter assumed that role after
Mr. Studdard left Reliance Trust. Exhibit P57 (Trey Carter Dep. 12:18–15:23,
104:6–105:22); Exhibit P72 (Depo. Exhibit 172 (RTCPLEDGER00046075);
Exhibit P37 (Depo. Exhibit 173 (RTCPLEDGER00057982)).
Response: Objection. The fact is not material to the Motion and the evidence
cited does not support the fact for the reasons stated in the Response to AMF ¶ 262.
264. Mr. Studdard described the expense approval process as
“administrative in nature”, “more of a verification process”, and in which he would
“literally check for a line item and make sure it had a related receipt or some sort of
proof of that line item.” Exhibit P6 (Lance Studdard Dep. 16:12–17:24). He played
a “very limited role”. Id. at 88:14–89:10.
Response: Objection. The fact is not material to the Motion and the evidence
cited does not support the fact for the reasons stated in the Response to AMF ¶ 262.
In addition, Plaintiffs cherry-pick specific terms from Mr. Studdard’s testimony
wherein he describes his personal role in the expense approval process as
“administrative in nature,” and attempt to impute that characterization to the entire
expense review and approval process conducted by RTC. However, as discussed in
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Response to AMF ¶ 262, Mr. Studdard was not the only individual at RTC involved
in the expense approval process. Mr. Studded testified that there were other more
“senior” individuals than him involved in the “policy” discussions to evaluate
whether expenses were properly reimbursable, including outside counsel. Studdard
Dep. at 130:12-l31:8; 178:10-179:13 (attached hereto as Ex. 97).
265. Prior to expense approval, Mr. Studdard did not determine the
reasonableness of each expense submitted for reimbursement because the “big
picture items” were previously determined to be expensable by an ad hoc committee
led by William Harlow at Reliance Trust. Id. (Lance Studdard Dep. 57:5–59:4,
89:11–94:22).
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Responses to AMF ¶¶ 262 and 264. Plaintiffs also ignore testimony
where Mr. Studdard clarified his use of the term “ad hoc” committee. See Studdard
Dep. at 178:8-179:23 (attached hereto as Ex. 97) (“again, I -- look, I don't want to
call it an ad hoc group. It was -- it's a group of senior management”).
266. The single largest category of expenses for which Retirement Services
sought and received reimbursement was for wages/personnel costs paid to
employees. E.g., Exhibit 17, Attachment A at 14 [Doc. 134-18]. Retirement Services
also sought and received reimbursement for general and administrative expenses,
which included multiple categories of expenses, such as printing, postage, rent,
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utilities, bank charges, and meals, among others. Id.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. Plaintiffs have
offered no evidence, or even expert opinion, that any wages or general and
administrative expenses approved by RTC were unnecessary, improper, or
unreasonable.
267. Mr. Studdard did not interview the employees at Retirement Services
to understand the services they performed for the Plan to determine if they were
necessary and appropriate for the operation of the Plan. Exhibit P6 (Lance Studdard
Dep. 113:9–114:10).
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Responses to AMF ¶¶ 262 and 264.
268. Jay Mullins of Reliance Trust questioned the expense approval process
but “was told to manage the expense approvals even though [he] had questions
regarding the process and acceptance of expenses such as Office Expenses.” Exhibit
P37 (Depo. Exhibit 173 (RTCPLEDGER00057982)).
Response: Objection. The fact is not material to the Motion. Plaintiffs have
offered no evidence, or even expert opinion, that any expenses approved by RTC
were unnecessary, improper, or unreasonable. This email does not identify any
expenses that are unnecessary, improper, or unreasonable. In addition, the evidence
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cited (a draft email) is inadmissible hearsay within hearsay under Fed. R. Evid. 802
and 805, since there is no exception to the hearsay rule that applies to the alleged
statement told to Mr. Mullin.
269. According to meeting notes prepared by Reliance Trust dated August
31, 2015, “Lance Studdard could not get comfortable” with charging the Plan for
utilities. Exhibit P38 at 1 (Depo. Exhibit 175 (RTCPLEDGER00400912) at *912).
Response: Objection. The fact is not material to the Motion. Plaintiffs have
offered no evidence, or even expert opinion, that any expenses approved by RTC
were unnecessary, improper, or unreasonable. Further, while RTC later reexamined
its prior approval of a select few expenses (including utilities), Retirement Services
reimbursed the Plan for the revisited expenses plus interest dating back to
2010. December 21, 2015 Letter to Trey Carter from Neil Shifman Regarding
Reimbursement Request Reductions and Revenue Sharing Funds (NSP-000043024)
(Ex. 27). Plaintiffs do not, and cannot, cite a single example of Retirement Services
failing to return to the Plan a reimbursement of which RTC rescinded its prior
approval.
270. Reliance Trust did not approve the direct charges billed to covered
entities and did not take those into account when approving the expenses submitted
by Retirement Services. Exhibit P57 (Trey Carter Dep. 85:16–86:9, 117:4–118:11).
Response: Objection. The fact is not material to the Motion. The direct
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charges billed to covered entities were not paid by the Plan or participants and thus
are immaterial. Plaintiffs’ expert Geist admitted at his deposition that fees paid by
client employers should not have been included in his calculation of the Plan’s
recordkeeping reimbursements for purposes of comparison to his hypothetical
numbers. Geist Dep. at 154:24-158:10 (attached hereto as Ex. 102).
271. Exhibit P10 (Depo. Exhibit 93) contains examples of monthly expense
submissions that would be submitted by Retirement Services to Reliance Trust for
reimbursement of expenses. Exhibit P6 (Lance Studdard Dep. 34:13–41:10); see
also Exhibit 17 at 10–124 [Doc. 134-18]. The expense submissions contain invoices
from subcontractors, such as Sungard, credit card receipts, receipts for travel and
meals of Retirement Services employees, utility bills, and timesheets, among other
items. Id.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. Conceded that the Court may consider the evidence cited
for purposes of summary judgment.
272. A spreadsheet titled “Expense Submission” would be included in the
expense submission listing the monthly wages paid to Retirement Services
employees and other general and administrative expense tabulations. E.g., Exhibit
P10 at 129–131 (Depo. Exhibit 93) at *407–409; Exhibit 17 at 116–119 [Doc. 134-
18]. The monthly compensation paid to employees at Retirement Services for whom
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a reimbursement was sought was included in this spreadsheet. Exhibit P10 at 129
(Depo. Exhibit 93) at *407; Exhibit 17 at 116 [Doc. 134-18].
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. Conceded that the Court may consider the evidence cited
for purposes of summary judgment.
273. Reliance Trust never conducted an investigation of the salaries
submitted by Retirement Services, or compared those salaries to published surveys
of compensation paid to employees who performed comparable services. Exhibit
P6 (Lance Studdard Dep. 105:3–22).
Response: Objection. The fact is not material to the Motion. Plaintiffs have
offered no evidence, or even expert opinion, that any expenses approved by RTC
were unnecessary, improper, or unreasonable. In particular, Plaintiffs have offered
no evidence that any salary was unreasonable or any comparison of Retirement
Services’ salaries to any survey. In addition, the evidence cited does not support the
fact. In the cited deposition testimony, Mr. Studdard testified that he personally
never conducted an investigation of the salaries “[o]ther than taking part of – all the
items that I listed, the fix or six items . . .” and only that he did not “believe” that
RTC compared the salaries to a published survey. Id.
274. Retirement Services sought and received reimbursement of salaries for
employees who worked less than 50% (and less than 75%) of their hours on tasks
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associated with the Plan. E.g., Exhibit P10 at 129 (Depo. Exhibit 93)
(RTCPLEDGER000386280) at 407; Exhibit 17 at 116 [Doc. 134-18] (showing less
than 50% of hours recorded as “Fiduciary Hours” submitted to Plan); e.g., Exhibit
P10 at 115 (Depo. Exhibit 93) at *393, Exhibit 17 at 121 [Doc. 134-18] (“Fiduciary”
hours recorded for the Plan (105001)).
Response: Objection. The fact is not material to the Motion. Plaintiffs offer
no citations to any authority limiting proper reimbursements for actual time spent
providing services to the Plan to employees with more than the stated percentage of
time during any particular period devoted to such service. Furthermore, Plaintiffs’
argument that portions of salaries for employees who worked less than 50% were
reimbursed by the Plan is irrelevant and misleading, since those salaries were
reimbursed to the Plan in 2015. See December 21, 2015 Letter to Trey Carter from
Neil Shifman Regarding Reimbursement Request Reductions and Revenue Sharing
Funds (NSP-000043024) (Ex. 27).
275. Prior to 2016, Reliance Trust did not consider the percentage of hours
worked by an employee of Retirement Services prior to approving the
reimbursement of salaries to Retirement Services. Exhibit P6 (Lance Studdard Dep.
122:3–18); Exhibit P13 at 2 (Depo. Exhibit 179 at RTCPLEDGER00405099).
Response: Objection. The fact is not material to the Motion and the evidence
cited does not support the fact for the reasons stated in the Responses to AMF ¶¶
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274 and 276.
276. A “but for” test based on a percentage was not used by Holdings,
Retirement Services, or Reliance Trust for reimbursement of Retirement Services
salaries until 2016. Exhibit P13 at 2 (Depo. Exhibit 179 at
RTCPLEDGER00405099). Prior to that point, no “but for” test as a percentage was
used. Exhibit P14 at 5 (Depo. Exhibit 101 at NSP-000035550).
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. Plaintiffs do not
cite any evidence or authority that a “but for” test based on a percentage is required
when only the time spent on actual services to the Plan is reimbursed. In addition,
the evidence cited does not support the fact. Plaintiffs cite notes from a 2013
meeting to argue that no “but for” test as a percentage was used prior to 2016.
Exhibit P14 at 5 (Depo. Exhibit 101 at NSP-000035550). However, such notes
confirm that the “but for” test as a percentage was being used in 2013. Furthermore,
even before the “but for” test as a percentage was used, Retirement Services and
RTC were using a “but for” test. As noted in the cited 2013 meeting notes, the “but
for” test as a percentage was not needed in earlier years because Retirement Services
was “a captive recordkeeper providing almost all of their services to either the Corp
or Big plans.” Id. Thus, a percentage test was not required because the Retirement
Services employees for whom it retained reimbursement spent more than half of
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their time providing services to the Plan. As the notes indicate, it was only when
Retirement Services started “to attract more non-PEO recordkeeping business” that
a formal percentage “but for” test was implemented. Id.; see also Studdard Dep. at
71:14-73:14 (attached hereto as Ex. 97) (confirming “but for” test used even prior
to 2005).
277. In February 2011, Mr. Rawson and Retirement Services led an initiative
to increase the amount that could be reimbursed by the Plan. Exhibit P18 (Depo.
Exhibit 15 (NSP-000078080)); Exhibit P2 (Richard Rawson Dep. 21:20–22:18,
31:5–7, 48:6–49:2). General business tasks unrelated to the Plan and other expenses
incurred in prior years were among those items sought for reimbursement. Exhibit
P12 (Depo. Exhibit 17 (NSP-000017768)).
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. Plaintiffs offer
no evidence that these additional reimbursements were unnecessary, improper, or
unreasonable. Moreover, RTC agreed that such items were properly reimbursable.
Finally, despite these additional reimbursements, undisputed evidence confirms that
Retirement Services operated at a loss each year of the Class Period. See SF ¶ 68
[Doc. 135-2].
278. According to the 2011 business plan for Retirement Services, one goal
for the year was to increase revenue from the Plan and Insperity’s 401(k) plan
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offered to its corporate employees (referred to collectively as the “ASF Plans”).
Exhibit P73 at 7 (Depo. Exhibit 134 (NSP000020141) at p. 7); Exhibit P2 (Richard
Rawson Dep. 45:2–46:12).
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Response to AMF ¶ 277.
279. The Plans represented the largest revenue possibility to Retirement
Services. Exhibit P73 at 10 (Depo. Exhibit 134 (NSP-00020141) at p. 10).
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Response to AMF ¶ 277.
280. Following the 2011 initiative, Plan reimbursements from the Insperity-
sponsored plans increased by approximately $600,000. Exhibit P74 (Depo. Exhibit
126 (NSP-000018097)).
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Response to AMF ¶ 277.
281. Mr. Rawson was pleased with the result and replied in an email when
he informed about it as “Sweet!!!!” Id.; Exhibit P2 (Richard Rawson Dep. 60:12–
25).
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Response to AMF ¶ 277. Furthermore, Plaintiffs offer no evidence that
Mr. Rawson made this statement while acting in a fiduciary capacity. RTC was the
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fiduciary that decided whether to approve such additional reimbursements.
282. Of the general and administrative expenses to be reimbursed by the
Insperity Plans in 2011, $549,987.76 was for expenses incurred in 2010. Exhibit 34
at 2 n. 3. (Depo. Exhibit 129)[Doc. 135-6].
Response: Objection. The fact is not material to the Motion. Plaintiffs have
offered no evidence or authority that such expenses were unnecessary, improper, or
unreasonable. Nor do Plaintiffs offer any authority that reconsideration and payment
of such expenses in 2011 was in any way improper or unreasonable. Moreover,
evidence confirms that Retirement Services still operated at a loss each year of the
Class Period, including 2011 when reimbursement of these expenses for 2010
occurred. See SF ¶ 68 [Doc. 135-2].
283. Retirement Services received reimbursement for time unallocated to the
Plan for general business tasked performed by its employees. E.g., Exhibit 21 at 6,
23 [Doc. 134-22]; Exhibit 17 at 122 [Doc. 134-22]; Exhibit P10 at 73 (Depo.
Exhibit 93 at RTCPLEDGER00386351)).
Response: Objection. The fact is not material to the Motion and the evidence
cited does not support the fact. RTC approved allocation of such tasks to the Plan
and the payment of such reimbursements, and Plaintiffs offer no evidence, or even
expert opinion, that such reimbursements were unnecessary, improper, or
unreasonable. Thus, the reimbursements were not “unallocated to the Plan.”
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Moreover, even after these reimbursements, evidence confirms that Retirement
Services operated at a loss each year of the Class Period. See SF ¶ 68 [Doc. 135-2].
284. These tasks included routine daily business duties unrelated to the Plan,
which were recorded as “email”, “filing”, “phone”, “Timesheet”, “meeting”, and
“Training-Non-401(k)”, among others. E.g., Exhibit 17 at 120–124 [Doc. 134-18];
Exhibit P10 at 73–128 (Depo. Exhibit 93 at RTCPLEDGER00386351–406).
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Response to AMF ¶ 283. In addition, the evidence cited does not
support the fact. There is no evidence that the tasks listed in AMF ¶ 284 were
“unrelated to the Plan.” Instead, documentation cited by Plaintiffs in AMF ¶ 283
confirms that certain general business tasks were reimbursed because “all of our
functions are focused on plan administration, therefore employees exceeding the
25% threshold can have a portion of their general business time expensed back to
the plan based on contemporaneous timesheet entries by each employee.” Ex. 21 at
6 [Doc. 134-22]. Thus, the reimbursed general business tasks are related to the Plan.
285. Reliance Trust did not conduct an investigation to determine the portion
of the hours recorded as “General Business” was for time spent by Retirement
Services employees for services actually provided to the Plan. Exhibit P6 (Lance
Studdard Dep. 115:4–9).
Response: Objection. The fact is not material to the Motion for the reasons
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stated in the Response to AMF ¶ 283. In addition, the evidence cited does not
support the fact. In the cited deposition testimony, Mr. Studdard testified only that
he did not “recall” whether he personally conducted an independent investigation to
determine what portion of the General Business hours was for time actually spent on
services provided to the Plan. Studdard Dep. at 115:4-9 (Exhibit P6). Plaintiffs offer
no evidence that others at RTC did not perform such an analysis. Plaintiffs also
ignore the process that led to the approval of such reimbursement, which involved
individuals other than Mr. Studdard, including outside counsel for RTC.
286. Reliance Trust adopted a “Procedure Manual for Payment or
Reimbursement of Plan Expenses to Plan Sponsor” (“Procedure Manual”) that
discussed the “legal requirements” that “should be the basis for all fiduciary
decisions relating to the reimbursement or payment of expenses to [Insperity] in
relation to its own plans.” Exhibit P16 at 4 (Depo. Exhibit 157 (INSPERITY00177)
at *180); Exhibit P6 (Lance Studdard Dep. 51:22–24, 86:18–87:6).
Response: Objection. The fact is not material to the Motion. Plaintiffs offer
no evidence that the Procedure Manual was still in use or being followed during the
Class Period. Plaintiffs also offer no evidence that the process that was used during
the Class Period resulted in any unnecessary, improper or unreasonable expenses
being approved, or later returned to the Plan.
287. This version was in effect through at least 2015. Exhibit P75 (Depo.
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Exhibit 156 (RTCPLEDGER00404970)(Insperity outside counsel’s production
letter enclosing documents in response to request for documents under 29 U.S.C.
§1024(b)(4), which included Exhibit P16 (Depo. Exhibit 157)); Docs. 30-10 and
41-11 (filing of Depo. Exhibit 157).
Response: Objection. The evidence cited does not support the fact. Plaintiffs
cite a letter producing the Procedure Manual in response to a request for documents.
This letter does not specify which portions of the Procedure Manual were in effect
and Plaintiffs offer no evidence that the Procedure Manual was still in use or being
followed during the Class Period. Indeed, the Procedure Manual was authored in
2004, and certain portions were outdated by the start of the Class Period and thus no
longer in effect.
288. The Procedure Manual advised that the “employer must enter into a
contract or reasonable arrangement with the plan for the provision of services in
order for the prohibited transaction exemptions to apply.” Exhibit P16 at 8 (Depo.
Exhibit 157 (INSPERITY00177) at *184). “[I]t is difficult to prove that the terms of
the agreement (and its reasonableness) without a written document.” Id. The
Procedure Manual recommended “Make sure that there is a written contract between
the plan and the employer for all service and expenses provided.” Id. at *185.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. There is no
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genuine dispute that a “reasonable arrangement” for the provision and
reimbursement of expenses existed between the Plan and Retirement Services. See
Reply to SF ¶ 39. There is also no genuine dispute that this arrangement was
documented in the Trust Agreement, the Credit Agreement, and the approval process
that developed between Retirement Services and RTC in its capacity as the
discretionary fiduciary acting on behalf of the Plan. Id. In addition, Plaintiffs offer
no evidence that suggests the failure to have a “written contract” between the Plan
and Retirement Services resulted in the reimbursement of any unnecessary,
improper, or unreasonable expenses.
289. According to the Procedure Manual’s Expense Reimbursement
Flowchart, if there is no “agreement terminable on reasonably short notice without
penalty”, it would be a “Prohibited Transaction - Not Reimburseable”. Exhibit P76
at 12 (Depo. Exhibit 10 (NSP-000043097) at p. 12 (duplicate version of manual).
Response: Objection. The fact is not material to the Motion. Plaintiffs offer
no evidence that the arrangement with Retirement Services was not “terminable on
reasonably short notice without penalty,” nor is there any evidence that this issue
had any impact on the reimbursement of expenses at issue. In any event, termination
and replacement of a recordkeeper for the Plan would be a process that would take
a significant amount of time to accomplish, and there is no evidence that this ever
occurred. In addition, the evidence cited does not support the fact. The fact offers
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Plaintiffs’ interpretation of the graphic. The graphic represented simply that there
“could be” a prohibited transaction.
290. The Procedure Manual noted that the “DOL regulations specifically
preclude the payment of overhead costs by the plan”. Exhibit P16 at 10 (Depo.
Exhibit 157 (INSPERITY00177) at *186). It explained that “if a department is
allocated a pro-rata share of electricity, oil, gas, and other utility expenses, that is
overhead[.]” Id.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. There is no
evidence that Retirement Services was reimbursed for overhead. See also SF ¶¶ 61,
64 [Doc. 134]. There is also no evidence that Retirement Services retained any
reimbursements for a “pro-rata share of electricity, oil, gas and[/or] other utility
expenses” during the Class Period. Although RTC initially approved the payment
of some utility costs per the terms of the lease of Retirement Services’ facilities, it
later rescinded such approval, and all such reimbursements within the Class Period
were returned to the Plan, plus interest. December 21, 2015 Letter to Trey Carter
from Neil Shifman Regarding Reimbursement Request Reductions and Revenue
Sharing Funds (NSP-000043024) (Ex. 27). Plaintiffs do not, and cannot, cite a
single example of Retirement Services failing to return to the Plan a reimbursement
of which RTC rescinded its prior approval.
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291. The Procedure Manual set forth a “General Protocol for Payment of
Plan Expenses”. Exhibit P16 at 13 (Depo. Exhibit 157 (INSPERITY00177) at *189.
One of the identified “ERISA requirements” that “apply anytime an expense
reimbursement is paid by the plan to the plan sponsor” was that “services that the
plan sponsor provides to the plan must be performed pursuant to a written agreement
that is terminable by the plan on reasonably short notice without penalty”. Id. at
*189.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. As an initial
matter, Retirement Services is not the Plan’s “sponsor.” Plaintiffs offer no evidence
that the arrangement with Retirement Services was not “terminable by the plan on
reasonably short notice without penalty,” nor is there any evidence that this issue
had any impact on the reimbursement of expenses at issue. In any event, termination
and replacement of a recordkeeper for the Plan would be a process that would take
a significant amount of time to accomplish, and there is no evidence that this ever
occurred. In addition, Plaintiffs offer no evidence that suggests the failure to have a
“written contract” between the Plan and Retirement Services resulted in the
reimbursement of any unnecessary, improper, or unreasonable expenses. As stated
AMF ¶ 288, the Procedure Manual advised that the “employer must enter into a
contract or reasonable arrangement[.]” Exhibit P16 at 8 (Depo. Exhibit 157
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(INSPERITY00177) at *184) (emphasis added). There is a “reasonable
arrangement” between the Plan and Retirement Services.
292. The Procedure Manual also set forth Protocols for various categories of
expense reimbursements that required specific information that the trustee must be
provided to “obtain reimbursement” and also provided a “Reimbursement Request
Form”. Id. at *194–96.
Response: Objection. The fact is not material to the Motion. As previously
noted, the Procedure Manual was authored in 2004 and certain portions were
outdated by the start of the Class Period and thus no longer in effect (including the
portions at issue in AMF ¶ 292). Plaintiffs offer no evidence that the failure to follow
these and other outdated portions of the Procedure Manual, such as the use of the
forms at issue, caused the reimbursement of any unnecessary, improper or
unreasonable expenses.
293. The “Reimbursement Request Form” contained within the Protocols
required certification from an officer of Insperity to attest that the expenses are
reasonable and necessary for the proper operation of the Plan. E.g., Id. at *192, 196,
200, 203, 206, 209, 212, 215, 218, 222, 226, 229, 232, 236, 240. No form was ever
submitted with the expense reimbursement request by Insperity. Exhibit P6 (Lance
Studdard Dep. 85:11–19).
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
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it contains multiple facts. The facts are not material to the Motion. As previously
noted, the Procedure Manual was authored in 2004 and certain portions were
outdated by the start of the Class Period and thus no longer in effect (including the
portions at issue in AMF ¶ 293). Plaintiffs offer no evidence that the failure to
follow these and other outdated portions of the Procedure Manual, such as the use
of the forms at issue, caused the reimbursement of any unnecessary, improper or
unreasonable expenses. The alleged failure to submit the forms at issue is not
material to whether any such expenses were unnecessary, improper, or unreasonable.
294. To obtain reimbursement of employee compensation, for example, the
Protocol for Employee Compensation required that Reliance Trust be provided the
“Title and Job description”, “Certification from the employer that the employee’s
services are necessary”, and “Certification from the employer that the employee’s
rate is reasonable”, among other items. Exhibit P16 at 18 (Depo. Exhibit 157
(INSPERITY00177) at *194).
Response: Objection. The fact is not material to the Motion. Plaintiffs offer
no evidence that any reimbursed employee compensation was unnecessary or
unreasonable, or that the failure to follow these portions of the Procedure Manual
caused any such improper reimbursements. As previously noted, the Procedure
Manual was authored in 2004 and certain portions were outdated by the start of the
Class Period and thus no longer in effect (including the portions at issue in AMF ¶
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294).
295. This information was not provided by Holdings prior to Reliance Trust
approving expense reimbursements for Retirement Services. E.g., Exhibit P10
(Depo. Exhibit 93 (RTCPLEDGER00386280)(expense submission packet); Exhibit
17 at 10–124 [Doc. 134-18].
Response: Objection. The fact is not material to the Motion. As previously
noted, the Procedure Manual was authored in 2004 and certain portions were
outdated by the start of the Class Period and thus no longer in effect (including the
portions at issue in AMF ¶ 295). Plaintiffs offer no evidence that the failure to follow
these and other outdated portions of the Procedure Manual, such as the use of the
forms at issue, caused the reimbursement of any unnecessary, improper or
unreasonable expenses. In addition, the evidence cited does not support the fact,
since it does not address whether RTC relied on the submission of such expenses as
meeting the requirements of the outdated forms.
296. Only in a draft memo from December 2015 does there appear to be any
contemplation of Holdings representing to Reliance Trust that its employees in
Retirement Services met the “but for” test. Exhibit P15 (Depo. Exhibit 177 at
RTCPLEGER00305876).
Response: Objection. The evidence cited does not support the fact. There is
no evidence that the December 2015 memo cited by Plaintiffs was the “only”
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contemplation of Holdings representing to RTC that the “but for” test was met.
Instead, AMF ¶ 296 is demonstrably false for the reasons stated in the Response to
AMF ¶ 276. In addition, the evidence cited does not support the fact that the
referenced document was not finalized and sent to RTC.
297. Mr. Herink did not know the policies and procedures that Reliance
Trust following in approving the expenses submitted by Retirement Services, and
did not recall reviewing the Procedure Manual. Exhibit P4 (Daniel Herink Dep.
91:20–92:20.
Response: Objection. The fact is not material to the Motion. Mr. Herink’s
knowledge and/or recollection of the Procedure Manual or these policies and
procedures does not support any claim of failure to monitor RTC’s performance of
its expense approval process, as it does not address whether others acting on behalf
of Holdings had such knowledge. In addition, the evidence cited does not support
the fact. In the cited deposition testimony, Mr. Herink testified only that he did not
specifically “recall” the policies and procedures that RTC used in approving
expenses or reviewing the Procedure Manual. Id.
298. Reliance Trust relied on the 401(k) Averages Book reported in the
Trustee’s report to benchmark the Plan’s expenses. E.g., Exhibit 3 at 36 [Doc. 134-
4]; Exhibit 4 at 43 [Doc. 134-5].
Response: Conceded that the Court may consider the evidence cited for
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purposes of summary judgment.
299. This was the only fee benchmarking information provided by Reliance
Trust to the Directors of Holdings during annual meetings when reporting on Plan
expenses. Exhibit P57 (Trey Carter Dep. 77:4–15).
Response: Objection. The fact is not material to the Motion. There is no
legal authority suggesting that more than one type of fee benchmarking data should
have been provided by RTC to the Directors of Holdings.
300. It was also the only documented source of benchmarking data used by
Reliance Trust in evaluating the Plan’s expenses. See Exhibit P57 (Carter Dep.
77:4–15); Doc. 137-1 ¶¶33–36 (401(k) Averages Book only documented data).
Response: Objection. The fact is not material to the Motion. There is no
legal authority suggesting that more than one type of fee benchmarking data should
have used by RTC. In addition, the evidence cited does not support the fact. The
evidence cited does not support that the 401(k) Averages Book was the “only”
documented source of benchmarking data used by RTC in evaluating the Plan’s
expenses. Instead, the evidence cited simply confirms that the 401(k) Averages
Book was one of the benchmarking tools used by RTC.
301. Mr. Herink did not recall ever reviewing the 401(k) Averages Book or
being provided a copy, and he determined the reliability of the source based on an
internet search. Exhibit P4 (Daniel Herink Dep. 135:22–136:20).
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Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. As admitted in
AMF ¶ 299, RTC presented fee benchmarking data from the 401(k) Averages Book
to the Directors of Holdings during annual meetings. There is no legal authority
suggesting that Mr. Herink should have duplicated RTC’s work by also reviewing
the 401(k) Averages Book since, as a matter of law, the duty to monitor does not
require the monitoring fiduciary to duplicate the work of the fiduciary they have
appointed. E.g., Howell, 633 F.3d at 573. Furthermore, there is no legal or other
authority suggesting that an internet search was not a reasonable method to
determine the reliability of the 401(k) Averages Book.
302. After 2013, the Trustee’s Report did not separately itemize the expenses
reimbursed to Retirement Services for recordkeeping and administrative services
provided to the Plan, previously referred to as “Recordkeeper expense”. Exhibit P23
(Depo. Exhibit 167 (RTCPLEDGER00304710) at 4–5); Exhibit 7 at 32 [Doc. 134-
8].
Response: Objection. The fact is not material to the Motion. The fact that
the format of RTC’s PowerPoint presentation changed over the Class Period is not
material. The presentations still provided the amount of recordkeeping and trustee
expenses. RTC also still confirmed that the Plan’s expenses were reasonable and in
line with expenses for plans that required similar services each year, based on its
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benchmarking analysis and the 401(k) Averages Book. Plaintiffs have offered no
evidence, or even expert opinion, that any expenses approved by RTC were
unnecessary, improper, or unreasonable.
303. Holdings or anyone acting on behalf of the Plan never conducted a
competitive Request for Proposal (RFP) or Request for Information (RFI) process
to evaluate the reasonableness of the compensation received by Retirement Services,
or the services Retirement Services provided on behalf of the Plan. Exhibit P4
(Daniel Herink Dep. 164:20–165:21); Exhibit P5 (John Stanton Dep. 41:9–43:23);
Exhibit P2 (Richard Rawson Dep. 230:7–231:22).
Response: Objection. The fact is not material to the Motion. Plaintiffs do
not cite any authority that a competitive bidding process for recordkeeping services
was required during the Class Period, and it would have been impractical to conduct
such an RFP for this Plan. See Scheinberg Rep. (Ex. 11) at ¶¶ 75-77.
304. Reliance Trust also never engaged in such bidding process. Exhibit P6
(Lance Studdard Dep. 103:8–106:5).
Response: Objection. The fact is not material to the Motion. Plaintiffs do
not cite any authority that a competitive bidding process for recordkeeping services
was required during the Class Period, and it would have been impractical to conduct
such an RFP for this Plan. See Scheinberg Rep. (Ex. 11) at ¶¶ 75-77.
305. Reliance Trust never engaged a third party to independently assess the
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reasonableness of the amounts paid to Retirement Services for recordkeeping and
administrative services provided to the Plan. Exhibit P6 (Lance Studdard Dep.
98:21–25).
Response: Objection. The fact is not material to the Motion. RTC was the
“third party” hired by Holdings to independently assess the reasonableness of
Retirement Services’ expense reimbursements from the Plan. There was no reason
for RTC (the independent third-party) to then hire another “third party” to duplicate
this work. In addition, the evidence cited does not support the fact. In the cited
deposition testimony, Mr. Studdard testified only that he did not “believe” that RTC
ever engaged a benchmarking company to provide an actual report on the fees and
expenses charged to the Plan. He then went on to testify that “we talked to several.
And I will say that the feedback from every one of them when we described the fees
– Insperity’s recordkeeping fees and the total fees charged to the plan, they couldn’t
believe how cheap it was.” Studdard Dep. at 98:21-100:7 (attached hereto as Ex.
97).
306. After hiring Reliance Trust as trustee, Holdings never engaged an
outside third party to independently assess the reasonableness of the amounts paid
to Retirement Services for recordkeeping and administrative services provided to the
Plan. Exhibit P2 (Richard Rawson 244:7–16).
Response: Objection. The fact is not material to the Motion. Holdings hired
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RTC to be the independent third party assess the reasonableness of Retirement
Services’ expense reimbursements from the Plan. E.g., SF ¶¶ 41-42 [Doc. 134].
There was no reason for Holdings or RTC to hire another “third party” to duplicate
this work. In addition, the evidence cited does not support the fact. In the cited
deposition testimony, Mr. Rawson testified only that he was “not aware of any”
engagement of a third-party independent consultant, excluding RTC.
307. In 2012, Veronica Medlin, the compliance manager at Retirement
Services, attended a luncheon sponsored by LeafHouse Financial Advisors regarding
fiduciary responsibilities. Exhibit P77 (Depo. Exhibit 185 (NSP-000034263)).
During this luncheon, Todd Kading of LeafHouse inquired into whether Retirement
Services “knew for sure that we could administer the plan at a lower cost than
outsourcing it”. Id. Ms. Medlin “didn’t answer that question.” Id.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion and not relevant
under Fed. R. Evid. 401 and 402. The attendance by Ms. Medlin at a marketing
luncheon, and her response to a marketing pitch from an individual trying to sell
services to her, is irrelevant to this case.
308. Mr. Kading later inquired with Ms. Medlin regarding whether Insperity
was interested in conducting an RFP benchmarking process, among other services.
Exhibit P78 at 3 (Depo. Exhibit 186 (NSP-000034568) at *570).
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Response: Objection. The fact is not material to the Motion and not relevant
under Fed. R. Evid. 401 and 402. The attendance by Ms. Medlin at a marketing
luncheon, and her response to a marketing pitch from an individual trying to sell
services to her, is irrelevant to this case. Furthermore, there was no reason for
Holdings to hire another entity to perform benchmarking because it had retained
RTC to do so. Finally, as acknowledged in the fact, Ms. Medlin did not have
decision-making authority to hire Mr. Kading and there is no evidence that Mr.
Kading ever responded to Ms. Medlin’s suggestion to contact Messrs. Rawson or
Stanton.
309. Ms. Medlin acknowledged that these services are “not likely” to get
approved because “Our alliance with Reliance Trust Company appears to be rather
strong” and his “best bet” was to reach out to Messrs. Rawson and Stanton because
they are the “true decision makers for a service such as yours.” Id. at *569. Mr.
Kading responded that his firm “battle[s] the ‘relationship’ issues on a regular basis”
and “[s]ometimes they get in front of the ‘exclusive benefit’ rule”. Id. at *568.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion and not relevant
under Fed. R. Evid. 401 and 402. The attendance by Ms. Medlin at a marketing
luncheon, and her response to a marketing pitch from an individual trying to sell
services to her, is irrelevant to this case. Furthermore, there was no reason for
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Holdings to hire another entity to perform benchmarking because it had retained
RTC to do so. Finally, as acknowledged in AMF ¶ 309, Ms. Medlin did not have
decision-making authority to hire Mr. Kading and there is no evidence that Mr.
Kading ever responded to Ms. Medlin’s suggestion to contact Messrs. Rawson or
Stanton.
310. In August 2015, Reliance Trust reviewed the process for approval of
expenses to be paid by the Plan. Exhibit P79 (Depo. Exhibit 174
(RTCPLEDGER00093303)). Reliance Trust raised questions as part of this
initiative. Id.
Response: Objection. The fact is not material to the Motion. Plaintiffs have
offered no evidence, or even expert opinion, that any expenses approved by RTC
were unnecessary, improper, or unreasonable. Further, while RTC later reexamined
a select few of its previously approved expenses, Retirement Services reimbursed
the Plan for the revisited expenses plus interest dating back to 2010. December 21,
2015 Letter to Trey Carter from Neil Shifman Regarding Reimbursement Request
Reductions and Revenue Sharing Funds (NSP-000043024) (Ex. 27). Plaintiffs do
not, and cannot, cite a single example of Retirement Services failing to return to the
Plan a reimbursement of which RTC rescinded its prior approval.
311. On May 5, 2016, Mr. Carter authored a memorandum that outlined
“corrective actions” to be taken by Reliance Trust and the practice and procedures
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that Reliance Trust will follow moving forward. Exhibit P13 at 2–3 (Depo. Exhibit
179 (RTCPLEDGER00405098) at *099–100. The memorandum provided that
Reliance Trust will no longer approve utilities incurred by Retirement Services,
instituted a “50% but for test” for wage and employee expenses, and modified the
procedure for reimbursement of rent, among other matters. Id.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. Plaintiffs have
offered no evidence, or even expert opinion, that any expenses approved by RTC
were unnecessary, improper, or unreasonable. Further, while RTC in 2015 later
reexamined a select few of its previously approved expenses, Retirement Services
reimbursed the Plan for the revisited expenses, plus interest, dating back to 2010.
See December 21, 2015 Letter to Trey Carter from Neil Shifman Regarding
Reimbursement Request Reductions and Revenue Sharing Funds (NSP-000043024)
(Ex. 27). Plaintiffs do not, and cannot, cite a single example of Retirement Services
failing to return to the Plan a reimbursement of which RTC rescinded its prior
approval.
312. On December 21, 2015, Retirement Services sent a memorandum to
Reliance Trust requesting that Reliance Trust reduce certain reimbursement requests
and reimburse the Plan for three categories previously approved expenses that were
reimbursed to Retirement Services since 2010. Exhibit 27 [Doc. 134-28]. Retirement
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Services withdrew requests for monthly utility costs and real estate rental payments.
Id. The total amount to be returned to the Plan for utilities, rent, and employee
salaries was $352,841.11. Exhibit P19 at 4 (Depo. Exhibit 18 (NSP-000027717) at
*720).
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. Plaintiffs have
offered no evidence, or even expert opinion, that any expenses approved by RTC
were unnecessary, improper, or unreasonable. Further, while RTC later reexamined
a select few of its previously approved expenses, Retirement Services reimbursed
the Plan for the revisited expenses, plus interest, dating back to 2010. See December
21, 2015 Letter to Trey Carter from Neil Shifman Regarding Reimbursement
Request Reductions and Revenue Sharing Funds (NSP-000043024) (Ex. 27).
Plaintiffs do not, and cannot, cite a single example of Retirement Services failing to
return to the Plan a reimbursement of which RTC rescinded its prior approval.
313. In their response to a request for proposal issued by Insperity in 2015
for trustee services, Reliance Trust “observed” that using institutional share classes
and an explicit per participant fee for administrative services were evolving trends
in the defined contribution plan environment. Exhibit P60 at 12 (Depo. Exhibit 171
(RTCPLEDGER00259544) at *555 (No. 53).
Response: Objection. The fact is not material to the Motion. Allowing
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Retirement Services to receive “an explicit per participant fee for administrative
services” would have been potentially illegal under ERISA’s prohibited transaction
rules, which permit fiduciaries to only receive reimbursement of direct expenses
“properly and actually incurred,” with no profit or overhead included. 29 U.S.C. §
1108(b)(2) and (c)(2). Furthermore, there is no legal requirement to select only
“institutional share classes.” E.g., Hecker v. Deere & Co., 556 F.3d 575, 586 (7th
Cir. 2009). This is particularly true here, where the Plan’s use of share classes with
revenue sharing did not result in increased costs or “fees” for participants, but instead
successfully avoided the need to charge participant accounts an additional fee to
cover any revenue shortfall. See SF ¶ 70 [Doc. 134].
314. Reliance Trust “continues to recommend large plans utilize institutional
share class mutual funds and CITs in an effort to lower costs and achieve a more
transparent and equitable fee structure across plan participants.” Id. at *556 (No. 53
cont.).
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Response to AMF ¶ 313. In addition, here the Plan did use CITs—the
Horizon Funds, among others.
315. The Plan has maintained higher-cost share classes of investment
options that generated revenue sharing to be available to offset trustee,
recordkeeping and administrative expenses. E.g., Exhibit P80 (Depo. Exhibit 89
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(RTCPLEDGER00144116))(noting, including “mostly retail share classes of
actively managed funds”); Exhibit 9 at 56 [Doc. 134-10].
Response: Conceded that the Court may consider the evidence cited for
purposes of summary judgment.
316. Retirement Services rejected the per-participant pricing approach and
using only institutional share classes for investments included in the Plan. Exhibit
P14 at 6 (Depo. Exhibit 101 (NSP-00035546) at *551; Exhibit P8 (Depo. Exhibit
85 (RTCPLEDGER00093411); Exhibit P5 (John Stanton Dep. 211:5–213:20);
Exhibit P80 at 2 (Depo. Exhibit 89 (RTCPLEDGER00144116) at *117) (Insperity
“dismissed” option of moving to all institutional share class lineup).
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Response to AMF ¶ 313. In addition, the evidence cited does not
support the fact that Retirement Services (as opposed to Holdings) made the decision
at issue.
317. No fixed per-participant fee was instituted to pay for recordkeeping and
administrative services provided to the Plan. See id.
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Response to AMF ¶ 313.
318. John Stanton, Director of Retirement Services, instructed Reliance
Trust on the amount of revenue sharing to be included in mutual funds options
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provided in the Plan. E.g., Exhibit P7 (Depo. Exhibit 119 (NSP-000014054))(“we
think it would be more prudent to go with the 21–40 bps revenue share classes”);
Exhibit 48 at 2 [Doc. 134-46] (Mr. Stanton: “I think we ought to go with the
Blackrock S class” and “I don’t think we can accept lower revenue at this time on
both funds.”); id. at 2 (Reliance Trust requesting “which share class you guys would
like us to use for each of the new additions”); Exhibit 57 [Doc. 134-55](“I’ll let you
know about the share class.”).
Response: Objection. The evidence cited does not support the fact. The
evidence cited is email correspondence wherein Mr. Cotter receives input from Mr.
Stanton regarding share class preferences, not “instructions.” Plaintiffs ignore
testimony from Messrs. Stanton and Cotter on this very issue. Stanton Dep. at 168:6-
170:7 (attached hereto as Ex. 100) (“Reliance [gives] us information about what
share classes might generate what revenue, us looking at the expenses of the plan,
and trying to -- keeping those two in balance. And then having indicated a
preference, it was up to Reliance to decide which share class to actually use”); Cotter
Dep. at 185:21-187:25 (attached hereto as Ex. 95) (“[RTC] already had ultimate
responsibility for the decision making of the investments that we put in the plan, but
we felt that listening to their feedback on that -- on that topic and taking that into
account was important”); id. at 203:10-206:25 (“we selected the fund that was
used”). The Trust Agreement establishes, as a matter of law, that RTC was delegated
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and accepted discretionary authority and control over all decisions regarding the
Plan’s investments. Trust Agreement (Ex. 2) at § 3.2. There is no carve out or
exception with regard to decisions regarding the selection of appropriate share
classes. Id. In addition, the evidence cited does not support the fact regarding Mr.
Stanton’s title. Mr. Stanton’s title was Managing Director throughout the time
period at issue.
319. Mr. Stanton “pushed back” when Reliance Trust suggested using non-
revenue sharing funds because “the ultimate goal is to arrive at a level of 25 bps
revenue share lineup.” Exhibit P8 (Depo. Exhibit 85 (RTCPLEDGER00093411).
Response: Objection. The fact is not material to the Motion. As discussed
in the Response to AMF ¶ 318, RTC had discretion and control over decisions
regarding the selection of share classes that generated revenue share to cover the
Plan’s expenses. In addition, the evidence cited (notes from an alleged conversation
with Mr. Stanton) is inadmissible hearsay within hearsay under Fed. R. Evid. 802
and 805, since there is no exception to the hearsay rule that applies to the alleged
statements from Mr. Stanton.
320. Reliance Trust believed it was Retirement Services’ “decision if they
want to utilize revenue sharing or not to offset some or all of that expense” and did
not believe Retirement Services “delegated that decision/authority to [Reliance
Trust].” Exhibit P9 (RTCPLEDGER00151180).
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Response: Objection. The fact is not admissible because its probative value
is substantially outweighed by its “confusing the issues” under Fed. R. Evid. 403.
Plaintiffs confuse the plan design function of whether to use revenue sharing as the
means for how the funds should be collected to cover the Plan’s expenses (i.e.,
whether through revenue sharing or through participant fees), versus the operational
function of selecting specific share classes which then generate revenue. The fact
that the Plan used revenue sharing to collect the funds to cover the Plan’s expenses
is undisputed. See SF ¶ 70 [Doc. 134]; see also AMF ¶ 315. AMF ¶ 320 simply
attempts to confuse the issues regarding the use of revenue sharing as the method
with the selection of specific share classes. In addition, the evidence cited does not
support the fact. The evidence cited does not support the fact that Retirement
Services (as opposed to Holdings) made the decision at issue.
321. Reliance Trust was concerned about “introducing revenue sharing
classes without any documented policy guidelines” as they “require a guideline
which directs us on this topic, it is not an area where we can apply discretion.”
Exhibit P81 at 1 (Depo. Exhibit 86 (RTCPLEDGER00277795) at *795).
Response: Objection. The fact is not material to the Motion. The fact that
RTC requested guidelines is immaterial and irrelevant. The Trust Agreement
establishes, as a matter of law, that RTC was delegated and accepted discretionary
authority and control over all decisions regarding the Plan’s investments. Trust
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Agreement (Ex. 2) at § 3.2. There is no carve out or exception with regard to
decisions regarding the selection of appropriate share classes. Id. Furthermore, the
IPS already provided directions to RTC with respect to the use of revenue sharing.
See, e.g., November 2012 IPS (NSP-000010927) (Ex. 42) at p. 16 (“The Fiduciaries
will review at least annually the costs and credits associated with the management
of the Plan’s investment program, including . . . 4. Revenue sharing: Proper
application of the credits due the Plan and trust through the use of mutual fund
revenue sharing credits.”) and p. 11 (“Special consideration is given for revenue
share earnings credited against trust expenses.”). There is no evidence that RTC
required more guidance than the IPS already provided.
322. From 2009 through 2016, the Plan’s suspense account, which held
revenue sharing from Plan investments and revenue derived from direct participant
charges that was used to pay trustee, recordkeeping and administrative expenses,
generated a surplus after payment of these expenses. Exhibit P23 (Depo. Exhibit
167)(compilation of revenue/expense slides of Trustee’s reports); Exhibit 9 at 54
[Doc. 134-10]; Exhibit 10 at 33 [Doc. 134-11]; Exhibit P82 (Depo. Exhibit 88
(RTCPLEDGER00395169)(“Insperity uses revenue from the funds to offset the
expenses of the plan, but typically have an excess of revenue over expenses.”).
Response: Objection. The fact is not material to the Motion. As excess
revenue in the revenue sharing account accumulates over time, it is periodically
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reallocated to participants. See Stanton Dep. at 197:19-198:14 (Ex. 30) (“in 2010,
we did an allocation of some of the excess active participant accounts” and in 2015
“allocate[d] a good share of what was left over at that point to participant accounts”).
Any amount in the revenue sharing account that exceeds Retirement Services’
quarterly expenses was maintained in the account to cover expenses in the
subsequent quarter. SF ¶ 75 [Doc. 134]. There was no requirement to reallocate the
excess revenue sharing more frequently than it was done. Furthermore, as Mr.
Stanton explained, RTC and RS worked to keep revenue sharing and expenses “as
close as possible,” but that proved difficult because neither revenue sharing nor
expenses could be known “completely with precision” in advance. Stanton Dep. at
183:4-184:17 (attached hereto as Ex. 100).
323. Although a portion of this surplus was allocated to participants in 2010,
2015 and 2016, Holdings and Retirement Services did not consider instituting a
policy to handle excess revenue sharing until late 2014 or early 2015. Exhibit P82
at 1–2 (Depo. Exhibit 88 (RTCPLEDGER00395169) at *169–170 (noting “no
policy in place” for handling excess revenue sharing).
Response: Objection. The fact is not material to the Motion. There was no
requirement to reallocate the excess revenue sharing more frequently than it was
done or to an institute a policy to handle the excess revenue sharing. Any amount
in the revenue sharing account that exceeds Retirement Services’ quarterly expenses
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was maintained in the account to cover expenses in the subsequent quarter. SF ¶ 75
[Doc. 134]. In addition, the evidence cited does not support the fact. The evidence
cited does not support the fact that Retirement Services (as opposed to Holdings)
considered such a policy. The evidence cited only supports that RTC considered
such a policy.
324. Holdings and Retirement Services drafted a “Policy for Use of Revenue
Sharing” that required the Plan’s suspense account to maintain a balance of $500,000
rather than returning all excess revenue sharing to Plan participants. Exhibit P83 at
2 (Depo. Exhibit 121 (NSP-000021438) at *139. This was the preference of
Retirement Services. Exhibit P82 at 2 (Depo. Exhibit 88
(RTCPLEDGER00395169) at *170); Exhibit P84 (Nicholas Cotter Dep. 232:21–
233:9).
Response: Objection. The fact is not material to the Motion. There was no
requirement to reallocate 100% of the excess revenue sharing (rather than holding a
reserve to offset shortfalls in estimated revenues that may occur). In addition, the
evidence cited does not support the fact that the referenced policy and preference
were from Retirement Services (as opposed to Holdings). Furthermore, Mr. Stanton
testified that Exhibit P83 (Depo. Exhibit 121) was “an early draft” and not a final
document. Stanton Dep. at 201:10-18 (attached hereto as Ex. 100). Finally, the
evidence cited in Exhibits P82 and P84 is inadmissible hearsay and hearsay within
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hearsay under Fed. R. Evid. 802 and 805 to the extent Plaintiffs offer such exhibits
as evidence of any verbal statements of the alleged “preference of Retirement
Services,” since there is no exception to the hearsay rule that applies to any purported
statements by any unidentified individuals representing Retirement Services.
325. The amount that Retirement Services was reimbursed by the Plan for
recordkeeping and administrative services has grown between 2009 and 2016.
Exhibit P23 (Depo. Exhibit 167 (RTCPLEGER00304710))(“Recordkeeper
expense”); Exhibit 9 at 54 [Doc. 134-10].
Response: Objection. The fact is not material to the Motion. The Plan nearly
doubled in assets and participants from 2009 to 2016. Scheinberg Rebuttal Report
at ¶ 31 (Ex. 12); see also Retirement Services Metrics – Plan Year 2016 (NSP-
000011874) (Ex. 18). The fact that Retirement Services’ reimbursements also grew
between 2009 and 2016 is immaterial. Instead, the appropriate focus is the Plan’s
cost per participant, which Mr. Scheinberg confirmed was similar to (but lower than)
the reported expenses of TriNet, nearly 20% less costly than ADP, and nearly 40%
less than Oasis. Sch. Rep. at ¶ 80, Table 4 (Ex. 11).
IV. The Insperity Horizon Risk-Managed Funds
326. On June 7, 2011, John Stanton, Director of Retirement Services,
corresponded with Mr. Rawson regarding the opportunity to offer “Insperity-
branded CITs as investments in our plans”. Exhibit P45 (Depo. Exhibit 137 (NSP-
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000096538)). Mr. Stanton estimated a potential management fee that Retirement
Services could earn on the new funds. Id. In response to Mr. Stanton’s question as
to whether “this is something that we would like to pursue”, Mr. Rawson responded
“ails [sic] would like you to get things rolling on our [own] fund.” Id.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. It is unrelated
to Insperity’s monitoring function and/or RTC’s selection of the Horizon Funds for
the Plan, which occurred nearly a year later. Moreover, there is no evidence that the
idea/possibility mentioned in the e-mail (that Insperity might “earn and keep some
portion of the investment manager fee” related to a CIT) was ever pursued or
considered further by Mr. Rawson or any of the other Directors of Holdings.
Moreover, the purported quotes from this document are taken out of context, and
Plaintiffs replace words in the document that do not fit their interpretation with
bracketed words that do not appear in the document. In addition, the evidence cited
does not support the fact regarding Mr. Stanton’s title. Mr. Stanton’s title was
Managing Director throughout the time period at issue.
327. On June 9, 2011, Reliance Trust’s “Discussion Notes” reflected
discussions between Reliance Trust and Retirement Services regarding the concept
of launching the proprietary target date funds. Exhibit P46 (Depo. Exhibit 56
(RTCPLEDGER00423242)).With $400 million the Plan’s J.P. Morgan target date
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funds, Retirement Services indicated “their willingness and desire to fund a Reliance
and potentially, Insperity branded” target date fund series that would serve as the
Plan’s qualified default investment alternative (QDIA). Id. at *242.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the motion. In addition, the
evidence cited does not support the fact that the “Discussion Notes” reflect external
discussions as opposed to internal discussions among representatives of RTC. The
document does not identify any particular individuals who participated in such
“discussions,” nor does it say there were any discussions of these topics with
representatives of Retirement Services (as opposed to Holdings, for example). In
addition, the evidence cited is inadmissible hearsay within hearsay under Fed. R.
Evid. 802 and 805 to the extent Plaintiffs offer it as evidence of any verbal statements
by Holding’s representatives, since there is no exception to the hearsay rule that
applies to any purported statements by any unidentified individuals representing
Holdings.
328. In anticipation of receiving a projected $577,000 per year, Anthony
Guthrie, the CEO of Reliance Financial Corporation, told William Harlow, the head
of Reliance Trust’s retirement plan business: “What the hell are we waiting for, lets
get down there and sell Richard [Rawson] on the idea.” Exhibit P85 (Exhibit 59
(RTCPLEDGER00162445)); Exhibit P26 (William Harlow Dep. 13:4–14:4).
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Response: Objection. The fact is not material to the Motion. That RTC
earned money and had business reasons for establishing CITs is irrelevant to the
question of whether they determined the Horizon Funds were prudent and in the
interests of Plan participants. The objectives are not mutually exclusive. In addition,
there is no evidence that Holdings was ever provided a copy of this document before
the litigation, or that it was ever made aware of Mr. Guthrie’s statement to Mr.
Harlow prior to the litigation. In addition, the cited evidence does not support the
fact. Mr. Harlow testified that Mr. Guthrie was “just popping off” and did not
actually need to have Mr. Rawson’s “buy-in to any new product inclusion.” Harlow
Dep. at 69:3-10 (attached hereto as Ex. 93).
329. On August 31, 2011, Reliance Trust and Retirement Services, including
Mr. Harlow from Reliance Trust and Messrs. Rawson and Stanton from Retirement
Services, again met to discuss the replacement of the J.P. Morgan target date funds
with the three potential replacement “finalists.” Exhibit 65 at 5 [Doc. 134-63].
Response: Objection. The evidence cited does not support the fact that the
August 31, 2011 meeting was with representatives of Retirement Services (as
opposed to Holdings).
330. The presentation reflected consideration for branding the Reliance
proprietary target date funds as “Insperity.” Id. at 6. It also noted that Reliance Trust
stood to receive an additional source of revenue from these funds of 7.5 bps from
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the proprietary target date funds. Id. at 8.
Response: Objection. The fact is not material to the Motion. That RTC
earned money and had business reasons for establishing CITs is irrelevant to the
question of whether they determined the Horizon Funds were prudent and in the
interests of Plan participants. The objectives are not mutually exclusive.
Furthermore, that the CITs might be Insperity branded is irrelevant and immaterial
to Holdings performance of its duty to monitor RTC’s eventual decision to select the
Horizon Funds for the Plan. There is no genuine dispute that this meeting occurred
many months before RTC formed the Horizon Funds and made its decision to select
them for the Plan. SF ¶¶ 125, 164 [Doc. 134]; August 13, 2012 letter from Nick
Cotter to Karen Drury (NSP- 000014159) (Ex. 84). There is also no genuine dispute
that none of the fund options being considered and discussed at this time were added
to the Plan. SF ¶¶ 125, 126, 130, 131, and 164 [Doc. 134]; August 13, 2012 letter
from Nick Cotter to Karen Drury (NSP- 000014159) (Ex. 84).
331. The presentation included the highest-cost share class with 20 bps of
revenue sharing for the J.P. Morgan passive target date alternative. Id. at 11; Exhibit
P41 at 2 (Depo. Exhibit 184 (NSP-000071572) at *573) (noting 3 share classes
available with the class with 20 bps of revenue sharing in the highest). These
“passive” versions had a “strong” performance history but no revenue to Reliance
Trust. Exhibit 65 at 11 [Doc. 134-63].
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Response: Objection. The fact is not material to the Motion. There is no
legal requirement to select only the lowest share class. E.g., Hecker, 556 F.3d at
586. This is particularly true here, where the Plan’s use of share classes with revenue
sharing did not result in increased costs or “fees” for participants, but instead
successfully avoided the need to charge participant accounts an additional fee to
cover any revenue shortfall. See SF ¶¶ 70 [Doc. 134]. In addition, the evidence
cited does not address revenue to RTC anywhere on page 11. Plaintiffs’ selective
mischaracterization of the document and the funds it references fails to mention that
this option did not provide the type of active management in down markets that was
one of the primary perceived benefits of the funds that were eventually selected for
the Plan by RTC.
332. The passive J.P. Morgan target date funds would have provided
approximately the same cost savings to Plan participants as the Insperity Horizon
funds based on total expense ratio. Exhibit 65 at 11 [Doc. 134-63]; Exhibit P41 at
2 (Depo. Exhibit 184 (NSP-000071572) at *573; Exhibit 7 at 35 [Doc. 134-8].
Response: Objection. The fact is not material to Motion. There is no legal
requirement to select only the lowest share class. E.g., Hecker, 556 F.3d at 586.
This is particularly true here, where the Plan’s use of share classes with revenue
sharing did not result in increased costs or “fees” for participants, but instead
successfully avoided the need to charge participant accounts an additional fee to
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cover any revenue shortfall. See SF ¶¶ 70 [Doc. 134]. In addition, the evidence
cited does not support the fact. Exhibit 65 at 11 shows a total expense ratio of .54%
for the JPMorgan Passive Blend Target Date Funds, with .20% in revenue sharing.
Exhibit 7 at 35 shows a total expense ratio of .53% for the Horizon Funds, with .25%
in revenue sharing. Thus, the Horizon Funds had a lower total expense ratio and
also provided more revenue sharing, which successfully avoided the need to charge
participant accounts an additional fee to cover any revenue shortfall. See SF ¶¶ 70
[Doc. 134].
333. Without the revenue sharing component, the lower-cost share class of
the passive J.P. Morgan target date funds would have been significantly lower cost
than the Insperity Horizon funds. Id.
Response: Objection. The evidence cited does not support the fact. The
evidence cited does not provide any details regarding the costs of the lower-cost
share classes of the JPMorgan Passive Blend Target Date Funds.
334. The desire to brand the Plan’s risk-managed target date funds as the
“Insperity” Horizon Risk-Managed Funds came from Insperity. Exhibit P84
(Nicholas Cotter Depo. 175:10–22).
Response: Objection. The fact is not material to the Motion. The naming of
the Horizon Funds is irrelevant and immaterial. Plaintiffs offer no evidence that this
had any impact on either RTC’s decision to select the Horizon Funds, or Holdings’
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performance of its duty to monitor this decision. In addition, the evidence cited is
inadmissible hearsay within hearsay under Fed. R. Evid. 802 and 805 to the extent
Plaintiffs offer it as evidence of any verbal statements by unidentified individuals
from “Insperity”, since there is no exception to the hearsay rule that applies to any
such purported statements.
335. In October 2011, Reliance Trust invited both Messrs. Rawson and
Stanton to the Cloister Resort at Sea Island in Georgia to attend the professional golf
tournament, the McGladry Classic. Exhibit P86 (Depo. Exhibit 62 (NSP-
000023523)); Exhibit P87 (Depo. Exhibit 63 (NSP-000023521)); Exhibit P44
(Depo. Exhibit 64 (NSP-000018061)); Exhibit P88 (Depo. Exhibit 141 (NSP-
000023517)).
Response: Objection. The fact is not material to the Motion. The fact that
Messrs. Rawson and Stanton spent time with representatives of RTC outside a
formal business setting (whether playing golf, having dinner, etc.) only further
demonstrates performance of their monitoring role, but otherwise is irrelevant and
immaterial to any claim in this case. See Rawson Dep. 28:6-129:17 (recounting
discussions related to the target date funds during an informal event with
representatives of RTC) (attached hereto as Ex. 94).
336. In addition to PGA golf tickets and hotel accommodations, Mr. Guthrie
of Reliance Trust hosted Mr. Rawson and Mr. Stanton at his home for cocktails and
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a round of golf at the Frederica Golf Club. Exhibit P87 (Depo. Exhibit 63 (NSP-
000023521)); Exhibit P86 (Depo. Exhibit 62 (NSP-000023523)); Exhibit P88
(Depo. Exhibit 141 (NSP-000023517)).
Response: Objection. The fact is not material to the Motion. Although
Messrs. Rawson and Stanton often spent time with representatives of RTC as part of
Holdings’ monitoring functions, the fact of their doing so at a golf tournament and
related events is otherwise irrelevant and immaterial to any claim in this case.
337. After the round of golf at the Frederica Golf Club, the Reliance Trust
and Insperity executives met in the men’s locker room to have a “brief discussion
and update on the target date project.” Exhibit P44 at 2 (Depo. Exhibit 64 (NSP-
000018061) at *062).
Response: Objection. The fact is not material to the Motion. The location of
the referenced discussion is irrelevant and immaterial to any claim in this case.
338. Mr. Harlow and Mr. Guthrie provided revised presentation slides
regarding the Insperity Horizon funds for this discussion. Exhibit P89 (Depo.
Exhibit 65 (RTCPLEDGER00162447)).
Response: Objection. The evidence cited does not support the fact. The
evidence cited is email correspondence, but does not establish or confirm what, if
anything, was actually provided to representatives of Holdings for the alleged
discussion. In addition, the email correspondence references changes to the slides
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used in discussions between RTC and representatives of Holdings in August 2011
(Ex. 65), none of which reference the Horizon Funds, which were not created until
after October of 2011. Instead, this document references changes to slides regarding
other funds offered by J.P. Morgan and MetLife that were being considered by RTC
at this time.
339. According to Mr. Harlow, he “closed the Insperity target fund” with
Mr. Rawson in the locker room. Exhibit P1 (Depo. Exhibit 67
(RTCPLEDGER000304859)).
Response: Objection. The evidence cited does not support the fact.
Plaintiffs’ contention that an agreement was reached in October 2011 between RTC
and Holdings regarding the Horizon Funds, which did not exist on that date, is belied
by testimony of both the author of Exhibit P1 and Mr. Rawson, respectively. Harlow
Dep. at 114:1-115:12 (attached hereto as Ex. 93); Rawson Dep. at 133:11-135:17
(attached hereto as Ex. 94). In his deposition, Plaintiffs’ counsel directly asked Mr.
Harlow about Exhibit P1, to which he replied, “[Exhibit P1 is] a misrepresentation
of -- of where we were. I mean, I -- I did not have the – the authority to close the
deal. It had to go through the investment policy committee.” Harlow Dep. at 114:1-
115:12 (attached hereto as Ex. 93). In addition, the evidence cited is inadmissible
hearsay within hearsay under Fed. R. Evid. 802 and 805, to the extent it purports to
be evidence supporting an alleged verbal agreement by Mr. Rawson to some
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unspecified “deal” regarding the Horizon Funds.
340. After the locker room deal, on November 23, 2011, Mr. Rawson
confirmed with Mr. Guthrie that Insperity was “moving forward with the new fund
ideas”. Exhibit P90 (Depo. Exhibit 66 (RTCPLEDGER000156103)).
Response: Objection. The evidence cited does not support the fact. The
evidence cited does not support the fact that there was any alleged “locker room
deal,” for the reasons stated in the Response to AMF ¶ 339. In addition, the evidence
cited indicates any “new fund” was still then just “ideas” – not a “deal” – and that
there was still work to be done on those “ideas.” Indeed, Holdings’ monitoring
efforts continued for many months after this email, as discussed in AMF ¶¶ 341-343
below. The cited email from Mr. Rawson is the only admissible evidence offered
by Plaintiffs as to Holdings’ views regarding the potential new fund ideas in the Fall
of 2011.
341. On December 23, 2011, Dan Pollina, in-house counsel at Insperity,
prepared an email to be sent by Mr. Stanton to Reliance Trust requesting information
regarding the decision to use Reliance’s proprietary collective trust funds. Exhibit
70 [Doc. 134-68]. Due to the “appearance of a conflict of interest”, Mr. Pollina
requested “a memo setting forth the methodology and analysis that was or will be
undertaken in evaluating the CCT investment providers”, and “address the support
Reliance is relying upon to undertake the CCT evaluation internally, rather than
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using an independent 3rd party, if it is doing so.” Id.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The evidence does not support the facts. Specifically, the
evidence does not support the fact that there had been a “decision to use Reliance’s
proprietary collective trust funds.” Instead, the email reflects that there were
multiple “CCT investments being considered,” which again confirms there was no
“deal” struck with the regard to the Horizon Funds in October 2011 as alleged in
AMF ¶¶ 339 and 340. In addition, the evidence does not support the fact that Mr.
Pollina requested the memo “due to the ‘appearance of a conflict of interest.’”
Instead, the email requested the memo and simply noted at the end of the request
that: “We feel this documentation is especially important considering the appearance
of a conflict of interest when Reliance is offering one of the CCT investments under
consideration.” (Ex. 70).
342. On March 2, 2012, Doug Sivula, in-house counsel at Insperity,
reiterated that Reliance Trust answer “What other funds/CCTs/providers did
Reliance consider, and how do the chosen Reliance CCTs compare to other
funds/CCTs available in the marketplace?” and “Why did Reliance make the
decision itself rather than using an independent third party…” Exhibit 72 at 2 [Doc.
134-70].
Response: Objection. The fact contains only a partial quotation of the follow-
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up requests to RTC. Pursuant to Fed. R. Evid. 106, the entirety of Exhibit 72 should
be considered.
343. Reliance Trust provided a response to Mr. Stanton on February 9, 2012,
and supplemented its response on several occasions. Exhibit 71 [Doc. 134-69];
Exhibit 73 [Doc. 134-71]; Exhibit 75 [Doc. 134-73]; Exhibit 77 [Doc. 134-75]
(collectively “Due Diligence” memoranda).
Response: Conceded that the Court may consider the evidence cited for
purposes of summary judgment.
344. Reliance Trust did not explain why it did not use an independent third
party to make the decision on Insperity Horizon funds in the Due Diligence
memoranda. See id.
Response: Objection. The evidence cited does not support the fact. The
evidence cited only supports that this explanation was not contained in the
memoranda. However, Plaintiffs’ Exhibit P91 confirms that this issue was a topic
for discussion during a meeting.
345. These memoranda were not sent to the Directors of Holdings. Exhibit
71 [Doc. 134-69]; Exhibit 73 [Doc. 134-71]; Exhibit 75 [Doc. 134-73]; Exhibit 77
[Doc. 134-75]. There is no record evidence that all of the Directors of Holdings were
provided copies of the memoranda.
Response: Objection. The evidence cited does not support the fact. Plaintiffs
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cite the memoranda, but do not cite any evidence that the memoranda were not sent
to the Directors of Holdings. Messrs. Herink and Rawson both testified that they
were familiar with the memos and that they kept Mr. Sarvadi informed of important
developments that merited his attention. E.g., SF ¶¶ 114 and 161 [Doc. 134]; Herink
Dep. at 259:2-:260:7 (Ex. 32) (testifying that Mr. Pollina discussed the issues in the
due diligence memoranda with him); Rawson Dep. at 188:22-189:15 (attached
hereto as Ex. 94) (testifying that he had “lots of conversations” with Mr. Stanton
providing updates on the target date fund due diligence process); Herink Dep. at
82:3-6; 128:11-14; 193:20-23 (Ex. 32) (Messrs. Herink and Rawson kept Mr.
Sarvadi apprised of updates as needed in between Annual Meetings). All of the
Directors attended the annual meeting, at which much of the information in the
memos was covered and discussed. SF ¶ 101; Herink Dep. at 80:5-82:22; 125:15-
126:3; 193:17-23 (Ex. 32); March 2012 Annual Report (NSP-000011037) (Ex. 5).
Both Mr. Herink and Mr. Rawson also testified that they were assisted in Holdings’
efforts to monitor RTC by other individuals who reported to them, including
specifically Messrs. Stanton, Pollina and Sivula. SF ¶ 90 [Doc 134]; Reply to SF ¶
143; Herink Dep. at 23:14-25:23; 95:15-97:18 (Ex. 32); Rawson Dep. at 187:19-
189:15 (attached hereto as Ex. 94).
346. On March 1, 2012, Mr. Sivula recognized that Reliance Trust’s
responses were “inadequate” and provided “no discussion of how those funds
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compared to other funds available in the marketplace, what other funds or providers
were considered, how the decision was made or why Reliance made the decision
itself rather than using an independent third party.” Exhibit P34 (NSP-000074015).
Response: Objection. The fact is not material to the Motion. That Mr. Sivula
thought RTC’s initial draft responses were “inadequate” is irrelevant and immaterial
to this case, since it is undisputed that RTC later supplemented the responses at issue.
See AMF ¶ 343.
347. On March 13, 2012, Mr. Sivula outlined issues that were not previously
addressed by Reliance Trust, and noted that “cost is not always the determinative
factor”. Exhibit P91 (NSP-000096512) at *512).
Response: Objection. The fact is not material to the Motion. That Mr. Sivula
thought certain issues were not previously addressed by RTC is irrelevant and
immaterial, since Plaintiffs’ Exhibit P91 confirms that such issues were a topic for
discussion during a subsequent meeting. In addition, later versions of the due
diligence memoranda did cover issues that RTC had not addressed by March 13,
2012. See Second Update Memorandum (NSP-000040862-68) (Ex. 75) and Third
Update Memorandum (NSP-000068624-30) (Ex. 77).
348. The “Due Diligence” memoranda did not identify the other funds that
were considered by Reliance Trust and how those funds compared to the Insperity
Horizon funds. See Exhibit 71 [Doc. 134-69]; Exhibit 72 [Doc. 134-70]; Exhibit 73
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[Doc. 134-71]; Exhibit 75 [Doc. 134-73]; Exhibit 77 [Doc. 134-75]. No data was
provided on any other comparator target date funds in these memoranda. Id.
Response: Objection. The evidence cited does not support the fact. The
memoranda explained that RTC did search and consider all other funds then
available in the market to see if any were comparable to the Horizon Funds, but
found no other fund that combined similar low costs and a tactical overlay with
active down-market management protection. See Second Update Memorandum
(NSP-000040862-68) at p. 3 (Ex. 75) and Third Update Memorandum (NSP-
000068624-30) at p. 3 (Ex. 77). In addition, the fact is not material to the Motion.
It is undisputed that RTC previously identified other funds that were somewhat
comparable (the passive J.P. Morgan target date fund that did not have similar active
down-market management and the MetLife fund that had similar active down-
market management but significantly higher fees), and compared those funds to
other custom funds that RTC proposed to manage. E.g., August 31, 2011 Insperity
QDIA Review (RTCPLEDGER00414666) (Ex. 65). But the Horizon Funds were
unique and custom designed to provide active down-market management and low
fees. See Second Update Memorandum (NSP-000040862-68) (Ex. 75) and Third
Update Memorandum (NSP-000068624-30) (Ex. 77). Because no other funds in the
market were similar, and in view of prior comparisons to other funds, the absence of
data in the memoranda is irrelevant and immaterial. As a matter of law, the duty to
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monitor does not require the monitoring fiduciary to duplicate the work of the
fiduciary they have appointed. E.g., Howell, 633 F.3d at 573.
349. Reliance Trust selected F-Squared to serve as the tactical overlay
advisor for the Insperity Horizon funds. E.g., Exhibit 9 at 37 [Doc. 134-10].
Response: Conceded that the Court may consider the evidence cited for
purposes of summary judgment.
350. Reliance Trust did not use “an RFP process combing the market,
instead opting for two managers/advisors that we have a relationship with” to select
an advisor for the Insperity Horizon funds. Exhibit P43 (Depo. Exhibit 107
(RTCPLEDGER00217706)).
Response: Objection. The fact is not material to the Motion. Plaintiffs do
not cite any authority that required RTC conduct a competitive bidding process to
select a sub-advisor to RTC for its management of the Horizon Funds.
351. Reliance Trust did not disclose this information in the “Due Diligence”
memoranda. See Exhibit 71 [Doc. 134-69]; Exhibit 72 [Doc. 134-70]; Exhibit 73
[Doc. 134-71]; Exhibit 75 [Doc. 134-73]; Exhibit 77 [Doc. 134-75].
Response: Objection. The fact is not material to the Motion. Plaintiffs do
not cite any authority that required RTC to conduct a competitive bidding process to
select a sub-advisor to RTC for its management of the Horizon Funds, and there was
similarly no requirement to disclose to Holdings that such a process had not
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occurred. Plaintiffs do not cite any authority that such a search, or disclosure, was
required. As a matter of law, the duty to monitor does not require the monitoring
fiduciary to duplicate the work of the fiduciary they have appointed. E.g., Howell,
633 F.3d at 573. In addition, the evidence cited does not support the fact. The
memoranda disclosed the process RTC used to select F-Squared. E.g., Ex. 77 at p.
6 (“The process RTC used to select and monitor the tactical overlay advisor is
consistent with the process used for selecting other actively managed strategies for
the plan (outlined above). However, given the unique, customized nature of the
service and the limited universe of managers with a considerable track record in this
area, the screening process was more focused in nature than is typically the case for
more mainstream investment mandates.”).
352. Reliance Trust did not disclose the identity of F-Squared as the tactical
overlay advisor in the Due Diligence memoranda. Id.
Response: Objection. The fact is not material to the Motion. Plaintiffs do
not cite any authority that such a disclosure was required for Holdings to perform its
duty to monitor. As a matter of law, the duty to monitor does not require the
monitoring fiduciary to duplicate the work of the fiduciary they have appointed. E.g.,
Howell, 633 F.3d at 573. Moreover, RTC disclosed the identity of F-Squared in the
March 2012 Annual Report. NSP-000011037) at pp. 50, 51 (Ex. 5). Thus, whether
the identity of F-Squared was also identified in the memoranda is irrelevant and
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immaterial.
353. At or around January 2012, Mr. Rawson and Retirement Services had
internal discussions related to the brand names for the proprietary target date funds,
which would become known as the Insperity Horizon Risk-Managed Funds. Exhibit
P29 (Depo. Exhibit 144 (NSP-000036443)); Exhibit P2 (Richard Rawson Dep.
146:7–12).
Response: Objection. The fact is not material to the Motion. The naming of
the Horizon Funds is irrelevant and immaterial. Plaintiffs offer no evidence that this
had any impact on either RTC’s decision to select the Horizon Funds, or Holdings’
performance of its duty to monitor this decision.
354. Retirement Services prepared an internal report that reflected potential
brand names for these funds to target both the clients that have an opportunity to
participant in the Plan (referred to as “Workforce Optimization” clients) as well as
potential clients of Retirement Services. Exhibit P92 at 4, 6–11 (Depo. Exhibit 145
(NSP-000036431) at *434, 436–41; Exhibit P2 (Richard Rawson Dep. 148:15–
151:2).
Response: Objection. The fact is not material to the Motion. The naming of
the Horizon Funds is irrelevant and immaterial. Plaintiffs offer no evidence that this
had any impact on either RTC’s decision to select the Horizon Funds, or Holdings’
performance of its duty to monitor this decision.
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355. Retirement Services intended to announce the new name at the
National Sales and Marketing Convention on February 23, 2012. Exhibit P92 at
2(Depo. Exhibit 145 (NSP-000036431) at *432.
Response: Objection. The fact is not material to the Motion. The naming of
the Horizon Funds is irrelevant and immaterial. Plaintiffs offer no evidence that this
had any impact on either RTC’s decision to select the Horizon Funds, or Holdings’
performance of its duty to monitor this decision.
356. On February 20, 2012, Insperity, Inc. filed with the United States Patent
and Trademark Office the “Insperity Horizon” fund name. Exhibit P93 (Depo.
Exhibit 31).
Response: Objection. The fact is not material to the Motion. The naming of
the Horizon Funds is irrelevant and immaterial. Plaintiffs offer no evidence that this
had any impact on either RTC’s decision to select the Horizon Funds, or Holdings’
performance of its duty to monitor this decision.
357. On March 14, 2012, Reliance Trust presented its Trustee’s Report to
the Directors of Holdings that noted the upcoming selection of the Insperity Horizon
funds. Exhibit 5 at 37 [Doc. 134-6]. The report provided a general overview of the
tactical overlay model and a comparison of the back-tested performance results of
the Insperity Horizon funds compared to the J.P. Morgan passive and active mutual
fund alternatives. Id. at 50–54.
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Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. Conceded that the Court may consider the evidence cited
for purposes of summary judgment. The fact references the “upcoming selection of
the Insperity Horizon Funds” which clearly belies AMF ¶¶ 335-339 that an
agreement was reached regarding the Horizon Funds in October 2011, which did not
even exist on that date. The Insperity Defendants note that the cited document
speaks for itself and contains additional information regarding the Horizon Funds
and RTC’s decision to select them. Pursuant to Fed. R. Evid. 106, the entirety of the
March 2012 Annual Report should be considered.
358. In a footnote to the Trustee’s Report, Reliance Trust explained that
back-tested performance “is not actual performance” and the results are “subject to
the fact that they have been prepared with the benefit of hindsight”. Id. at 54. “The
hypothetical results” may “over compensate for the impact of actual market
conditions”. Id.
Response: Objection. The fact contains only a partial quotation of a single
footnote in the March 2012 Annual Report. Pursuant to Fed. R. Evid. 106, the
entirety of the March 2012 Annual Report should be considered.
359. Mr. Rawson testified that he believed the hypothetical back-tested
performance data was “actual”, and the “only hypothetical part” was “how many
dollars would be going into those funds from participants.” Exhibit P2 (Richard
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Rawson Dep. 197:16–198:15).
Response: Objection. The cited deposition testimony was subject to a form
objection, due to the vagueness of the meaning “hypothetical performance” and
“hypothetical analysis,” and Plaintiffs’ counsel did not cure that objection. The
hypothetical back-tested performance data was an actual analysis based on
hypothetical numbers, since the tactical overlay did not exist at that time. Thus, Mr.
Rawson’s testimony refers to this being an actual analysis, but based on hypothetical
numbers regarding “how many dollars” would be used in the analysis. In addition,
the fact contains only partial quotations from Mr. Rawson’s deposition testimony.
Pursuant to Fed. R. Evid. 106, the entirety of Mr. Rawson’s deposition testimony on
this topic should be considered. In particular, Plaintiffs’ counsel asked: “So you
believe it’s appropriate to rely on hypothetical performance history in making
investment decisions on behalf of 401(k) participants?” Mr. Rawson answered: “I’m
not the investment advisor. I mean, I -- all I can do is understand what Reliance was
trying to propose. After an extended period of time, we were satisfied that it was --
it was a good strategy to deploy, and we were happy that Reliance made the decision
to put in a tactical overlay with a Target-Date Fund. That’s all I can remember.”
360. Mr. Rawson did not recall what the AlphaSector Premium Index was.
Exhibit P2 (Richard Rawson Dep. 200:20–22). This was the beta hedge model used
by F-Squared for the Insperity Horizon funds. Exhibit P94 (Depo. Exhibit 70
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(RTCPLEDGER000065700).
Response: Objection. The fact is not material to the Motion. Mr. Rawson’s
current (2018) recollection regarding the name “AlphaSector Premium Index” — six
years after the selection of F-Squared is irrelevant and immaterial to Holdings’
performance of its duty to monitor RTC’s decision to select the Horizon Funds for
the Plan. Rawson Dep at 198:16-199:3 (Exhibit P2).
361. The Trustee’s Report did not provide data on multiple target date fund
providers for comparison purposes or a detailed description of the process that
Reliance Trust used to support the selection of the Insperity Horizon funds. Exhibit
5 [Doc. 134-6]. It also did not provide data reflecting the experience and
qualifications of Reliance Trust in managing asset allocation strategies. Id.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. It is undisputed
that the March 2012 Annual Report did provide data comparisons to other funds.
See 2012 Annual Report (NSP-000011037) at p. 54 (Ex. 5) (“[o]utperformed
JPMorgan by an average 6.1% per year over the trailing 5 year period”). It is also
undisputed that the due diligence memoranda described the process RTC used to
select the Horizon Funds and RTC’s experience in managing similar allocation
strategies. Ex. 71 at pp. 2-4; Ex. 73 at pp. 3-6; Ex. 75 at pp. 3-6; Ex. 77 at pp. 3-6.
It is likewise undisputed that RTC previously identified other target date funds
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offered by “multiple providers” for comparison purposes. E.g., August 31, 2011
Insperity QDIA Review (RTCPLEDGER00414666) (Ex. 65); Ex.71; Ex. 73; Ex. 75;
Ex. 77. Finally, Plaintiffs offer no evidence that the March 2012 Annual Report (Ex.
5) is a full and complete record of what was discussed in this regard between RTC
and Holdings at the Annual Meeting. As explained in the Reply to SF ¶ 96, it is
undisputed that while the Annual Reports served as the foundation of the meetings,
such documents did not reflect the entirety of the discussions. See Studdard Dep. at
156:4-25 (attached hereto as Ex. 97) (“these are, you know, slides that form the basis
of what we discussed [at the annual meeting], so in that regard, they're also talking
points . . . in other words, there was more than just written information being
provided; there was verbal information being provided”). Thus, whether all of this
information was also provided in the March 2012 Annual Report is irrelevant and
immaterial.
362. The Trustee’s Report did not explicitly disclose the identity of F-
Squared as the tactical overlay provider. Id. It also did not disclose the qualifications
of F-Squared or Reliance Trust’s qualifications to manage target date fund strategies.
Id.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The evidence cited does not support the first sentence of
the fact. RTC disclosed the identity of F-Squared in the March 2012 Annual Report.
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NSP-000011037) at pp. 50, 51 (Ex. 5). The second sentence of the fact is not
material to the Motion for the reasons explained in the Response to AMF ¶ 361.
RTC described its qualifications to manage target date fund strategies and the
qualifications of F-Squared in the due diligence memoranda. E.g., Ex. 77 at p. 4
(discussing RTC’s track record of managing fund-of-fund asset allocation models)
and p. 6 (discussing qualifications of F-Squared). Thus, whether the qualifications
of F-Squared and RTC were disclosed again in the March 2012 Annual report is
irrelevant and immaterial.
363. Prior to offering the Insperity Horizon funds, Reliance Trust had no
prior experience managing a target date fund solution. See Exhibit P95 (Mark
Teichner Depo. 80:12–83:2).
Response: Objection. The fact is not material to the Motion. Plaintiffs do
not claim that RTC mismanaged the target date aspects of the Horizon Funds, nor
do they claim that the subsequent performance of the Horizon Funds relates in any
way to RTC’s lack of experience in managing a target date fund. In response to a
question regarding RTC’s experience in creating and overseeing the internal tactical
glide path, Mr. Teichner answered: “We had not done it before, but it was well inside
our capabilities.” Id. at 82:18–83:2.
364. Mr. Herink did not recall ever being provided data on other Reliance
Trust collective investment trusts that utilized F-Squared as an advisor. See generally
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Exhibit P4 (Daniel Herink Dep. 252:2–7).
Response: Objection. The fact is not material to the Motion. As a matter of
law, the duty to monitor does not require the monitoring fiduciary to duplicate the
work of the fiduciary they have appointed. E.g., Howell, 633 F.3d at 573. Thus, Mr.
Herink’s lack of current recollection regarding the data provided on F-Squared (six
years after the selection of F-Squared) is irrelevant and immaterial. Further, it is
undisputed that RTC disclosed that it was working with F-Squared “in another
collective trust mandate [which] also gave the Investment Management Group
additional insight into the strategy . . .”). Ex. 77 at p. 6.
365. Reliance Trust did not prepare a manager search report that documented
the target date funds that were considered and the quantitative and qualitative data
comparing those alternatives prior adding the Insperity Horizon funds in the Plan.
See Exhibit 5 [Doc. 134-6].
Response: Objection. The term “manager search report” is vague and
ambiguous. The fact is also not material to the Motion. There is no genuine dispute
that RTC did prepare, at Holdings’ request, due diligence memoranda that described
their search and comparison efforts. The memoranda explained that RTC did search
and consider all other funds then available in the market to see if any were
comparable to the Horizon Funds, but found no other fund that combined similar
low costs and a tactical overlay with active down-market management protection.
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See Second Update Memorandum (NSP-000040862-68) at p. 3 (Ex. 75) and Third
Update Memorandum (NSP-000068624-30) at p. 3 (Ex. 77). In addition, it is
undisputed that RTC prepared the March 2012 Annual Report that Plaintiffs cite,
and it contains data comparing the Horizon Funds to other fund options. It is also
undisputed that RTC considered and compared data in their initial efforts to identify
a lower cost, better risk option for the Plan in August 2011. August 31, 2011
Insperity QDIA Review (RTCPLEDGER00414666) (Ex. 65). Thus, whether RTC
also prepared a document specifically titled “manager search report” is irrelevant
and immaterial.
366. Mr. Rawson did not conduct any investigation into F-Squared’s
qualifications to serve as the tactical overlay provider for the Insperity Horizon
funds. Exhibit P2 (Richard Rawson Dep. 163:22–164:9). There is no record
evidence that Holdings or anyone acting on its behalf conducted an investigation
into the qualifications of F-Squared prior to the inclusion of the Insperity Horizon
funds in the Plan.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. As a matter of
law, the duty to monitor does not require the monitoring fiduciary to duplicate the
work of the fiduciary they have appointed. E.g., Howell, 633 F.3d at 573. RTC was
the fiduciary with the responsibility for investigating the qualifications of F-Squared,
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and there was no requirement for Holdings to duplicate this work. In addition, the
evidence cited does not support the fact. In the cited deposition testimony, Mr.
Rawson testified only that “I did not personally go do the research because I have a
team that helps me do that.” Rawson Dep. at 163:22-164:9 (Exhibit P2). Mr.
Rawson also specifically noted that “Mr. Stanton and I had some dialogue about this
and, you know, he’s on my team and I rely on him to give me information . . .” Id.
367. On June 3, 2013, Mr. Rawson met with representatives of F-Squared to
discuss a joint marketing effort for the Insperity Horizon funds. Exhibit P96 at 7
(Depo. Exhibit 147 (NSP-000023681) at *687); Exhibit P2 (Richard Rawson Dep.
162:22–165:12). This was the first time that Mr. Rawson had met with F-Squared.
Exhibit P2 (Richard Rawson Dep. 163:8–12).
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. The meeting
referenced in these documents occurred more than a year after RTC made its
decision to select the Horizon Funds for the Plan. Therefore, this meeting is
obviously unrelated to that decision or Holdings’ efforts to monitor that decision.
As a matter of law, the duty to monitor does not require the monitoring fiduciary to
duplicate the work of the fiduciary they have appointed. E.g., Howell, 633 F.3d at
573. Thus, it is immaterial that Mr. Rawson did not meet with F-Squared before
June 2013. Moreover, the potential marketing of the Horizon Funds to others is
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irrelevant and immaterial. Plaintiffs offer no evidence that such marketing ever
occurred, or that mere discussions of whether to conduct such marketing had any
impact on Holdings’ performance of its duty to monitor.
368. As of June 2013, Mr. Stanton was not familiar with F-Squared. Exhibit
P97 (Depo. Exhibit 146 (NSP-000020027)); Exhibit P96 at 1 (Depo. Exhibit 147
(NSP-000023681) at *681) (noting F-Squared as the creators of the Insperity
Horizon funds).
Response: Objection. The fact is not material to the Motion. Whether Mr.
Stanton was “familiar” with F-Squared before June 2013, or recalled that they were
providing advice to RTC in connection with the Horizon Funds in June 2013, is not
material to Holdings’ monitoring efforts in 2011 and 2012 concerning RTC’s
decision to select the Horizon Funds for the Plan. In addition, the evidence cited
does not support the fact. Plaintiffs provide no evidence that the cited handwritten
note on Exhibit P96 was authored by Mr. Stanton (indeed, Mr. Rawson was the
custodian of this document). Regardless, even if Mr. Stanton wrote the cited
handwritten note, it does not establish that Mr. Stanton was not familiar with F-
Squared as of June 2013, and Plaintiffs apparently neglected to ask Mr. Stanton this
question during his deposition and cannot now use that failure to create a disputed
issue of fact. Similarly, Exhibit P97 does not establish that Mr. Stanton was not
familiar with F-Squared as of June 2013. This email correspondence does not
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include any statements by Mr. Stanton regarding his knowledge of F-Squared.
369. Effective November 15, 2012, the Insperity Horizon Risk-Managed
target date funds were added to the Plan, which replaced the J.P. Morgan
SmartRetirement funds. Exhibit P98 (Depo. Exhibit 21
(RTCPLEDGER00154476)); Exhibit P99 (Insperity 401(k) Plan Form 5500 (2012),
Notes to Fin. Stmt. at p. 10); Exhibit 6 at 34 [Doc. 134-7].
Response: Conceded that the Court may consider the evidence cited for
purposes of summary judgment.
370. The transfer of Plan assets was completed on November 16, 2012.
Exhibit P100 at 39 (RTCPLEDGER00379427 at *465).
Response: Conceded that the Court may consider the evidence cited for
purposes of summary judgment.
371. The J.P. Morgan target date funds were included in the Plan after
Reliance Trust conducted a target date manager search in February 2010 that
screened available target date fund managers based on objective quantitative and
qualitative criteria. Exhibit P42 (Depo. Exhibit 36 (RTCPLEDGER00218470)).
Response: Objection. The fact is not material to the Motion. There is no
genuine dispute that RTC’s search process that led to its decision to select the
Horizon Funds for the Plan included a similar search for objectively comparable
options, and the conclusion that none existed. See Second Update Memorandum
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(NSP-000040862-68) at p. 3 (Ex. 75) and Third Update Memorandum (NSP-
000068624-30) at p. 3 (Ex. 77). There is likewise no genuine dispute that the
existing J.P. Morgan target date funds were not collective investment trusts, and thus
were significantly more expensive than the Horizon Funds. See SF ¶ 120 [Doc. 134]
discussing Ex. 62 (Mr. Harlow’s June 24, 2011 e-mail suggested a new target date
fund with low-cost, passive funds would significantly reduce the expense ratio from
what participants paid for the J.P. Morgan target date funds). The J.P. Morgan target
date funds also did not include a tactical overlay that provided active management
to reduce risk in down markets. See Reply to SF 131 (noting that based on Exhibit
P42, managers for the J .P. Morgan target date funds used “tactical moves, but only
very small ones” and “management’s tactical bets are fairly constrained”).
Moreover, the target date manager search in February 2010 did not include
consideration of collective investment trusts or custom funds. Thus, comparison of
the search process in 2010 to the subsequent, very different, search process in 2011
and 2012 is irrelevant and immaterial.
372. The manager search report noted that the J.P. Morgan target date funds
consisted of a “glidepath designed based on real life 401(k) participant behavior”
and had strong underlying funds with a “broadly diversified exposure to investment
strategies that charged “low expense ratios.” Id. at *472.
Response: Objection. The fact is not material to the Motion for the reasons
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stated in the Response to AMF ¶ 371. In addition, the evidence cited does not
support the fact. The reference to “low expense ratios” appears in discussions of the
TIAA-CREF Lifecyle and American Funds Target Date funds, but not in any
discussions of the J.P. Morgan target date funds. The remainder of the quoted
language does not appear in the cited document.
373. It also recognized that J.P. Morgan target date funds used a tactical
allocation component. Id. at *472, *481.
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Response to AMF ¶ 371. In addition, the evidence cited does not
support the fact. With respect to the J.P. Morgan target date funds, the cited
document notes that “the managers make tactical moves, but only very small ones”
and “management’s tactical bets are fairly constrained and internal.” Exhibit P42 at
3, 12.
374. The Plan’s IPS effective March 2010 specified the criteria for placing
an investment on watch and a thorough review and analysis be conducted “when one
or more of the following are determined to be a factor that may adversely impact
investment performance”:
1. A manager performs below median for their peer group over a 1-, 3-
and 5-year cumulative period.
2. A manager’s 3-year risk adjusted return (Alpha and/or Sharpe) falls
below the peer group’s median risk adjusted return.
3. There is a change in the professionals managing the portfolio.
4. There is a significant decrease in the product’s assets.
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5. There is an indication the manager is deviating from his/her stated
style and/or strategy.
6. There is an increase in the product’s fees and expenses.
7. Any extraordinary event occurs that may interfere with the manager’s
ability to fulfill their role in the future.
Exhibit 41 at 14 (March 2010 IPS) [Doc. 134-39].
Response: Objection. The fact is not material to the Motion. There is
no genuine dispute that RTC decided to replace the J.P. Morgan target date
funds with the Horizon funds for reasons other than poor performance and/or
any of the cited criteria. E.g., March 2012 Annual Report (NSP-000011037)
at p. 36 (Ex. 5). Specifically, there is no genuine dispute that RTC selected
the Horizon Funds because they charged lower fees and included a tactical
overlay that provided active risk management in down markets. Id.
Nonetheless, the Insperity Defendants concede that Plaintiffs have accurately
quoted the specified IPS.
375. The Trustee’s Report incorporated these factors from the IPS under
“Manager Selection/Monitoring Process”. E.g., Exhibit 5 at 27 [Doc. 134-6]
(incorporating criteria in Trustee’s Report).
Response: Objection. The fact is vague and ambiguous in using the term
“incorporated these factors” and also with regard to what specific Annual Reports
are being included. The fact is also not material to the Motion. These factors were
not the basis for RTC’s decision to replace the J.P. Morgan target date funds with
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the Horizon Funds, and thus they are irrelevant and immaterial. See, e.g., March
2012 Annual Report (NSP-000011037) at p. 36 (Ex. 5).
376. Prior to the addition of the Insperity Horizon funds in 2012, other Plan
investments were placed on watch due to poor performance prior to their removal
from the Plan. Exhibit 4 at 32–33 [Doc. 134-5]; Exhibit 5 at 34–35 [Doc. 134-6].
Response: Objection. The fact is not material to the Motion. There was no
requirement for RTC to put a Plan investment on the watch list due to poor
performance prior to removal from the Plan. See, e.g., November 2012 IPS (NSP-
000010927) (Ex. 42). Plaintiffs do not cite any authority that the J.P. Morgan target
date funds were required to be on the watch list prior to removal. Moreover, there
is no genuine dispute that the J.P. Morgan target date funds were not removed from
the Plan due to poor performance, but replaced by the Horizon Funds for other
reasons. Specifically, there is no genuine dispute that RTC selected the Horizon
Funds because they charged lower fees and included a tactical overlay that provided
active risk management in down markets. E.g., March 2012 Annual Report (NSP-
000011037) at p. 36 (Ex. 5). Plaintiffs do not cite any authority disputing that these
are valid reasons for replacement of an investment. Thus, whether, when and how
any other Plan investments were placed on the watch list is irrelevant and immaterial
to the issue of whether the J.P. Morgan target date funds should have been placed on
the watch list prior to removal.
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377. In particular, the J.P. Morgan target date funds were added to the Plan
in 2010. Exhibit 4 at 32 [Doc. 134-5]. They replaced the Fidelity Freedom Funds
after those funds “were put on watch in Q1 2009 due to poor performance” and were
“no longer best-in-class”. Id. Reliance Trust noted that the J.P. Morgan funds had
“Strong underlying funds” and “Low expense ratios”, among other highlighted
factors. Id.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion for the reasons
stated in the Response to AMF ¶ 376. In addition, the removal of the Fidelity
Freedom Funds and the addition of the J.P. Morgan target date funds is not at issue
in this case and thus is irrelevant and immaterial.
378. Prior to their removal, the J.P. Morgan target date funds were never
placed on watch. Exhibit P95 (Mark Teichner Dep. 197:13–198:4); Exhibit 5 at 37
[Doc. 134-6]; Exhibit 6 at 34 [Doc. 134-7].
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Response to AMF ¶ 376. There is no genuine dispute that RTC decided
to replace the J.P. Morgan target date funds with the Horizon funds for reasons other
than poor performance and/or any of the cited criteria. E.g., March 2012 Annual
Report (NSP-000011037) at p. 36 (Ex. 5). Specifically, there is no genuine dispute
that RTC selected the Horizon Funds because they charged lower fees and included
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a tactical overlay that provided active risk management in down markets. Id.
Plaintiffs do not cite any authority disputing that these are valid reasons for
replacement of an investment. In addition, the evidence cited does not support the
fact. Mr. Teichner testified that “I don’t recall if we had formally put the JPMorgan
target date funds on watch.” Teichner Dep. at 198:5-13 (Exhibit P95).
379. Reliance Trust did not have any concerns related to the performance of
the funds. Exhibit P95 (Mark Teichner Depo. 198:5–199:8, 203:4–10).
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Responses to AMF ¶¶ 376 and 378.
380. In May 2011, the J.P. Morgan target date funds were upgraded to “top-
tier” by Morningstar. Exhibit P101 (Depo. Exhibit 78 (RTCPLEDGER00157951)).
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Responses to AMF ¶¶ 376 and 378.
381. The inception date of the Insperity Horizon funds was November 13,
2012. Exhibit P102 (NSP-000090291).
Response: Conceded that the Court may consider the evidence cited for
purposes of summary judgment.
382. At the time they were added to the Plan, the Insperity Horizon funds
did not have a reported performance history. Id.; Exhibit 5 at 54 [Doc. 134-6]
(reporting hypothetical back-tested performance).
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Response: Objection. The fact is not material to the Motion. There is no
genuine dispute that the Horizon Funds were new, custom funds. Plaintiffs’
criticism of the lack of performance history would mean that a plan could never add
a custom fund, since such funds are, by their very nature, new funds without a prior
performance history. Plaintiffs do not cite any authority that such custom funds are
impermissible investment products for a plan. See EMP. BENEFITS SEC. ADMIN.,
U.S. DEP’T OF LABOR, Target Date Retirement Funds – Tips For ERISA Plan
Fiduciaries (2013) (noting “custom” [target date funds] may offer advantages to
your plan participants by giving you the ability to incorporate the plan's existing core
funds”). Moreover, Plaintiffs misrepresent the nature of the Horizon Funds. The
Horizon Funds were composed of investment funds and products with performance
histories. E.g., Harlow Dep. at 59:6-15 (attached hereto as Ex. 93) (“all the
underlying funds had performance [histories]”). Thus, while the Horizon Funds as
a whole did not have a performance history, the individual component funds did
have a reported performance history. Id.
383. The Plan’s IPS specified criteria that Reliance Trust must apply when
selecting an investment option for the Plan. Exhibit 41 at 11 [Doc. 134-39]. The
March 2010 IPS stated that for “Minimum Track Record”, “[t]he investment
portfolio’s inception date will normally be greater than three years.” Id. This criteria
specifically applied to target date funds. Id. at 12.
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Response: Objection. The fact is not material to the Motion. The March
2010 IPS was not in effect at the time that the Horizon Funds were added to the Plan.
Ex. 42. In addition, the evidence cited does not support the fact. The cited language
is not a requirement but instead only a criteria for consideration (with the track
record only “normally” greater than three years). Ex. 41 at 11.
384. Effective November 2012, Reliance amended the IPS, including the
minimum track record for fund selection. Exhibit 42 at 11 [Doc. 134-40]. The
amended IPS provided that a minimum track record “normally be greater than three
years. For asset allocation funds using a fund-of-funds structure, this restriction may
be relaxed as long as the majority of the underlying funds have at least a three year
track record”. Id.
Response: Conceded that the Court may consider the evidence cited for
purposes of summary judgment.
385. The November 2012 IPS maintained the performance objectives and
watchlist criteria, including the requirement to monitor fund performance “over a 1-
, 3-, and 5-year cumulative period”. Id. at 15.
Response: Objection. The reference to “performance objectives” is vague
and ambiguous. The fact is also not material to the Motion for the reasons stated in
the Responses to AMF ¶¶ 376 and 378. In addition, the evidence cited does not
support the fact. The IPS does not contain a “requirement to monitor fund
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performance ‘over a 1-, 3-, and 5-year cumulative period.’” Ex. 42 at 15. Instead,
the IPS simply provides that a fund “may” be placed on the watch list if “[a] manager
performs below median for their peer group over a 1-, 3- and 5-year cumulative
period” and that factor “adversely impact[s] investment performance.” Id.
386. Mr. Rawson testified that it would be difficult to monitor a fund under
the terms of the IPS without a performance history. Exhibit P2 (Richard Rawson
Dep. 177:5–10).
Response: Objection. The fact is not material to the Motion. There is no
claim that RTC or the Insperity Defendants breached their respective duties in
connection with RTC’s monitoring of the Horizon Funds’ performance after they
were added to the Plan. Rather, the claim here is that RTC allegedly breached its
duties, and that Holdings allegedly failed to monitor RTC, in connection with RTC’s
decision to replace the J.P. Morgan target date funds with the Horizon Funds. In
addition, the evidence cited does not support the fact. In the cited deposition
testimony, Mr. Rawson simply agreed with the question: “You would agree that it
would be difficult to monitor a manager over a one-, three-3, and five-year
cumulative period if that manager had no prior performance history, correct?” Id.
Thus, Mr. Rawson did not testify that it would be “difficult to monitor a fund under
the terms of the IPS without a performance history,” but rather only that it would be
difficult to monitor a manager’s performance over the prior 1-5 years if there was
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no performance history.
387. In advance of the March 14, 2012 annual Trustee’s meeting, Reliance
Trust sent a draft of the IPS effective November 2012 reflecting changes to the
minimum track record to Mr. Stanton. Exhibit P103 (RTCPLEDGER00156254 and
RTCPLEDGER00156255). Reliance Trust asked Mr. Stanton, in relevant part, “if
there’s anything you think should be added.” Id. (RTCPLEDGER00156254).
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion for the reasons
stated in the Responses to AMF ¶¶ 382-384. Plaintiffs do not cite any authority that
the amendment of the IPS was illegal or invalid. Other than being further evidence
of Holdings’ monitoring of RTC, it is irrelevant and immaterial that RTC sent a draft
of the revised IPS to Mr. Stanton and asked for his input.
388. On June 15, 2012, Dan Pollina, Insperity’s in-house counsel, raised
concerns regarding the requirement under the IRS Revenue Ruling 81-100 that
collective investment funds have multiple employers participating in the trust in
order to maintain the tax-exempt status of the collective investment fund. Exhibit
P104 (Depo. Exhibit 29 (NSP-000071468)). Without at least two separate
participating plans in those funds, the tax exempt status of the Plan would be at
“significant risk.” Id. He noted that “Legal is unable to support a recommendation
to move forward absent further clarification” on this issue. Id.
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Response: Objection. The fact is not material to the Motion. Plaintiffs do
not (and cannot) claim that the requirement under IRS Revenue Ruling 81-100 was
not met with regard to the Horizon Funds before they were added to the Plan. Thus,
other than being further evidence of Holdings’ monitoring of RTC, it is irrelevant
and immaterial that Mr. Pollina wanted to ensure that the requirements under IRS
Revenue Ruling 81-100 were met.
389. Reliance Trust and Holdings entered into an Indemnity Agreement on
October 31, 2012. Exhibit P105 (Depo. Exhibit 30 (NSP-000032784)). Richard
Rawson signed the agreement on behalf of Holdings. Id. at *787. In order to meet
the multiple employers participation requirement” under IRS Revenue Ruling 81-
100, Reliance Trust agreed to cause its own employees’ 401(k) plan invest in the
“Risk-Managed Target Date Funds”, the same group collective investment trust as
the Insperity Horizon funds. Id. at *784.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. Plaintiffs do not
cite any authority that the Indemnity Agreement was illegal or improper. Thus, other
than being further evidence of efforts by Insperity’s legal department to protect the
Plan’s tax exempt status, it is irrelevant and immaterial that RTC and Holdings
entered into the Indemnity Agreement.
390. In 2014, Reliance Trust was acquired by FIS. Exhibit P84 (Nicholas
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Cotter Dep. 172:22–173:13). Following the acquisition, FIS replaced the Risk-
Managed target date funds in Reliance Trust employees’ 401(k) plan with the
Vanguard target date funds. Id. 172:22–175:9. This occurred while the Plan still
invested in the Insperity Horizon funds. Id.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. The fact that
RTC was acquired by FIS years after the decision and related facts at issue is
irrelevant and immaterial. In addition, the migration of the investments in RTC’s
plan to FIS’s plan following such acquisition is irrelevant and immaterial. It is
common practice for an acquiring company to merge the acquired company’s
defined contribution plan into its own, rather than administer two separate plans. See
https://www.kiplinger.com/article/investing/T001-C032-S014-how-a-merger-or-
acquisition-affects-your-401k.html (“highly probable” for a company’s plan to be
merged into the acquiring company’s plan in a stock sale). Moreover, Plaintiffs do
not assert any claim, and offer no evidence of anyone ever asserting any claim, that
the retention of the Horizon Funds after the merger of the RTC plan with the FIS
plan actually adversely impacted the Plan or its tax exempt status. In that regard,
Plaintiffs offer no evidence, or any facts, regarding what other plans may have
invested in the Horizon Funds after their addition to the Plan and RTC’s plan. In
addition, the evidence cited does not support the fact. In the cited deposition
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testimony, Mr. Cotter testified that the Horizon Funds “were in the plan until FIS
acquired Reliance Trust and the -- the plan was, basically, changed, migrated over
to the FIS plan.” Cotter Dep. at 172:22-173:5 (attached hereto as Ex. 95). Thus,
FIS did not “replace” the Horizon Funds in RTC’s plan, but rather merged RTC’s
plan with the FIS plan (at which point, the only available investment options were
those in the FIS plan). Id. These facts are irrelevant to Holdings’ performance of
its duty to monitor RTC, including RTC’s selection and retention of the Horizon
Funds.
391. The Insperity Horizon funds were removed from the Plan and replaced
with the American Funds Target Date Retirement Funds effective June 28, 2017.
Exhibit P106 (INSPERITY-PLTF-0000740); Exhibit 10 at 24 [Doc. 134-11].
Response: Conceded that the Court may consider the evidence cited for
purposes of summary judgment.
392. Reliance Trust referred to the American Funds target date fund series
as “a traditional, more strategic target date fund”. Exhibit 10 at 24 [Doc. 134-11].
Response: Objection. The fact is not material to the Motion. Plaintiffs have
not asserted any claims regarding the selection of the American Funds Target Date
Retirement Series (or dispute that such selection was prudent and in the interest of
participants). This fact is irrelevant to Holdings’ performance of its duty to monitor
RTC’s selection and retention of the Horizon Funds. The Insperity Defendants also
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note that the cited document speaks for itself and contains additional information
regarding the selection of the American Funds Target Date Retirement Series. E.g.,
id. at pp. 27-30. Pursuant to Fed. R. Evid. 106, the entirety of the March 2017
Annual Report should be considered.
393. Mr. Rawson testified that the American Funds target date funds did not
use a tactical overlay model. Exhibit P2 (Richard Rawson Dep. 199:12–16).
Response: Objection. The fact is not material to the Motion. Plaintiffs have
not asserted any claims regarding the selection of the American Funds Target Date
Retirement Series (or dispute that such selection was prudent and in the interest of
participants). This fact is irrelevant to Holdings’ performance of its duty to monitor
RTC’s selection and retention of the Horizon Funds.
394. Schiff Hardin prepared a legal memorandum for Reliance Trust on
December 8, 2011. Exhibit 69 [Doc. 134-67]. Schiff Hardin advised Reliance Trust
that it would commit a prohibited transaction by investing assets of the Plan in a
proprietary trust fund that Reliance maintains unless it meets the §408(b)(8)
prohibited transaction exemption requiring, in part, that “the Plan document
expressly authorizes Reliance to do so, or another Plan fiduciary, such as a Plan
investment committee, authorizes Reliance to do so”. Id. at 5.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The evidence cited does not support all of these facts. The
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Schiff Hardin Memorandum confirmed that ERISA’s prohibited transaction rules
“allow[] Reliance, as discretionary trustee of the Plan, to invest assets of the Plan in
a collective trust fund that Reliance maintains” so long as certain criteria are met.
Id. Thus, the Schiff Hardin Memorandum did not advise RTC “that it would commit
a prohibited transaction” but rather stated the opposite—that there would be no
prohibited transaction if certain criteria were met. The document speaks for itself in
this regard. Pursuant to Fed. R. Evid. 106, the entirety of the Schiff Hardin
Memorandum should be considered.
395. The First Amendment to the Trust Agreement amended Sections 1.8
and 5.3 effective November 15, 2012 to authorize Plan investment in proprietary
collective investment trusts maintained by Reliance Trust. Exhibit 85 [Doc. 134-83]
(Section 1.8 inserted “collective investment funds…that a bank or trust company
maintains (including collective investment funds or group trusts that the Trustee
maintains)”, and Section 5.3 inserted investments “(including, if applicable, the
Trustee or any affiliate of the Trustee)”).
Response: Conceded that the Court may consider the evidence cited for
purposes of summary judgment.
396. The First Amendment to the Trust Agreement was not fully executed
until January 2013. Exhibit P47 (Depo. Exhibit 150 (NSP-000047505), and Depo.
Exhibit 151 (NSP-000047506); Exhibit P48 (NSP-000040710 and NSP-
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000040712) (email and attached amendment).
Response: Objection. The fact is not material to the Motion. Section 8.1 of
the Trust Agreement explicitly provides that “any such amendment by its terms may
be retroactive.” Ex. 2. Here, the First Amendment to the Trust Agreement was
effective January 1, 2012 (with certain sections effective at later dates). It is
irrelevant and immaterial that the document was not fully executed until January
2013. Thus, this fact is irrelevant to Holdings’ performance of its duty to monitor
RTC’s selection and retention of the Horizon Funds, except to the extent it confirms
Holdings’ intent, as Plan sponsor, to ensure the requirements of the prohibited
transaction exemption were met by a change in the Plan documents as discussed in
the Schiff Hardin Memorandum (Ex. 69).
397. The Board of Holdings did not adopt the First Amendment to the Trust
Agreement through a unanimous written consent, as it had done for the Second
Amendment to the Trust Agreement. Exhibit P49 (Depo. Exhibit 154 (NSP-
000032853)).
Response: Objection. The fact is not material to the Motion. There was no
requirement for a unanimous written consent. Plaintiffs do not cite any authority
that a unanimous written consent was required, nor do they contend, or have standing
to contend, that the amendment was invalid or improper as a result of this fact. Thus,
whether a unanimous written consent was signed is irrelevant and immaterial.
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V. Plaintiffs’ expert Jania Stout
398. Jania Stout was retained by Plaintiffs’ counsel to provide expert
testimony related to Defendants’ administration of the Plan. Exhibit P157 (March
1, 2018 Expert Report of Jania Stout)(hereinafter “Stout Rpt.”).
Response: Objection. The fact is not material to the Motion. Ms. Stout’s
opinions should be excluded for the reasons stated in the Stout Daubert Motion.
399. Ms. Stout has over 22 years of experience in the retirement plan
industry. Stout Rpt. ¶4. She has worked at several service providers that provided
recordkeeping and administrative services to defined contribution plans. Id. She has
served as an investment advisor providing consulting services to clients under 29
U.S.C. §1002(21) and as an investment manager under 29 U.S.C. §1002(38) with
the discretion to make investment selections. Id. ¶¶4–11. She has direct knowledge
of the administrative and recordkeeping services provided by a PEO organization
that provided administrative outsourcing solutions to worksite employees, similar to
the Insperity arrangement. Id. ¶¶5–6. She also has knowledge of administrative and
recordkeeping services provided by other third-party service providers, including
Fidelity and a third-party administrator for over 100 defined contribution plan
clients. Id. ¶¶8, 11.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. Ms. Stout’s
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claimed experience is irrelevant and immaterial because most of her experience is
unrelated to the issues in this litigation. Plaintiffs assert that Ms. Stout “has direct
knowledge of the administrative and recordkeeping services provided by a PEO
organization” and refer to her employment with Automatic Data Processing, Inc.
Stout Rep. ¶¶ 5-8 (Exhibit P157). However, this experience was strictly a sales role.
Id.; Stout Dep. at 104:13-106:2 (attached hereto as Ex. 103). Indeed, for her first 13
years in the “retirement plan industry,” Ms. Stout performed strictly a sales role for
recordkeepers/third party administrators. Id. She first began offering advice to
fiduciaries regarding investments less than 10 years ago, and only in the last three
years did she advise “seventeen-ish” plan fiduciaries regarding their duty to monitor
a 3(38) investment manager, which is her only experience advising fiduciaries
regarding the duty to monitor. Id. at 106:13-107:10. Of those approximately
seventeen plans, none had plan assets greater than “about 75 million” dollars (as
compared to the Plan here with over $2.7 billion in assets). Id. Thus, Ms. Stout’s
experience in the fiduciary duty to monitor issues involved here is limited to the last
few years and involves only significantly smaller plans. In sum, these roles do not
qualify her to opine on the legal issue of whether Holdings fulfilled its fiduciary duty
to monitor RTC. Ms. Stout’s opinions should also be excluded for the additional
reasons stated in the Stout Daubert Motion.
400. Ms. Stout currently is managing director and co-founder of Fiduciary
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Plan Advisors, which is a firm that advises clients on fiduciary governance. Id. ¶11.
The firm serves as both a §1002(21) advisor and as an §1002(38) investment
manager. Id.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Response to AMF ¶ 399
and the Stout Daubert Motion. In addition, she has never been a monitoring
fiduciary—the role Holdings had here. Stout Dep. at 69:20-23 (attached hereto as
Ex. 103). In sum, these roles do not qualify her to opine on the legal issue of
Holdings’ performance of its fiduciary duty to monitor in this matter.
401. She is the Vice President of the National Association of Plan Advisors
(“NAPA”), which is the voice of the retirement plan advisory community. Id. ¶12.
She previously provided testimony before Congress, and was named the 2016
Retirement Plan Advisor of the Year. Id. ¶¶13–14.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Response to AMF ¶ 399
and the Stout Daubert Motion. Plaintiffs offer no evidence to support the role of
NAPA in the retirement plan advisory community other than Ms. Stout’s self-
serving statement, and Ms. Stout’s testimony before Congress had nothing to do with
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the issues in this litigation. In sum, these facts do not qualify her to opine on the
legal issue of Holdings’ performance of its fiduciary duty to monitor in this matter.
402. She provides fiduciary training of plan sponsors and was part of the
committee who created test questions for the Certified Plan Fiduciary Advisory
designation. Id. ¶¶15–16.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Response to AMF ¶ 399
and the Stout Daubert Motion. These roles do not qualify her to opine on the legal
issue of Holdings’ performance of its fiduciary duty to monitor in this matter.
403. Based on her extensive experience in the industry, Ms. Stout opined
that Holdings failed to institute a proper plan governance structure. Id. ¶¶135–38.
Response: Objection. The fact is not material to the Motion, and the fact is
an inadmissible legal opinion with regard to Holdings’ performance of its fiduciary
duties under the Plan, as more fully explained in the Stout Daubert Motion.
Moreover, Ms. Stout does not have “extensive experience in the industry” for the
reasons stated in the Responses to AMF ¶¶ 399-402, and thus has no basis to opine
as to what would constitute “proper plan governance structure.”
404. Despite accepted fiduciary best practices, id. ¶¶28–32, Ms. Stout
observed that Holdings never established a retirement plan committee tasked with
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fiduciary duty to monitor Reliance Trust, never adopted a written charter to delineate
the roles and responsibilities of the Directors of Holdings, never kept formal meeting
minutes, and only met on an annual basis to carry out its monitoring duties. Id. ¶¶28–
29, 135–36; Exhibit P158 (April 2, 2018 Rebuttal Report of Jania Stout, “Stout
Rebuttal”, ¶¶14, 18–19).
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Response to AMF ¶ 403
and the Stout Daubert Motion. Ms. Stout’s views of “accepted fiduciary best
practices,” which she equates with the legal issue of prudence under ERISA § 404(a),
are unsupported by any authority or source other than herself, (e.g., Stout Rep. at ¶¶
28, 43, 135 (Exhibit P157)) and are contrary to the law which does not impose any
set standard formula or procedure for performing the limited duty to monitor. See
29 C.F.R. § 2509.75-8, Q&A FR-17. In addition, Ms. Stout admitted in her
deposition that a named fiduciary may act through a board of directors rather than a
“committee” (and that the DOL has expressly approved this structure). Stout Dep.
at 183:2-15 and 433:12-436:8 (attached hereto as Ex. 103). Ms. Stout offers no
authority for the requirement that a board of directors of a corporate entity adopt a
“written charter,” and since she has no experience advising a board of directors
monitoring an ERISA § 3(38) investment manager (like RTC), she has no experience
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to support this particular opinion. See Stout Rep. at ¶ 32 (Exhibit P157); Stout Dep.
at 455:22-24 (attached hereto as Ex. 103). Moreover, there is no authority
suggesting that monitoring activity has to be recorded in written minutes, and Ms.
Stout’s opinion that “if it wasn’t in the notes, it didn’t happen” is contrary to common
sense and Fed. R. Evid. 602. Stout 317:13-22; see also id. at 413:21-424:9. Finally,
Ms. Stout’s statement that Holdings’ Board “only met on an annual basis to carry
out its monitoring duties” is a statement of fact (not an expert opinion) that is
contradicted by the undisputed evidence of record. E.g., SF ¶¶ 84, 88, 90, 103-118
[Doc. 134].
405. In her experience, a plan fiduciary documents the fiduciary process and
meets quarterly with the discretionary trustee with responsibility to make investment
selections to obtain sufficient information to allow the fiduciary to understand and
evaluate the actions of the delegated fiduciary. Id.¶¶38–39, 135–36.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 403
and 404 and the Stout Daubert Motion. Moreover, there is ample documentation of
the diligent and frequent monitoring activities of Holdings in the record that Ms.
Stout admittedly ignored in forming her opinions. E.g., SF ¶¶ 84, 88, 90, 103-118
[Doc. 134]; Stout Dep. at 166:20-167:22 (attached hereto as Ex. 103). Finally, Ms.
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Stout admitted in her deposition that a board of directors monitoring a fiduciary
committee with investment authority should meet in person on an “annual basis.”
Id. at 76:6-19.
406. Ms. Stout opined that the only reliable source for evaluating whether a
fiduciary employed a prudent fiduciary process is based on a review of the materials
that were prepared for and considered by the fiduciaries in carrying out their duties.
Stout Rebuttal ¶¶11–19, 23.
Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 403
and 404 and the Stout Daubert Motion. In addition, the fact is vague and ambiguous.
While unclear, it appears that the fact is attempting to argue that the Annual Reports
are the only reliable source for evaluating Holdings’ monitoring of RTC. However,
there is ample documentation of the diligent and frequent monitoring activities of
Holdings in the record that Ms. Stout ignored in forming her opinions. E.g., SF ¶¶
84, 88, 90, 103-118 [Doc. 134]; Stout Dep. at 166:20-167:22 (attached hereto as Ex.
103).
407. Ms. Stout opined that Holdings failed to prudently monitor Reliance
Trust prior to the selection of the Insperity Horizon funds. Stout Rpt. ¶¶21, 139–145.
Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 403
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and 404 and the Stout Daubert Motion. In addition the fact is an inadmissible legal
opinion with regard to Holdings’ performance of its fiduciary duties under the Plan,
as more fully explained in the Stout Daubert Motion. Such legal opinions are
unsupported by any authority or source other than herself. E.g., Stout Rep. at ¶¶ 21,
139-145 (Exhibit P157). Moreover, there is ample documentation of the diligent
and frequent monitoring activities of Holdings with regard to RTC’s selection of the
Horizon Funds in the record that Ms. Stout ignored in forming her opinions. E.g.,
SF ¶¶ 133-163 [Doc. 134].
408. In her experience, a prudent fiduciary who has hired a discretionary
trustee meets with the trustee on a quarterly basis to review the trustee’s actions,
receives detailed information during the quarterly meetings to enable the fiduciary
to understand and evaluate the trustee’s actions, and prior to an investment decision,
receives a detailed manager search report to demonstrate that a rigorous and prudent
process was followed. Id. ¶¶37–41.
Response: Objection. The term “manager search report” is vague and
ambiguous. The fact does not comply with LR 56.1.B.(1) because it contains
multiple facts. The facts are not material to the Motion, and Ms. Stout’s opinions
should be excluded for the reasons stated in the Responses to AMF ¶¶ 403 and 404
and the Stout Daubert Motion. The fact is an inadmissible legal opinion on the legal
issue of what is required to fulfill fiduciary duties as a matter of law, as more fully
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explained in the Stout Daubert Motion. Such legal opinions are unsupported by any
authority or source other than herself. E.g., Stout Rep. at ¶¶ 37-41 (Exhibit P157).
Moreover, there is ample documentation of the diligent and frequent monitoring
activities of Holdings in the record that Ms. Stout ignored in forming her opinions.
E.g., SF ¶¶ 84, 88, 90, 103-118, 133-163 [Doc. 134]; Stout Dep. at 166:20-167:22
(attached hereto as Ex. 103). Finally, Ms. Stout admitted in her deposition that a
board of directors monitoring a fiduciary committee with investment authority
should meet in person on an “annual basis.” Id. at 76:6-19.
409. She opined that Holdings failed to obtain fundamental information to
enable a prudent fiduciary to determine that Reliance Trust conducted appropriate
due diligence prior to the selection of the Insperity Horizon funds. Id. ¶¶135–145;
Stout Rebuttal ¶¶32–33, 45, 48.
Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 403
and 404 and the Stout Daubert Motion. In addition, Ms. Stout’s statement that
“Holdings failed to obtain fundamental information” is a statement of fact (not an
expert opinion) that is contradicted by the undisputed evidence of record. E.g., SF
¶¶ 133-163 [Doc. 134]. The fact is also an inadmissible legal opinion on the legal
issue of what is required to fulfill fiduciary duties as a matter of law, as more fully
explained in the Stout Daubert Motion. Such legal opinions are unsupported by any
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authority or source other than herself. E.g., Stout Rep. at ¶¶135–145 (Exhibit P157);
Stout Rebuttal at ¶¶32–33, 45, 48 (Exhibit P158).
410. She opined that had the Directors of Holdings been provided with
detailed information and a comparison of other target date funds, they would not
have allowed Reliance Trust to move forward with the Insperity Horizon funds.
Stout Rebuttal ¶¶49–52.
Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 403
and 404 and the Stout Daubert Motion. In addition, Ms. Stout’s statement regarding
the alleged inadequate information provided to the Directors of Holdings is a
statement of fact (not an expert opinion) that is contradicted by the undisputed
evidence of record. E.g., SF ¶¶ 133-163 [Doc. 134]. This opinion is also
inadmissible because it is pure speculation with regard to hypothetical facts.
411. She also opined that a prudent fiduciary would not have allowed
Reliance Trust to amend the Plan’s IPS that governed Plan investment selections to
permit the investment in newly created, proprietary target date funds. Id. ¶53.
Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 403
and 404 and the Stout Daubert Motion. The fact is also an inadmissible legal opinion
on the legal issue of what is required to fulfill fiduciary duties as a matter of law, as
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more fully explained in the Stout Daubert Motion. Such legal opinions are
unsupported by any authority or source other than herself. E.g., Stout Rebuttal at ¶
53 (Exhibit P158). Plaintiffs do not cite any authority that the amendment of the IPS
was improper, illegal, or invalid. Since Ms. Stout has no experience with the
addition of custom target date funds to a retirement plan, or an amendment of an IPS
that would permit investment decisions that are in the participants’ interest, her
opinion in this regard is inadmissible. Stout Dep. at 109:24-110:8 and 206:10-24
(attached hereto as Ex. 103).
412. In her experience acting as fiduciary with discretion to make investment
selections, her firm presents a thorough manager search report to the client that
outlines the quantitative and qualitative data to assist the client in conducting
appropriate oversight, including a comparison of historical performance, risk metrics
and fees across candidates. Stout Rpt. ¶¶40–41, 140.
Response: Objection. The term “manager search report” is vague and
ambiguous. The fact is not material to the Motion, and Ms. Stout’s opinions should
be excluded for the reasons stated in the Responses to AMF ¶¶ 403 and 404 and the
Stout Daubert Motion. Moreover, Ms. Stout does not have sufficient “experience
acting as fiduciary” to offer the opinion at issue for the reasons stated in the
Responses to AMF ¶¶ 399-402. Since Ms. Stout has no experience with custom
target date funds, her opinion in this regard in inapplicable and inadmissible.
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413. Because the Insperity Horizon funds were the QDIA in the Plan, this
increased the level of oversight that should have been conducted by Holdings. Stout
Rpt. ¶142; Stout Rebuttal ¶¶51–52.
Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 407
and 408 and the Stout Daubert Motion. There is ample documentation of the diligent
and frequent monitoring activities of Holdings with regard to RTC’s selection of the
Horizon Funds in the record that Ms. Stout ignored in forming her opinions. E.g.,
SF ¶¶ 133-163 [Doc. 134].
414. She opined that a prudent fiduciary would not have permitted Reliance
Trust to select a proprietary target date fund strategy without a sufficient historical
performance history and in light of the Plan’s IPS that required a fund’s performance
to be evaluating under 1-, 3-, and 5-year periods. Stout Rpt. ¶¶143–44; Stout
Rebuttal ¶57.
Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 403
and 404 and the Stout Daubert Motion. The fact is also an inadmissible legal opinion
on the legal issue of what is required to fulfill fiduciary duties as a matter of law, as
more fully explained in the Stout Daubert Motion. Such legal opinions are
unsupported by any authority or source other than herself. E.g., Stout Rep. at ¶¶
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143-44 (Exhibit P157); Stout Rebuttal at ¶ 57 (Exhibit P158). In addition, the IPS
does not contain a requirement to monitor fund performance over a 1-, 3-, and 5-
year cumulative period. Instead, the IPS simply provides that a fund “may” be
placed on the watch list if “[a] manager performs below median for their peer group
over a 1-, 3- and 5-year cumulative period” and that factor “adversely impact[s]
investment performance.” Ex. 42 at 15.
415. Given the acknowledged conflict of interest in selecting the Insperity
Horizon Funds, Ms. Stout opined that such conflict of interest should have been
avoided. Stout Rebuttal ¶¶43–44.
Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 407
and 408 and the Stout Daubert Motion. In addition, the fact is an inadmissible legal
opinion that is directly contradicted by the prohibited transaction rules, and
exemptions thereto, which specifically permit fiduciaries to receive fees for
providing services to investments they select for a plan. E.g., 29 U.S.C. §
1108(b)(8). Moreover, Plaintiffs cannot defeat summary judgment by identifying a
potential conflict of interest; rather, they must demonstrate that such conflicts
actually influenced the Plan’s fiduciaries’ decisions. See Evans v. Bexley, 750 F.2d
1498, 1499–500 (11th Cir. 1985) (internal citations omitted). Plaintiffs have not
done so here.
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416. Ms. Stout opined that Reliance Trust and Holdings failed to prudently
assess the reasonableness of the recordkeeping and administrative fees charged to
the Plan. Stout Rpt. ¶¶22, 146–50.
Response: Objection. The fact is not material to the Motion. The fact is also
an inadmissible legal opinion on the legal issue of what is required to fulfill fiduciary
duties as a matter of law, as more fully explained in the Stout Daubert Motion. Such
legal opinions are unsupported by any authority or source other than herself. E.g.,
Stout Rep. at ¶¶ 22, 146-50 (Exhibit P157). Ms. Stout has not opined that any
expenses approved by RTC were unnecessary, improper, or unreasonable. SF ¶ 174
[Doc. 134]; Stout Dep. at 140:8-1413 (attached hereto as Ex. 103) and 218:15-20
(Ex. 92). Ms. Stout further offers no opinion that the reimbursed expenses were
unreasonable or improper in the aggregate. Stout Dep. at 139:21-141:3 (attached
hereto as Ex. 103). In addition, Holdings hired RTC to independently assess the
reasonableness of Retirement Services’ expense reimbursements from the Plan.
E.g., SF ¶¶ 41-42 [Doc. 134]. Ms. Stout’s opinions should also be excluded for the
additional reasons stated in the Stout Daubert Motion.
417. She concluded that a prudent fiduciary would have entered into a
written agreement with Retirement Services and negotiated a fixed amount for
recordkeeping and administrative services. Id. ¶146; Stout Rebuttal ¶¶66–67.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
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it contains multiple facts. The facts are not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Response to AMF ¶ 416
and the Stout Daubert Motion. The fact is also an inadmissible legal opinion on the
legal issue of what is required to fulfill fiduciary duties as a matter of law, as more
fully explained in the Stout Daubert Motion. In addition, Ms. Stout’s opinion in this
regard is contrary to established law. 29 U.S.C. § 1108(b)(2) allows a plan to make
“reasonable arrangements” with a party in interest (including a fiduciary) “for
services necessary for the establishment or operation of the plan, if no more than
reasonable compensation is paid.” There is no genuine dispute that a “reasonable
arrangement” for the provision and reimbursement of expenses existed between the
Plan and Retirement Services. E.g., SF ¶¶ 41-65 [Doc. 134]. Finally, allowing
Retirement Services to receive “a fixed amount for recordkeeping and administrative
services” would have been potentially illegal under ERISA’s prohibited transaction
rules, which permit fiduciaries to only receive reimbursement of direct expenses
“properly and actually incurred,” with no profit or overhead included. 29 U.S.C. §
1108(b)(2) and (c)(2). Ms. Stout acknowledged she is unfamiliar with the prohibited
transaction rules and the law that is applicable to her opinion on this issue. Stout
Dep. at 54:4-56:6 (attached hereto as Ex. 103).
418. This would have enabled the Plan fiduciaries to control the amount of
expenses charged to the Plan. Stout Rpt. ¶147.
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Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 416
and 417 and the Stout Daubert Motion.
419. A prudent fiduciary would have considered all sources of compensation
to Retirement Services to prudently assess the reasonableness of Retirement
Services’ total compensation. Id.¶148.
Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 416
and 417 and the Stout Daubert Motion. The fact is also an inadmissible legal opinion
on the legal issue of what is required to fulfill fiduciary duties as a matter of law, as
more fully explained in the Stout Daubert Motion. Such legal opinions are
unsupported by any authority or source other than herself. E.g., Stout Rep. at ¶ 148
(Exhibit P157). In addition, the fact that certain fees are paid by client companies
to cover expenses that the Plan could not legally pay is not material to what the Plan
paid and whether what the Plan paid is reasonable for the services provided. Mr.
Geist admitted at his deposition that the customer service fees paid by client
companies (not the Plan) should not have been included in his calculation of the
Plan’s recordkeeping reimbursements for purposes of comparison to his hypothetical
numbers. SF ¶¶ 190-192 [Doc. 134]; Geist Dep. at 154:24-158:10 (attached hereto
as Ex. 102).
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420. Based on her experience in the requirement industry and working for a
PEO that provided recordkeeping and administrative services, Ms. Stout observed
that there are qualified service providers in the marketplace that are capable of
providing the same or better recordkeeping and administrative services to the Plan.
Id. ¶150.
Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Response to AMF ¶ 416
and the Stout Daubert Motion. In addition, Ms. Stout’s claim that there are other
qualified service providers who could provide recordkeeping and administrative
services to the Plan is irrelevant and immaterial. Ms. Stout offers no details or
specific information to support her opinion that others in the industry could provide
“better” services. Moreover, Ms. Stout does not have sufficient “experience” to
offer the opinion at issue for the reasons stated in the Responses to AMF ¶¶ 399-
402.
421. The Trustee’s Reports provided limited information on Plan expenses.
Stout Rebuttal ¶34.
Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Response to AMF ¶ 416
and the Stout Daubert Motion. In addition, the fact is a statement of fact (not an
expert opinion) that is contradicted by the undisputed evidence of record. E.g., SF
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¶ 93, 95 [Doc. 134]. The Trustee Reports speak for themselves.
422. Through 2013, the reports did not identify revenue sharing applied to
each investment, the total expense ratio by fund, or compare the fund expense ratios
to peer groups and appropriate benchmarking sources. Stout Rebuttal ¶33; Exhibit 3
[Doc. 134-04]; Exhibit 4 [Doc. 134-05]; Exhibit 5 [Doc. 134-06]; Exhibit 6 [Doc.
134-07].
Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 416
and 421 and the Stout Daubert Motion. In addition, the evidence cited does not
support the fact. Paragraph 33 of Ms. Stout’s Rebuttal Report concerns the length
of the annual meetings, and not the contents of the Annual Reports. Moreover, the
fact that the format of RTC’s PowerPoint presentation changed over the Class Period
is not material. The presentations before 2013 identified the amount of
recordkeeping and trustee expenses. E.g., SF ¶ 93, 95 [Doc. 134]. RTC also still
confirmed that the Plan’s expenses were reasonable and in line with expenses for
plans that required similar services each year, based on its benchmarking analysis
and the 401(k) Averages Book. Id. Moreover, there is ample documentation of the
diligent and frequent monitoring activities of Holdings in the record that Ms. Stout
ignored in forming her opinions. E.g., SF ¶¶ 84, 88, 90, 103-118 [Doc. 134].
423. In her opinion, reporting data on total Plan expenses is not enough as a
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prudent fiduciary must fully understand and assess the expenses paid by the Plan.
Stout Rpt. ¶50; see also ¶¶51–53 (citing sources).
Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 416,
421, and 422 and the Stout Daubert Motion. The fact is also an inadmissible legal
opinion on the legal issue of what is required to fulfill fiduciary duties as a matter of
law, as more fully explained in the Stout Daubert Motion. Moreover, there is ample
documentation of the diligent and frequent monitoring activities of Holdings in the
record that Ms. Stout ignored in forming her opinions. E.g., SF ¶¶ 84, 88, 90, 103-
118 [Doc. 134].
424. In her experience, and as confirmed by cited sources, a prudent
fiduciary would have conducted a competitive bidding process to obtain a reasonable
fee for the desired level of services provided to the Plan at least every three years,
particularly when Holdings had a direct conflict of interest in maintaining its own
subsidiary as the Plan’s recordkeeper. Id. ¶¶22, 47–48, 150.
Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Response to AMF ¶¶ 415
and 416 and the Stout Daubert Motion. The fact is also an inadmissible legal opinion
on the legal issue of what is required to fulfill fiduciary duties as a matter of law, as
more fully explained in the Stout Daubert Motion. Further the one “cited source”
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does not support Stout’s opinion. The one cite that Ms. Stout relies upon states that
“plans normally conduct requests for proposal (RFPs) from service providers at least
once every three to five years.” Stout Rep. at ¶ 48 (Exhibit P157). But this is not in
any way a directive or guidance for plan sponsors or the industry as a whole. A
closer examination of this quote reveals this is a completely tangential statement
regarding an estimate of “time [that] will be required to update the disclosures”
required under a new DOL Employee Benefit Plan Security Agency (EBSA) rule in
2010.8 The source says nothing about conducting an RFP process in the context of
an in-house recordkeeper, as is the situation here. Plaintiffs do not cite any authority
that a competitive bidding process for recordkeeping services was required during
the Class Period, and it would have been impractical to conduct such an RFP for this
Plan. See Scheinberg Rep. at ¶¶ 75-77 (Ex. 11).
425. If a retirement plan is difficult to benchmark, she opined that the only
reliable method to assess the reasonableness of the fees charged for recordkeeping
and administrative services is to engage in a competitive RFP process. Id. ¶47.
Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 416
and 424 and the Stout Daubert Motion.
8 Reasonable Contract or Arrangement Under Section 408(b)(2) — Fee Disclosure,
75 FR 41600, 41632 (July 16, 2010).
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426. Without conducting an RFP search process, coupled with the Insperity
Defendants’ expert acknowledgement that there are no “readily available sources”
to evaluate the cost components of Retirement Services, Exhibit 11 ¶81 [Doc. 134-
12], Ms. Stout opined that Holdings could not determine that the fee charged for
recordkeeping and administrative services was reasonable. Stout Rebuttal ¶73.
Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 416
and 424 and the Stout Daubert Motion.
427. Ms. Stout opined that a prudent fiduciary would not rely solely on
publicly available benchmarking surveys reporting total plan cost, such as the 401(k)
Averages Book. Stout Rebuttal ¶¶50, 51–52 (citing sources). This survey reporting
total plan cost is an inherently unreliable source to assess fees paid by participants.
Stout Rpt. ¶149.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Response to AMF ¶ 416
and the Stout Daubert Motion. The fact is also an inadmissible legal opinion on the
legal issue of what is required to fulfill fiduciary duties as a matter of law, as more
fully explained in the Stout Daubert Motion. In addition, there is no legal authority
suggesting that more than one type of fee benchmarking data should have used by
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RTC, or that it was improper to use the 401(k) Averages Book. Indeed, the 401(k)
Averages Book “is the only resource book available for non-biased, comparative
401k average cost information.”9
428. In her opinion, a prudent fiduciary tasked with monitoring the actions
of another fiduciary charged with determining the reasonableness of Plan expenses
would not conclude that a proper evaluation had been conducted based on this
limited information. Stout Rebuttal ¶¶35–36.
Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 416
and 427 and the Stout Daubert Motion. The fact is also an inadmissible legal opinion
on the legal issue of what is required to fulfill fiduciary duties as a matter of law, as
more fully explained in the Stout Daubert Motion. Such legal opinions are
unsupported by any authority or source other than herself. E.g., Stout Rebuttal at ¶¶
35-36 (Exhibit P158).
429. Ms. Stout also opined that when designing an investment lineup for a
401(k) plan, a fiduciary would provide investment options with the lower-cost of
participation to plan participants. Stout Rpt. ¶53. There is a strong preference for
non-revenue sharing, institutional share-class investments. Id. ¶55.
9 https://www.plansponsor.com/book-reveals-wide-range-of-401k-plan-fees/ (“It’s
designed to provide financial professionals and plan sponsors with essential 401k
cost benchmarking information.”).
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Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Response to AMF ¶ 416
and the Stout Daubert Motion. Further, there is no legal requirement to select only
“non-revenue sharing, institutional share-class investments.” E.g., Hecker, 556 F.3d
at 586. This is particularly true here, where the Plan’s use of share classes with
revenue sharing did not result in increased costs or “fees” for participants, but instead
successfully avoided the need to charge participant accounts an additional fee to
cover any revenue shortfall. See SF ¶¶ 70 [Doc. 134]. Ms. Stout provides no
authority to support this opinion. Ms. Stout’s opinions should also be excluded for
the additional reasons stated in the Stout Daubert Motion.
430. By using institutional share classes with no revenue sharing and
charging Plan participants the actual expenses for recordkeeping and administrative
services, Ms. Stout opined that Plan participants would have been directly charged
the actual expenses incurred by Retirement Services for providing these services.
Stout Rebuttal ¶64. Because Plan participants were not allocated all excess revenue
sharing, Plan participants paid higher expenses than were necessary for Plan
services. Id. ¶63.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion, and Ms. Stout’s
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opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 416
and 429 and the Stout Daubert Motion. In addition, as excess revenue in the revenue
sharing account accumulated over time, it was periodically reallocated to
participants. SF ¶ 76 [Doc. 134]. Ms. Stout and Plaintiffs do not offer any authority
to support any requirement to reallocate the excess revenue sharing more frequently
than it was done, nor do they offer any authority to suggest there was anything
improper or impermissible with maintaining a small “buffer” amount in the revenue
sharing account.
431. In her experience, fiduciaries for defined contribution plans do not
maintain an excess buffer account of revenue sharing but negotiate the rebate of
excess revenue sharing in full to Plan participants. Stout Rebuttal ¶69.
Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinion should be excluded for the reasons stated in the Response to AMF ¶ 430 and
the Stout Daubert Motion.
432. The Plan’s design afforded inherent administrative efficiencies to the
recordkeeper that would have allowed a recordkeeper to charge far lower fees for
the same or similar services provided to the Plan than those than that would be
charged in the smaller plan market segment. Stout Rpt. ¶¶23, 151–57.
Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinion should be excluded for the reasons stated in the Response to AMF ¶ 416 and
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the Stout Daubert Motion. In addition, the fact is immaterial because the
benchmarking analyses performed by Mr. Scheinberg, which Plaintiffs and Ms.
Stout do not contradict, demonstrated that the reimbursed expenses were far lower
than would have been charged in the smaller plan market. SF ¶ 175 [Doc. 134];
Scheinberg Rep. at ¶¶ 65, 82 (Ex. 11).
433. These efficiencies related to a single payroll feed, limited compliance
testing due to the Plan’s safe harbor provisions, limited customization by covered
entities, and standardized reporting. Id.
Response: Objection. The fact is not material to the Motion, and Ms. Stout’s
opinions should be excluded for the reasons stated in the Response to AMF ¶ 416
and the Stout Daubert Motion. In addition, the fact is immaterial for the reasons
stated in the Response to AMF ¶ 432.
VI. Plaintiffs’ expert Michael Geist
434. Plaintiffs’ counsel retained Michael Geist to provide expert testimony
related to the Insperity Defendants’ administration of the Plan, and to the
recordkeeping and administrative fees charged to the Plan. Exhibit P163 (April 10,
2018 Corrected Expert Report of Michael Geist, “Geist Rpt.”, ¶1).
Response: Objection. The fact is not material to the Motion. Mr. Geist has
not opined that any expenses approved by RTC were unnecessary, improper, or
unreasonable. SF ¶ 173 [Doc. 134]; Geist Dep. at 183:15-19 (attached hereto as Ex.
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102) and 189:19-22 (Ex. 90). Mr. Geist’s opinions should also be excluded for the
additional reasons stated in the Geist Daubert Motion.
435. Michael Geist has extensive experience with the recordkeeping services
and charges that are provided to defined contribution plans. Geist Rpt. ¶¶4–10. He
was the head of pricing in the Retirement Plan Services division at T. Rowe Price,
which provided recordkeeping services to thousands of retirement plans. Id. ¶¶5–10.
He was involved in over 20,000 pricing proposals and the negotiations of final
recordkeeping compensation arrangements with successful bidders in the RFP
process. Id. ¶¶5–10.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. Mr. Geist’s
opinions in this case are based entirely upon his experience at T. Rowe Price from
2005 to 2016. Geist Rep. at ¶¶ 5-10 (Exhibit P163); Geist Dep. at 45:3-24 (attached
hereto as Ex. 102). But Mr. Geist’s experience at T. Rowe Price was primarily in
“sales” and “marketing,” and not the underwriting analysis he proffers in this case.
See Geist Rep., Ex. 2 (Curriculum Vitae) (Exhibit P163); Geist Dep at. 48:3-52:19
(attached hereto as Ex. 102). Mr. Geist was never an underwriter and never
developed a pricing proposal without the help of underwriters at T. Rowe Price. Id.
at 54:21-62:3. Nor has he ever developed a pricing proposal without T. Rowe Price’s
data and pricing model, which he admittedly did not use or have access to for his
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report. Id. In addition, Mr. Geist has no experience pricing recordkeeping services
for a plan sponsored by a PEO, nor does Geist have any experience pricing a MEP
plan of a similar size to the Plan. Id. at 66:21-67:3 and 68:23-71:4. Mr. Geist has
also never priced a plan for a sponsor with in-house recordkeeping operations. Id.
at 71:5-18. Thus, Mr. Geist’s purported experience is irrelevant and immaterial. Mr.
Geist’s opinions should also be excluded for the additional reasons stated in the Geist
Daubert Motion.
436. He describes that plan fiduciaries engage in a competitive bidding
process for recordkeeping services and the following negotiations result in plans
obtaining the lowest cost for the level of recordkeeping services they desire. Id.
¶¶42–51. Recordkeeping fees are negotiated on a fixed dollar amount per participant
(or “revenue requirement”), because the cost of recordkeeping varies with the
number of participants, not the amount of assets in a plan. Id. ¶¶26–41. Because of
economies of scale in providing recordkeeping services to large plans, as the number
of participants increase, the cost per participant decreases. Id.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. Plaintiffs do not
cite any authority that a competitive bidding process for recordkeeping services was
required during the Class Period, and it would have been impractical to conduct such
an RFP for this Plan. See Scheinberg Rep. at ¶¶ 75-77 (Ex. 11). In addition, allowing
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Retirement Services to receive “a fixed dollar amount per participant” for
recordkeeping and administrative services would have been potentially illegal under
ERISA’s prohibited transaction rules, which permit fiduciaries to only receive
reimbursement of direct expenses “properly and actually incurred,” with no profit or
overhead included. 29 U.S.C. § 1108(b)(2) and (c)(2). Moreover, Mr. Geist agrees
that administration for the Plan is more complex, time consuming, and expensive
than for a single employer plan of a similar size. SF ¶ 177 [Doc. 134]. Mr. Geist’s
opinions should also be excluded for the additional reasons stated in the Geist
Daubert Motion.
437. Mr. Geist applied his knowledge and understanding of the process he
applied during his tenure at T. Rowe Price when developing a pricing proposal for a
401(k) plan client prospect when determining the reasonable fee for recordkeeping
and administrative services performed by Retirement Services. Id. ¶¶15–16, 80–102;
Exhibit P164 (April 10, 2018 Corrected Rebuttal Report of Michael Geist, “Geist
Rebuttal”, ¶¶24–28).
Response: Objection. The fact is not material to the Motion, and Mr. Geist’s
opinions should be excluded for the reasons stated in the Response to AMF ¶ 435
and the Geist Daubert Motion.
438. He explained that he would first begin with a baseline fee for a standard
product offering for a 401(k) plan with similar participants with account balances,
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cash flows and average account balance. Geist Rpt. ¶80. He would then evaluate the
specific characteristics of the prospect plan based on the unique plan demographics
and service requirements, and then adjust the price accordingly. Id.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion, and Mr. Geist’s
opinions should be excluded for the reasons stated in the Response to AMF ¶ 435
and the Geist Daubert Motion. Moreover, Mr. Geist acknowledged that when he
was at T. Rowe Price, he had T. Row Price’s data available to identify his “baseline
fee.” Geist Dep. at 54:21-62:3 (attached hereto as Ex. 102). In this matter, Mr.
Geist’s “baseline fee” is not based on any benchmarking data, reference to the actual
pricing for any other plan, or any other source – merely his “recollection” and
“experience.” SF ¶ 183 [Doc. 134]; Geist Dep. at 239:10-23 (attached hereto as Ex.
102) (“A. I definitely didn’t use benchmarking probably in the way that you’re using
that phrase, no. Q. You didn’t use -- you didn’t use any objective source of pricing
information from a third party to form your opinions in this case, correct? A. I did –
I did not. I used my knowledge of the marketplace.”). Similarly, while at T. Rowe
Price, Mr. Geist utilized the services of “underwriters” to evaluate the specific
demographics and service requirements of a particular plan and adjust the price
accordingly. Id. at 54:21-62:3. In this matter, Mr. Geist did not have the help of an
underwriter, but is attempting to do what underwriters at T. Rowe Price did. Mr.
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Geist was never such an underwriter while at T. Rowe Price. Id. at 54:24-55:2.
Thus, Mr. Geist lacked the data and experience he needed to form admissible
opinions in this matter.
439. Applying this methodology, Mr. Geist first determined the baseline fee
for standard service levels that would be obtained by a similarly sized plan in terms
of assets and participants compared to the Plan. Geist Rpt. ¶¶86–88; Geist Rebuttal
¶¶26–27.
Response: Objection. The fact is not material to the Motion, and Mr. Geist’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 435
and 438 and the Geist Daubert Motion. Specifically, Mr. Geist lacked T. Rowe
Price’s data to establish a “baseline fee.”
440. He provided objective data on total fees paid by T. Rowe Price 401(k)
plans based on publicly available Forms 5500 filed with the Department of Labor to
validate the range of pricing that could be obtained in the market. Geist Rebuttal ¶27
n. 32; Exhibit P165 (Exhibit 2 to Geist Rebuttal).
Response: Objection. The fact is not material to the Motion, and Mr. Geist’s
opinions should be excluded for the reasons stated in the Response to AMF ¶ 435
and the Geist Daubert Motion. In addition, the evidence cited does not support the
fact. Mr. Geist did not consider the referenced Form 5500 data in forming his
opinions, he only relied upon them in his rebuttal report to Mr. Scheinberg’s
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analysis. Geist Dep. at 107:6-108:19 (attached hereto as Ex. 102). Further, none of
the referenced plans are a PEO plan or MEP, many of the referenced plans paid more
than his purported “baseline fee” in the years at issue, and none of the referenced
plans paid his “baseline fee” for each of the years in question. Geist Rep., Ex. 2
(Exhibit P165). Furthermore, Mr. Geist admits that the Form 5500s may not actually
show the total amounts paid for recordkeeping and administrative services, which is
the key data needed for a valid comparison. Geist Dep. at 270:24-273:9 (attached
hereto as Ex. 102). For example, the Form 5500s do not disclose all indirect
compensation (e.g., revenue sharing) or any direct payments by plan sponsors to
service providers, and thus likely understate the total amount paid. Id. at 262:16-
263:10.
441. Mr. Geist then adjusted this baseline fee to account for incremental
additional services that would be required to administer the Plan. Geist Rpt. ¶¶91–
97. He principally relied on the evidentiary record to support any assumptions used
for these pricing adjustments. Id. ¶¶91–97; Geist Rebuttal ¶¶9–22; Exhibit P166
(Geist Corrected Rebuttal Reliance Spreadsheet).
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion, and Mr. Geist’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 435
and 438 and the Geist Daubert Motion. In addition, Mr. Geist’s “adjustments” are
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based on opinions, such as the average number of meetings per year and the average
number of terminations and mergers of new sub-plans for a similarly sized plan, for
which he has no data or support. SF ¶ 187 [Doc. 134]; Geist Dep. at 368:19-369:18,
370:5-23, 371:8-13, and 366:11-367:24 (attached hereto as Ex. 102). Mr. Geist’s
adjustments are also based on 2014 hours data contained in NSP-000062988 that
was preliminary, not final, 2014 hours data, and it is inaccurate. SF ¶¶ 185-186
[Doc. 134]; Geist Corrected Damages Analysis from Rebuttal Report at pp. 4-8 (Ex.
91); Stanton Aff. at ¶¶ 23-24 (Ex. 17). Thus, the evidence cited does not support
that Mr. Geist “relied on the evidentiary record” in making his “adjustments.”
442. Mr. Geist explained that given the lack of available sources to
benchmark the Plan’s recordkeeping and administrative fees, as admitted by the
Insperity Defendants’ expert, Exhibit 11 ¶81 [Doc. 134-12], the proper method to
determine the reasonableness of the compensation received by Retirement Services
under the circumstances is to conduct a detailed analysis of the pricing for Plan
services that would be followed if recordkeepers in the industry were presented with
an opportunity to bid on the recordkeeping and administrative services provided to
the Plan. Geist Rebuttal ¶24.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion, and Mr. Geist’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 435,
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438, and 441 and the Geist Daubert Motion. In addition, the evidence cited does not
support the fact. Mr. Scheinberg never made the admission insinuated in the fact.
Instead, Mr. Scheinberg simply noted certain resources that provide only total plan
costs (and thus cannot be used to compare the cost of each individual component of
the necessary services that Retirement Services provides to the Plan). Scheinberg
Rep. at ¶ 81 (Ex. 11). Moreover, Geist did not obtain any bids from recordkeepers
in the industry, and thus has no basis to determine, or even opine as to, what those
bids would be.
443. This reasonably replicated a competitive bidding process under the
unique circumstances of the Plan and in accordance with the underwriting process
for pricing of 401(k) plans. Id. ¶25.
Response: Objection. The fact is not material to the Motion, and Mr. Geist’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 435,
438, and 441 and the Geist Daubert Motion. For the reasons explained in response
to AMF ¶ 442, Mr. Geist’s analysis did not “replicate a competitive bidding process
under the unique circumstances of the Plan.” Moreover, Mr. Geist’s analysis is not
“in accordance with the underwriting process for pricing of 401(k) plans.” Mr.
Geist’s analysis was done without the assistance of underwriters, the T. Rowe Price
data or pricing model, or pricing models from any other recordkeepers. Geist Dep.
at 54:21-62:3 and 94:22-96:19 (attached hereto as Ex. 102). Mr. Geist also did not
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use pricing data from any source to conduct his analysis or form his opinions. Id. at
106:2-107:5. Plaintiffs offer no evidence from any source, including Mr. Geist, of
what any other recordkeeper would bid to provide the services Retirement Services
performed for the Plan.
444. From January 1, 2010 through December 31, 2016, and using the S&P
500 index to account for lost investment opportunity, Mr. Geist determined that the
Plan paid $23,323,383 in unreasonable recordkeeping and administrative expenses,
and the total amount paid by the Plan to Retirement Services was $50,732,253. Geist
Rpt. ¶¶98–101. Eliminating any market perception reduction for sub-standard
services provided by Retirement Services, the Plan paid $19,397,536 in
unreasonable recordkeeping and administrative expenses. Geist Rebuttal ¶27.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion, because the
specific amount of any alleged “damages” for “unreasonable expenses” is not at
issue in the Motion. Moreover, the facts are not material to the Motion, and Mr.
Geist’s opinions should be excluded for the reasons stated in the Responses to AMF
¶¶ 435, 438, 441, and 443 and the Geist Daubert Motion. Mr. Geist’s damages model
also contains numerous errors. SF ¶¶ 191 and 197-199 [Doc. 134]. After identifying
and correcting Mr. Geist’s numerous errors and mathematical mistakes (but still
using Mr. Geist’s questionable methodology), Mr. Scheinberg demonstrated that
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Retirement Services’ expense reimbursements are actually lower each year than Mr.
Geist’s “total reasonable fee” for the Plan in each year of the Class Period. Id., SF
¶ 199. Moreover, Mr. Geist did not conduct any analysis of the quality of services
provided by Retirement Services, and he does not have any data to support his
opinion that there should be a “market perception deduction for substandard services
provided by Retirement Services.” See Geist Dep. at 349:7-350:10 (attached hereto
as Ex. 102). Finally, Mr. Geist has not opined that any expenses approved by RTC
were unnecessary, improper, or unreasonable. SF ¶ 173 [Doc. 134]; Geist Dep. at
183:15-19 (attached hereto as Ex. 102) and 189:19-22 (Ex. 90).
445. Mr. Geist explained that one factor that lead to the unreasonable
recordkeeping and administrative expenses charged to the Plan was that Retirement
Services did not have the economies of scale to spread their fixed costs over a larger
participant base. Geist Rpt. ¶¶71, 88.
Response: Objection. The fact is not material to the Motion. Mr. Geist did
not discuss, analyze or consider the amount of “fixed costs” that were reimbursed to
Retirement Services, and therefore has no basis to opine whether the amount of such
fixed costs were unreasonable when “spread” over the number of participants in the
Plan. See Geist Rep. (Exhibit P163). In addition, Mr. Geist ignores the undisputed
fact that Retirement Services was not reimbursed any overhead. Id. Moreover, Mr.
Geist has not opined that any expenses approved by RTC were unnecessary,
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improper, or unreasonable. SF ¶ 173 [Doc. 134]; Geist Dep. at 183:15-19 (attached
hereto as Ex. 102) and 189:19-22 (Ex. 90). In addition, the fact is immaterial
because the benchmarking analyses performed by Mr. Scheinberg, which Plaintiffs,
Mr. Geist, and Ms. Stout do not contradict, demonstrated that the reimbursed
expenses were far lower than would have been charged to provide services to
comparable plans. SF ¶ 178-181 [Doc. 134]; Scheinberg Rep. at ¶¶ 65, 80-82 (Ex.
11); Scheinberg Rebuttal Rep. at ¶¶ 16, 29 (Ex. 12). Mr. Geist’s opinions should
also be excluded for the additional reasons stated in the Geist Daubert Motion.
446. Plan Sponsor reported the number of defined contribution plan
participants with account balances that are recordkept by recordkeepers. Geist Rpt.
¶71. For 2014 and 2015, this data for the top 20 recordkeepers and Retirement
Services is shown in the following chart.10
Rank Recordkeeper 2015 2014
1 Fidelity Investments 18,345,803 17,609,747
2 Empower Retirement 7,581,978 7,072,543
3 Aon Hewitt 5,743,463 5,738,342
4 Transamerica Retirement Solutions 4,783,542 3,470,236
10 See PlanSponsor 2016 Recordkeeping Survey,
https://www.plansponsor.com/research/2016-recordkeeping-survey/7/;
PlanSponsor 2015 Recordkeeping Survey,
https://www.plansponsor.com/research/2015-recordkeeping-survey/7/; Insperity
Retirement Services Provider Profile, 2016:
https://www.plansponsor.com/research/2016-recordkeeping-
survey/8/?pid=24&pname=Insperity-Retirement-Services, 2015:
https://www.plansponsor.com/research/2015-recordkeeping-
survey/8/?pid=27&pname=Insperity-Retirement-Services.
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Rank Recordkeeper 2015 2014
5 Principal 4,693,477 4,350,849
6 Voya Financial 4,482,039 4,886,469
7 TIAA 4,273,578 4,157,383
8 Vanguard 4,186,546 3,857,768
9 Wells Fargo 3,365,668 3,150,344
10 Bank of America Merrill Lynch 3,021,924 2,599,522
11 Prudential Retirement 2,716,680 2,604,192
12 Xerox HR Solutions, LLC 2,657,640 2,677,372
13
John Hancock Retirement Plan Servic
es 2,581,833 2,729,652
14 MassMutual Financial Group 2,462,204 n/r
15 Nationwide 2,190,510 2,192,118
16 VALIC 2,189,600 2,209,281
17 T. Rowe Price 1,878,988 1,875,059
18 ADP Retirement Services 1,573,662 1,554,105
19 Lincoln Financial Group 1,416,850 1,400,314
20 ICMA-RC 1,242,066 n/r
* Insperity Retirement Services 109,380 94,840
Response: Objection. The fact is not material to the Motion, and Mr. Geist’s
opinions should be excluded for the reasons stated in the Response to AMF ¶ 445
and the Geist Daubert Motion.
447. From this data, Mr. Geist noted that other recordkeepers that compete
for the business of large 401(k) plans have between 10 and 185 times more defined
contribution plan participants with account balances on their recordkeeping
platform. Id. ¶¶71, 88. These economies of scale enable competing recordkeepers to
spread fixed costs over a much larger participant base, which would make their
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marginal costs far lower than those of Retirement Services. Id.
Response: Objection. The fact is not material to the Motion, and Mr. Geist’s
opinions should be excluded for the reasons stated in the Response to AMF ¶ 445
and the Geist Daubert Motion. Mr. Geist never actually analyzed Retirement
Services’ “fixed costs,” and thus cannot opine regarding the impact of “economies
of scale” on such costs. See Geist Dep. at 229:15-231:9 (attached hereto as Ex. 102).
. Indeed, Mr. Geist’s analysis supports that Retirement Services’ variable costs far
exceed the fixed costs (and thus the alleged “economies of scale” would be
insignificant) because his “adjustments” (which are based on variable costs) far
exceed his “baseline fee” (which is based on both variable and fixed costs). See
Geist Corrected Damages Analysis from Rebuttal Report (Ex. 91) at p. 1 (executive
summary of damages). Mr. Geist even admitted that Retirement Services is not
reimbursed for many “fixed costs,” and the only such cost he could identify was
SunGard. Geist Dep. at 231:10-238:2. In fact, most of the costs involved in
providing the Plan’s recordkeeping and administrative services are variable and
based on the salaries paid to the individuals providing such services. Retirement
Services Summary by Year (NSPFINANCE-000001-154 ) (Ex. 34) at p. 1 (showing
at every year measured, variable costs comprised primarily of “employee costs”
greatly exceed the “fixed cost” of SunGard and other recordkeeper software).
448. Mr. Geist opined that because Retirement Services did not have the
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scale, the Plan incurred the majority of the expense incurred by Retirement Services
in maintaining their recordkeeping software purchased from Sungard. Id.
Response: Objection. The fact is not material to the Motion, and Mr. Geist’s
opinions should be excluded for the reasons stated in the Responses to AMF ¶¶ 445
and 447 and the Geist Daubert Motion.
449. Mr. Geist notes that Mr. Scheinberg did not account for the
$1,517,660.79 in customer service fees that were received by Retirement Services,
which would increase his calculated per participant fee for the Plan to over $23
higher than TriNet Geist Rpt. ¶29.
Response: Objection. The fact is not material to the Motion. As a matter of
law, the customer service fees are not reported on Form 5500s because they are not
paid by or to the Plan. See, e.g., 2012 Form 550 at p. 5 (Exhibit P99). Mr. Geist
offers no evidence or analysis of whether TriNet also charged its clients additional
fees that would not be included on the Form 5500s for its plan. Moreover, Mr. Geist
admitted at his deposition that the customer service fees paid by client companies
(not the Plan) should not have been included in his calculation of the Plan’s
recordkeeping reimbursements for purposes of comparison to his hypothetical
numbers. SF ¶¶ 190-192 [Doc. 134]; Geist Dep. at 154:24-158:10 (attached hereto
as Ex. 102). Moreover, Mr. Geist has not opined that any expenses approved by
RTC were unnecessary, improper, or unreasonable. SF ¶ 173 [Doc. 134]; Geist Dep.
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at 183:15-19 (attached hereto as Ex. 102) and 189:19-22 (Ex. 90). Mr. Geist’s
opinions should also be excluded for the additional reasons stated in the Geist
Daubert Motion.
VII. Plaintiffs’ expert Dr. Gerald Buetow
450. Plaintiffs’ counsel retained Dr. Gerald Buetow to provide expert
testimony related to Defendants’ selection, monitoring and/or retention of the
Insperity Horizon funds, and to the higher-cost share classes offered in the Plan.
Exhibit P160 (March 1, 2018 Expert Report of Gerald Buetow, ¶1).
Response: Objection. The fact is not material to the Motion. Mr. Buetow’s
opinions do not distinguish between RTC’s role as the fiduciary with the
responsibility for selecting and monitoring the Plan’s investments, versus Holdings’
duty to monitor RTC. See generally Exhibit P160. As a matter of law, the duty to
monitor does not require the monitoring fiduciary to duplicate the work of the
fiduciary it has appointed. E.g., Howell, 633 F.3d at 573. Mr. Buetow does not have
any experience with the duty to monitor, and has never been in a monitoring role
similar to Holdings. Buetow Dep. 295-296, 314:24-315:7, and 316:13-317:12
(attached hereto as Ex. 104). Mr. Buetow’s criticism of the Plan’s share classes also
fails to acknowledge that the revenue sharing from the higher share classes was used
to pay for Plan expenses. Id. at 172:5-21. Given Mr. Buetow’s failure to understand
the proper role of Holdings and the Plan’s use of revenue sharing, his opinions are
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immaterial and inadmissible.
451. Dr. Gerald Buetow has extensive experience in investment
management for defined contribution plans, including due diligence on asset
managers and advising clients on the performance of investment options. Id. ¶¶4–
12. He has authored publications in various academic and practitioner journals. Id.
¶11. Dr. Buetow holds both a CFA and CIPM designations in addition to his formal
education. Id. ¶12.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. Mr. Buetow’s
claimed experience relates to the investment selection expertise that RTC was hired
to provide with respect to the Plan. Mr. Buetow does not have any experience with
the duty to monitor, and has never been in a monitoring role similar to the Insperity
Defendants. Buetow Dep. at 295-296, 314:24-315:7, and 316:13-317:12 (attached
hereto as Ex. 104). While the fact claims that Mr. Buetow “has authored
publications in various academic and practitioner journals,” he admits that he has
never authored any articles on ERISA or related to the duties that Holdings had to
monitor RTC. Id. at 318:2-4 and 318:5-8. Thus, Mr. Buetow’s purported experience
is irrelevant and immaterial.
452. Generally, Dr. Buetow opined that the Plan’s fiduciaries: (1) failed to
properly and loyally assess the reasonableness of selecting and maintain the
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Insperity Horizon funds in the Plan; (2) improperly and disloyally removed the J.P.
Morgan target date funds from the Plan; (3) failed to consider alternative target date
fund alternatives; and (4) included higher-cost share classes of Plan investments. Id.
¶13.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion. In addition, the
fact is an inadmissible legal opinion with respect to the Plan’s fiduciaries’
performance of their fiduciary duties under the Plan. Mr. Buetow erroneously lumps
all of the Insperity Defendants together. Mr. Buetow’s opinions also do not
distinguish between RTC’s role as the fiduciary with the responsibility for selecting
and monitoring the Plan’s investments, versus Holdings’ duty to monitor RTC.
Buetow Rep. at ¶ 13 (Exhibit P160). As a matter of law, the duty to monitor does
not require the monitoring fiduciary to duplicate the work of the fiduciary it has
appointed. E.g., Howell, 633 F.3d at 573. Mr. Buetow does not have any experience
with the duty to monitor, and has never been in a monitoring role similar to Holdings.
Buetow Dep. at 295-296, 314:24-315:7, and 316:13-317:12 (attached hereto as Ex.
104). Mr. Buetow’s criticism of the Plan’s share classes also fails to acknowledge
that the revenue sharing from the higher share classes was used to pay for Plan
expenses. Id. at 172:5-21. Given Mr. Buetow’s failure to understand the proper
role of Holdings and the Plan’s use of revenue sharing, his opinions are immaterial
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and inadmissible.
453. Dr. Buetow opined that prudent fiduciaries ensure that plan participants
are invested in the lowest share class of a selected fund. Id. ¶128.
Response: Objection. The fact is not material to the Motion. In addition, the
fact is an inadmissible legal opinion with respect to the Plan’s fiduciaries’
performance of their fiduciary duties under the Plan. There is no legal requirement
to select only “the lowest share class.” E.g., Hecker, 556 F.3d at 586. This is
particularly true here, where the Plan’s use of share classes with revenue sharing did
not result in increased costs or “fees” for participants, but instead successfully
avoided the need to charge participant accounts an additional fee to cover any
revenue shortfall. See SF ¶¶ 70 [Doc. 134]. Mr. Buetow does not acknowledge that
the revenue sharing from the higher share classes was used to pay for Plan expenses.
Buetow Dep. at 172:5-21 (attached hereto as Ex. 104). Thus, his opinion is
immaterial and inadmissible.
454. Dr. Buetow calculated losses to the Plan as a result of the selection of
the Insperity Horizon funds. Had the Plan fiduciaries selected the J.P. Morgan target
date funds instead of the Insperity Horizon funds, Dr. Buetow calculated total
damages of $83 million. Id. ¶125. Had the Plan’s fiduciaries selected the Vangaurd
target date funds, Dr. Buetow calculated damages of $96 million. Id. ¶126.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
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it contains multiple facts. The facts are not material to the Motion, because the
specific amount of any alleged “damages” for selection of the Horizon Funds is not
at issue in the Motion. In addition, the fact assumes that the Insperity Defendants
were responsible for the selection of the Horizon Funds, which is incorrect (only
RTC was responsible for the selection of the Horizon Funds). Holdings only had
responsibility for monitoring RTC. As a matter of law, the duty to monitor does not
require the monitoring fiduciary to duplicate the work of the fiduciary they have
appointed. E.g., Howell, 633 F.3d at 573. There is ample documentation of the
diligent and frequent monitoring activities of Holdings with regard to RTC’s
selection of the Horizon Funds in the record that Mr. Buetow ignored in forming his
opinions. E.g., SF ¶¶ 133-163 [Doc. 134].
455. Dr. Buetow calculated Plan losses based on the Plan fiduciaries
including higher-cost share classes of the Plan’s investments. Id. ¶127. Had the
Plan’s fiduciaries used the lowest-cost share class available for each investment
option, Dr. Buetow calculated total fee savings of $31 million. Id.
Response: Objection. The facts are not material to the Motion, because the
specific amount of any alleged “damages” related to the Plan’s investments is not at
issue in the Motion. In addition, Mr. Buetow’s calculation does not take into account
that the Plan’s use of share classes with revenue sharing did not result in increased
costs or “fees” for participants, but instead successfully avoided the need to charge
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participant accounts an additional fee to cover any revenue shortfall. See SF ¶¶ 70
[Doc. 134]. Mr. Buetow does not acknowledge that the revenue sharing from the
higher share classes was used to pay for Plan expenses. Thus, Mr. Buetow’s
damages calculation is duplicative of Mr. Geist’s damages calculation.
VIII. Insperity Defendants’ Expert James Scheinberg
456. The Insperity Defendants’ counsel retained James Scheinberg to
express opinions related to the recordkeeping and administrative services provided
by Retirement Services to the Plan. Exhibit 11 ¶10 [Doc. 134-12].
Response: Conceded that the Court may consider the evidence cited for
purposes of summary judgment.
457. Mr. Scheinberg did not offer the opinion that each task performed by
Retirement Services was necessary for the operation of the Plan. Exhibit P54 (James
Scheinberg Dep. 29:10–13).
Response: Objection. The fact is not material to the Motion. Holdings
engaged RTC to review and determine whether to approve all expenses submitted
for reimbursement by Retirement Services as properly payable under ERISA before
they were reimbursed from the Plan’s revenue sharing account. E.g., SF ¶¶ 41-42
[Doc. 134]; Trust Agreement at §§ 3.4 (Ex. 2). As a matter of law, such expenses
must be both reasonable in amount and necessary before they were properly
reimbursable under ERISA. 29 U.S.C. § 1108(b)(2) and (c)(2). Thus, the fact that
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they were reimbursed is, itself, evidence that they were approved as reasonable and
necessary by RTC. Moreover, Plaintiffs have not offered any evidence that any
reimbursed expense was unnecessary for the operation of the Plan. Geist Dep. at
183:15-19 (attached hereto as Ex. 102) and 189:19-22 (Ex. 90); Stout Dep. at 140:8-
141:3 (attached hereto as Ex. 103) and 218:15-20 (Ex. 92).
458. Mr. Scheinberg did not offer the opinion that each expense submitted
by Retirement Services and approved by Reliance Trust was properly and actually
incurred by Retirement Services in performing services for the Plan. Id. 30:24–
31:17.
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Response to AMF ¶ 457. Plaintiffs offer no evidence that any such
expense was not “properly and actually incurred by Retirement Services in
performing services of the Plan.”
459. Mr. Scheinberg did not independently verify each and every submission
for expense reimbursement, which is the only way to determine that the expenses
met the but-for test. Id. 45:23–46:6.
Response: Objection. The fact is vague and ambiguous in its use of the term
“independently verify,” since it does not explain what Plaintiffs suggest Mr.
Scheinberg should have verified about the expenses at issue. The fact is also not
material to the Motion for the reasons stated in the Response to AMF ¶ 457.
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Plaintiffs offer no evidence that any reimbursed expense failed to meet the “but-for
test.”
460. Mr. Scheinberg did not independently verify or evaluate the level of the
salaries that were paid to employees of Retirement Services. Id. 34:4–21.
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Response to AMF ¶ 457. Plaintiffs offer no evidence that any salary
paid to employees of Retirement Services was unreasonable.
461. Mr. Scheinberg did not opine that the expenses submitted by
Retirement Services for reimbursement were direct expenses of the Department of
Labor regulations and only reviewed a “broad sampling of the expenses that were
submitted.” Id. 31:18–32:4.
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Response to AMF ¶ 457. Plaintiffs offer no evidence that any
reimbursed expense was anything other than a “direct expense,” and therefore not
overhead or profit, consistent with the regulations promulgated by the Department
of Labor.
462. Mr. Scheinberg testified that he never used the 401(k) Averages Book
as the sole basis in assessing the reasonableness of recordkeeping and administrative
fees. Id. 89:22–90:10. He has not used the 401(k) Averages Book within the last 10
years. Id. 90:20–24; see also 90:11–19 (“I know we have used the 401(k) book of
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averages back in excess of a decade ago, generally.”).
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The fact is also not material to the Motion for the reasons
stated in the Response to AMF ¶ 457. In addition, there is no legal authority
suggesting that more than one type of fee benchmarking data should have used by
RTC, or that it was improper to use the 401(k) Averages Book. Indeed, the 401(k)
Averages Book “is the only resource book available for non-biased, comparative
401k average cost information.”11 In addition, the evidence cited does not support
the fact. In the cited deposition testimony, Mr. Scheinberg testified that he used the
401(k) Averages Book for benchmarking recordkeeping and administrative fees
charged to clients. Scheinberg Dep. at 89:22–90:10 (Exhibit P54). He also testified
that he did not “recall” using it as the sole basis of assessing reasonableness of fees.
Id. (emphasis added).
463. Mr. Scheinberg concedes that it was “extraordinarily difficult to find or
establish a reasonable benchmark with which to compare the costs of the Plan” and
there “are no known industry resources to benchmark PEO 401(k) plans
specifically.” Exhibit 11 ¶81 [Doc. 134-12]. He also admits that there are not
“readily available sources of data that look at the costs of each individual component
11 https://www.plansponsor.com/book-reveals-wide-range-of-401k-plan-fees/ (“It’s
designed to provide financial professionals and plan sponsors with essential 401k
cost benchmarking information.”).
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of the necessary services that Retirement Services provides to the Plan.” Id.
Response: Objection. The fact does not comply with LR 56.1.B.(1) because
it contains multiple facts. The facts are not material to the Motion for the reasons
stated in the Response to AMF ¶ 457. In addition, the quotes from Mr. Scheinberg
are taken from a discussion regarding certain resources that provide only total plan
costs (and thus cannot be used to compare the cost of each individual component of
the necessary services that Retirement Services provides to the Plan). Scheinberg
Rep. at ¶ 81 (Ex. 11). Pursuant to Fed. R. Evid. 106, the entirety of Mr. Scheinberg’s
Report should be considered.
464. Mr. Scheinberg concedes that “[o]nly total plan costs, or overly broad
administrative and advisory costs are readily available publicly; thus, these resources
are of limited value, generally, in their ability to provide comparative data
specifically for a plan like the Insperity 401(k) Plan, due to its uniqueness.” Id. ¶81.
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Response to AMF ¶ 457. In addition, this quote from Mr. Scheinberg
is taken from a discussion regarding certain resources that provide only total plan
costs (and thus cannot be used to compare the cost of each individual component of
the necessary services that Retirement Services provides to the Plan). Scheinberg
Rep. at ¶ 81 (Ex. 11). Pursuant to Fed. R. Evid. 106, the entirety of Mr. Scheinberg’s
Report should be considered.
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465. In practice, Mr. Scheinberg markets the benefits of conducting an RFP
for recordkeeping services and the value his firm can provide to fiduciaries when
conducting vendor searches on their behalf. Exhibit P107 (Scheinberg Depo.
Exhibit 12).
Response: Objection. The fact is not material to the Motion. Plaintiffs do
not cite any authority that a competitive bidding process for recordkeeping services
was required during the Class Period. Mr. Scheinberg specifically explained how
and why it would have been impractical to conduct an RFP for the services provided
by Retirement Services to this Plan. Scheinberg Rep. at ¶¶ 75-77 (Ex. 11). Mr.
Scheinberg explained: “it is not unreasonable that Holdings did not think that it
needed to embark on a disingenuous RFP exercise, wasting Retirement Services’
peers’ time and their own. Since for-profit entities would have to bid for all costs
plus an expected profit, it was reasonable for Holdings to conclude that Retirement
Services was providing the services at a reasonable cost that was less than what any
other entity would charge for the same services. Based on my experience in the
industry, I would have concluded the same.” Id. at ¶ 77. Furthermore, Exhibit P107
is marketing material from Mr. Scheinberg’s firm’s website. That Mr. Scheinberg’s
firm marketed itself as available to assist with RFPs is irrelevant and immaterial.
466. He advised potential clients to “Check the market routinely.
Benchmarking exercises are fine, but from time to time you need to get real life
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comparisons for your specific plan and its needs. Remember, you don’t know what
you don’t know.” Exhibit P108 at 6 (Scheinberg Depo. Exhibit 10) at slide 28.
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Response to AMF ¶ 465.
467. In other litigation, Mr. Scheinberg opined that “[m]any plans in any
benchmark universes are going to be priced inefficiently (i.e. they’re paying too
much in light of the services received.)” Exhibit P36 (Scheinberg Depo. Exhibit 16,
¶36). He concludes “‘average’ should not be confused with what could be expected
in an average arrangement in the current competitive marketplace.” Id.
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Response to AMF ¶ 465.
468. He also previously testified in other litigation that “I’ve always said that
there are no two plans that are alike, which is why benchmarking is only useful as
information and not as a substitute for going to market.” Exhibit P109 at 39
(Scheinberg Depo. Exhibit 17, p. 39 (139:18–21)).
Response: Objection. The fact is not material to the Motion for the reasons
stated in the Response to AMF ¶ 465.
Dated: September 21, 2018 Respectfully submitted,
ALSTON & BIRD LLP
By: /s/ H. Douglas Hinson
H. Douglas Hinson
Case 1:15-cv-04444-MHC Document 193 Filed 03/11/19 Page 372 of 374
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Georgia Bar No. 356790
doug.hinson@alston.com
Emily Hootkins
Georgia Bar No.858347
emily.hootkins@alston.com
One Atlantic Center
1201 West Peachtree Street
Atlanta, GA 30309-3424
Telephone: (404) 881-7000
Facsimile: (404) 881-7777
and
Emily S. Costin (pro hac vice)
emily.costin@alston.com
David Mohl (pro hac vice)
david.mohl@alston.com
The Atlantic Building
950 F Street, NW
Washington, DC 20004-1404
Telephone: (202) 239-3300
Fax: (202) 239-3333
Counsel for Defendants Insperity, Inc.,
Insperity Holdings, Inc., Insperity
Retirement Services, L.P. and the Insperity
Retirement Plan Committee
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CERTIFICATE OF SERVICE AND TYPE-SIZE COMPLIANCE
Pursuant to Local Rule 5.1, N.D. Ga., the foregoing pleading is prepared in
Times New Roman font, 14 point, and was filed using the CM/ECF system, which
will automatically provide notice to the following attorneys of record by electronic
means:
Bradley S. Wolff
SWIFT CURRIE McGHEE & HEIRS,
LLP
1355 Peachtree St., NE, Suite 300
Atlanta, GA 30309-3231
Jerome Schlichter
Michael Wolff
Troy Doles
Kurt Struckhoff
Heather Lea
Aaron E. Schwartz
Ethan D. Hatch
Scott Andrew Bumb
Stephen M. Hoeplinger
SCHLICHTER BOGARD &
DENTON, LLP
100 South Fourth Street
St. Louis, MO 63012
Counsel for Plaintiffs
William Bard Brockman
BRYAN CAVE, LLP
One Atlantic Center, 14th Floor
1201 West Peachtree St, N.W.
Atlanta, GA 30309-3488
Brian D. Boyle
Shannon M. Barrett
Benjamin Bradshaw
John McDermott
O'MELVENY & MYERS
1625 Eye Street, NW
Washington, DC 20006-4001
Abby Johnston
Stuart Sarnoff
Taylor Simeone
O'MELVENY & MYERS
7 Times Square
New York, NY 10036
Counsel for Defendant Reliance Trust
Company
/s/ H. Douglas Hinson
H. Douglas Hinson
Case 1:15-cv-04444-MHC Document 193 Filed 03/11/19 Page 374 of 374
