A judge in the U.S. District Court for the District of Southern New York recently denied a motion for class certification filed by the board of trustees of the Southern California IBEW-NECA Defined Contribution Plan against the Bank of New York Mellon and its subsidiaries.
IBEW-NECA is a self-administered welfare trust fund serving electrical workers in Southern California.
The plaintiff had alleged that the custodian bank had violated the Employee Retirement Income Security Act (ERISA) by investing securities-lending cash collateral in allegedly risky notes issued by Lehman Brothers Holdings; and by refusing to sell such notes despite alleged warnings about the lack of liquidity in the credit market and declines in the market value of the investments.
Keith Ugone, managing partner of strategy consultants Analysis Group, which represented the defendants counsel A Boies Schiller & Flexner, filed an expert report, opining on the requirements necessary to certify the class of ERISA-governed plans. A [c]lass-wide approach would obfuscate (or mask) important differences among proposed class members individual investment expectations and tolerances, Dr. Ugone observed in his report, citing differences in the plans maturity guidelines, credit-quality guidelines, prohibited investments, and diversification requirements.
Citing Ugones report in his decision, Judge Richard Berman said the plaintiffs claims failed to meet conditions of numerosity and commonality, because the plaintiff had not established that common questions of law or fact predominate over individual issues. He denied the plaintiffs motion for class certification.
(JDC)