Here is a nice article from that sums up the recent opinion out of the Seventh Circuit that I discussed the other day in this post, on the propriety of certifying classes of plan participants in excessive fee cases. The article does a nice job of summing up the findings on that issue, if you don’t want to read the court’s fairly long, but well written analysis of the issue.

One of the impressions you may get from the article is that, in some manner, certifying a class in such a case may be difficult, but I don’t think that is a fair reading of the case or of the events in the litigation itself that gave rise to the ruling. If you think about it, there is little question that each plan participant’s account rises and falls on its own, independent of those of other plan participants to a certain extent, and that harm to one may not be harm to all. However, there is also little question that if there is an overarching problem with the plan that runs across all or many participants’ accounts – such as fees that are too high with certain investment options – that many participants may be injured in the same way and to a similar extent. What the Seventh Circuit’s ruling in Spano suggests, rightfully I think, is that, under these circumstances, one has to think carefully about how a class should be defined and of whom it should consist. There is no reason to draft a broad class definition that simply includes all plan participants, and instead a class should be constructed that is limited to those plan participants who actually invested in the specified investment options that are shown to have had excessive fees or other fiduciary breaches during the time period that the problems existed. That is not a lot to ask to make sure that class action litigation actually serves it purposes and satisfies the procedural and other legal limitations that exist to ensure that it does so, and doesn’t run off the tracks. It certainly requires more thinking, study and analysis of the actual scope of the investment problems at the class certification stage, rather than simply certifying the class and waiting to figure that out during the merits portion of the case, but isn’t that, after all, what class certification discovery exists for?

Just idle musings for a Monday morning.