A class action alleging that BlackRock entities favored their own proprietary funds when selecting investment options for BlackRock’s 401(k) Plan is headed for trial after Judge Haywood S. Gilliam, Jr. denied both parties’ motions for summary judgment on January 12, 2021. Baird v. BlackRock Inst’l. Trust Co., No. 17-1892 (N.D. Cal. Jan. 12, 2021).

BlackRock sought summary judgment on Plaintiffs’ claims for breaches of fiduciary duty. The court denied the motion for several reasons. First, the court held that summary judgment was precluded because a genuine dispute of a material fact existed as to whether BlackRock complied with the Plan’s Investment Policy Statement. Next, the court held that Defendants’ “loss causation” arguments involved weighing the parties’ respective experts and their methodologies, “a task which is inappropriate at the summary judgment stage.”

The court then turned to whether certain of Plaintiffs’ prohibited transaction claims were time-barred because they were not brought within six years after “the date of the last action which constituted a part of the breach or violation.” 29 U.S.C. § 1113(1). BlackRock argued the only relevant transaction for claims based on including a fund in a plan line up is the date the fund is initially added. The court rejected the argument, reasoning that (1) the case law did not support such a broad proposition, and (2) Plaintiffs’ claims were not based solely on including the challenged funds, but also involved the fees paid to BlackRock affiliates.

Finally, the court found that summary judgment was inappropriate on the merits of Plaintiffs’ prohibited transaction claims, maintaining the prohibited transaction exemptions required examination of the reasonableness of compensation received by the Defendants, which required resolution of disputed issues of fact.

The court likewise denied Plaintiffs’ motion for partial summary judgment as to liability. Trial is scheduled to begin on March 1, 2021.