Andrew Albert v. Oshkosh Corporation

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 21‐2789
A NDREW A LBERT ,
Plaintiff‐Appellant,
v.
OSHKOSH C ORPORATION, et al.,
Defendants‐Appellees.
____________________
Appeal from the United States District Court for the
Eastern District of Wisconsin.
No. 1:20‐cv‐00901 — William C. Griesbach, Judge.
____________________
A RGUED J UNE 2, 2022 — D ECIDED A UGUST 29, 2022
____________________
Before EASTERBROOK , ST . EVE , and J ACKSON‐A KIWUMI ,
Circuit Judges.
ST . EVE , Circuit Judge. Andrew Albert claims that his for‐
mer employer, a subsidiary of Oshkosh Corporation, violated
the Employee Retirement Income Security Act by mismanag‐
ing its retirement plan. Albert alleges, among other things,
that Defendants breached their fiduciary duties by authoriz‐
ing the Plan to pay unreasonably high fees for recordkeeping
and administration, failing to adequately review the Plan’s

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2 No. 21‐2789
investment portfolio to ensure that each investment option
was prudent, and unreasonably maintaining investment ad‐
visors and consultants for the Plan despite the availability of
similar service providers with lower costs or better perfor‐
mance histories.
The district court granted Defendants’ motion to dismiss
the complaint and denied Albert’s motion to reconsider.
While this appeal was pending, the Supreme Court issued its
opinion in Hughes v. Northwestern University, 142 S. Ct. 737
(2022), vacating our decision in Divane v. Northwestern Univer‐
sity, 953 F.3d 980 (7th Cir. 2020), and remanding for reevalua‐
tion of the operative complaint. The district court cited Divane
repeatedly in its opinion, albeit not for the proposition that
the Supreme Court rejected in Hughes. As explained below,
we affirm the dismissal of all claims for failure to state a claim.
I. Background
A. Statutory Context
The Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1001 et seq., provides a variety of rem‐
edies to ensure that employees receive benefits they earned
through employer‐provided benefit plans. Id. § 1132. Of rele‐
vance here, ERISA provides a private right of action for
breach of a fiduciary duty. Id. § 1132(a)(2). Plan participants
and beneficiaries may seek monetary relief from a plan fidu‐
ciary for failing to properly oversee a benefits plan. Id. § 1109;
see also id. § 1002(7), (8), (21). The duty of prudence requires a
plan fiduciary to discharge its duties “with the care, skill, pru‐
dence, and diligence under the circumstances then prevailing
that a prudent man acting in a like capacity and familiar with
such matters would use ....” Id. § 1104(a)(1)(B). The duty of

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No. 21‐2789 3
loyalty requires a plan fiduciary to “discharge his duties with
respect to a plan solely in the interest of the participants and
beneficiaries.” Id. § 1104(a)(1).
In a defined contribution plan like Albert’s, “participants’
retirement benefits are limited to the value of their own indi‐
vidual investment accounts, which is determined by the mar‐
ket performance of employee and employer contributions,
less expenses.” Tibble v. Edison Int’l, 575 U.S. 523, 525 (2015);
see 29 U.S.C. § 1002(34).1 Defined contribution plans often pay
a variety of fees in exchange for services that third parties per‐
form.2 Investment‐management fees, for example, compen‐
sate a fund, such as a mutual fund or index fund, for design‐
ing and maintaining the fund’s investment portfolio. Typi‐
cally, investment‐management fees are calculated as a per‐
centage of the money a plan participant invests in a particular
fund, which is known as an expense ratio. “Expense ratios
tend to be higher for funds that are actively managed accord‐
ing to the funds’ investment strategies, and lower for funds
that passively track the makeup of a standardized index, such
as the S&P 500.” Hughes, 142 S. Ct. at 740. Recordkeeping fees
compensate recordkeepers who “track the balances of indi‐
vidual accounts, provide regular account statements, and of‐
fer informational and accessibility services to participants.”
1 By contrast, in a defined benefit plan, “retirees receive a fixed pay‐
ment each month, and the payments do not fluctuate with the value of the
plan or because of the plan fiduciaries’ good or bad investment decisions.”
Thole v. U. S. Bank N.A, 140 S. Ct. 1615, 1618 (2020); see 29 U.S.C. § 1002(35).
2 Our sister circuit has observed, “just as compounding can dramati‐
cally increase the value of a mutual‐fund investment over time, so the
costs of that investment can dramatically eat into that investment over
time.” Smith v. CommonSpirit Health, 37 F.4th 1160, 1163 (6th Cir. 2022).

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4 No. 21‐2789
Id. Recordkeeping fees are assessed either as a flat fee per par‐
ticipant or via an expense ratio.
Sometimes, a portion of the investment‐management fees
collected through an expense ratio goes to the recordkeeper.
This is known as “revenue sharing.” We have explained that
“expense ratios and revenue‐sharing payments [generally]
move in tandem: the higher a given share class’s expense ra‐
tio, the more the fund pays [the recordkeeper] in revenue
sharing.” Leimkuehler v. Am. United Life Ins. Co., 713 F.3d 905,
909 (7th Cir. 2013). A “share class” refers to groups of inves‐
tors who invest in the same investment option. A “retail”
share class pays the same fees as the general public, while an
“institutional” share class pays a discounted rate.
In Hughes, the Supreme Court vacated our decision in Di‐
vane, which dismissed an ERISA complaint alleging misman‐
agement of a defined contribution plan for failure to state a
claim. The plaintiffs alleged, among other things, that the plan
sponsor “breached its fiduciary duties by providing invest‐
ment options that were too numerous, too expensive, or un‐
derperforming.” Divane, 953 F.3d at 991. We held that this
claim failed as a matter of law because the inclusion of low‐
cost investment options in the plan mitigated concerns that
other investment options were imprudent. Id. (“[The availa‐
bility of] the types of funds plaintiffs wanted ... eliminat[ed]
any claim that plan participants were forced to stomach an
unappetizing menu.”). The Supreme Court rejected this por‐
tion of our analysis because “[s]uch a categorical rule is incon‐
sistent with the context‐specific inquiry that ERISA requires
and fails to take into account respondents’ duty to monitor all
plan investments and remove any imprudent ones.” Hughes,
142 S. Ct. at 740 (citing Tibble, 575 U.S. at 530). In Tibble, the

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No. 21‐2789 5
Court similarly explained that “[a] plaintiff may allege that a
fiduciary breached the duty of prudence by failing to
properly monitor investments and remove imprudent ones.”
Tibble, 575 U.S. at 530. That is so even when participants
choose their own investments in a defined contribution plan.
Id. at 529–30.
These principles meant that the categorical rule we ap‐
plied in Divane was improper. Hughes, 142 S. Ct. at 742. The
Court therefore vacated and remanded for us to reconsider
whether the plaintiffs had plausibly alleged a violation of the
duty of prudence in light of Tibble, Bell Atlantic Corp. v.
Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662
(2009). The Court noted, however, that “the circumstances
facing an ERISA fiduciary will implicate difficult tradeoffs,
and courts must give due regard to the range of reasonable
judgments a fiduciary may make based on her experience and
expertise.” Hughes, 142 S. Ct. at 742. The case is still pending
before this court on remand.
Several of the questions presented in this appeal concern
the ramifications of Hughes. According to Defendants, Hughes
“did not radically reinvent this area of law or upend years of
precedent”; it simply reinforced that “ERISA does not allow
the soundness of investments A, B, and C to excuse the un‐
soundness of investments D, E, and F.” Plaintiff, meanwhile,
contends that Hughes renders reliance on any aspect of Divane
improper.
B. Facts
Andrew Albert worked for a subsidiary of Oshkosh Cor‐
poration from January 2018 to April 2020. Oshkosh Corpora‐
tion is a company based in Oshkosh, Wisconsin that

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6 No. 21‐2789
manufactures specialty vehicles and trucks. Oshkosh Corpo‐
ration is the plan sponsor of the Oshkosh Corporation and Af‐
filiates Tax Deferred Investment Plan (“the Plan”). The plan
administrator is the Administrative Committee, which over‐
sees the day‐to‐day administration and operation of the Plan.
Oshkosh selected Fidelity Management Trust Company (“Fi‐
delity”) as the Plan’s recordkeeper and Strategic Advisors,
Inc. (“SAI”) as the Plan’s investment advisor. SAI is a subsid‐
iary of Fidelity, but neither SAI nor Fidelity are defendants
here. According to Albert, the Plan has about $1.1 billion in
assets and over 12,000 participants.
Albert filed this suit individually and as a representative
of a putative class of Plan participants and beneficiaries. As a
former employee, he participated in the Plan, but the
amended complaint does not specify which investment op‐
tions he holds in his individual account. The main thrust of
his complaint is that Oshkosh Corporation, the Oshkosh
Board of Directors, the Plan’s Administrative Committee, and
unknown officers and employees (collectively, “Oshkosh”)
breached their fiduciary duties under ERISA from June 15,
2014, through the date of judgment. At least twenty‐nine of
the Plan’s investment options charge excessive fees because
Oshkosh allegedly failed to engage in a prudent decision‐
making process.
Albert brings nine counts against Oshkosh, which can be
sorted into three buckets: recordkeeping fees (Count I), in‐
vestment‐management fees (Count II), and ancillary claims
(Count III to IX). Count III alleges that Oshkosh breached its
fiduciary duty by paying too much to SAI in the form of in‐
vestment‐advisor fees. While Counts I to III allege breaches of
the duties of prudence and loyalty, only Count III is arguably

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No. 21‐2789 7
relevant to a breach of the duty of loyalty, as explained below.
Counts IV to VI mirror Counts I to III but allege that Oshkosh
failed to monitor other fiduciaries with respect to the Plan’s
fees. Counts VII to IX allege that payment of each category of
fees amounted to a prohibited transaction in violation of 29
U.S.C. § 1106(a)(1)(C). Albert also alleges that Oshkosh failed
to properly disclose these fees, but this claim is not tied to a
specific count.
C. Procedural History
On September 2, 2021, the district court granted Oshkosh’s
motion to dismiss the complaint. At no point did the court
rely on the categorical rule the Supreme Court rejected in
Hughes. First, the district court dismissed Count I (breach of
fiduciary duty for excessive recordkeeping fees) because Al‐
bert’s allegations—that nine purportedly comparable plans
paid less for recordkeeping—did not plausibly “suggest[] that
the fee charged by Fidelity [was] excessive in relation to the
services provided.” Albert v. Oshkosh Corp., No. 20‐C‐901, 2021
WL 3932029, at *5 (E.D. Wis. Sept. 2, 2021). The district court
dismissed Count II (breach of fiduciary duty for excessive in‐
vestment‐management fees), which it divided into two cate‐
gories: share‐class allegations and high‐cost fund allegations.
As to the first category, “Plaintiff’s preference for different
share classes of certain investments is not enough to state a
plausible claim for breach of fiduciary duty.” Id. at *6. The dis‐
trict court noted that the Seventh Circuit “has not addressed
imprudence based on a net investment expense to retirement
plans theory,” but this lack of guidance was “primarily be‐
cause it is a novel concept created by Plaintiff.” Id. As to the
second category, “[t]he fact that the Plan offered certain ac‐
tively managed options does not establish that Defendants

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8 No. 21‐2789
acted imprudently.” Id. at *7. Count III (breach of fiduciary
duty for excessive investment‐advisor fees) failed to state a
claim because Albert “does not allege that a lower‐cost alter‐
native would provide comparable services.” Id. at *7.
Counts I to III also failed to state duty of loyalty claims
because plaintiffs “must do more than recast allegations of
purported breaches of fiduciary duty as disloyal acts.” Id. at
*7. Counts IV to VI (breach of the duty to monitor) failed be‐
cause they were derivative of Albert’s fiduciary duty claims.
Id. Counts VII to IX (prohibited transactions) failed because
they were based on circular reasoning—that “an entity which
becomes a party in interest by providing services to the Plan[]
has engaged in a prohibited transaction simply because the
Plan[] [has] paid for those services.” Id. at *8 (quoting Sacer‐
dote v. N.Y. Univ., No. 16‐cv‐6284, 2017 WL 3701482, at *13
(S.D.N.Y. Aug. 25, 2017)). Finally, Albert failed to state a claim
for failure to disclose because fiduciaries need not disclose de‐
tailed information about revenue sharing. Id. at *7 (citing
Hecker v. Deere & Co., 556 F.3d 575, 586 (7th Cir. 2009)).
On July 2, 2021, before the entry of final judgment, the Su‐
preme Court granted certiorari in Hughes. On September 30,
2021, Albert filed a Rule 59(e) motion to vacate the judgment
and stay proceedings pending a decision in Hughes. The dis‐
trict court denied the motion, in large part because Albert did
not seek a stay until after the entry of final judgment. Albert
timely appealed.
II. Discussion
This court reviews de novo the district court’s dismissal of
the amended complaint for failure to state a claim. Larson v.
United Healthcare Ins. Co., 723 F.3d 905, 910 (7th Cir. 2013). In

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No. 21‐2789 9
putative ERISA class actions, Rule 12(b)(6) motions are an
“important mechanism for weeding out meritless claims.”
Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. 409, 425 (2014) (cit‐
ing Iqbal, 556 U.S. at 677–680; Twombly, 550 U.S. at 554–563).
Courts apply a “careful, context‐sensitive scrutiny of a com‐
plaint’s allegations” to “divide the plausible sheep from the
meritless goats.” Dudenhoeffer, 573 U.S. at 425. Because “the
circumstances facing an ERISA fiduciary will implicate diffi‐
cult tradeoffs, [] courts must give due regard to the range of
reasonable judgments a fiduciary may make based on her ex‐
perience and expertise.” Hughes, 142 S. Ct. at 742. We may “af‐
firm on any ground that the record supports and that appellee
has not waived.” Larson, 723 F.3d at 917.
A. Standing
Before turning to the merits, we have “an independent ob‐
ligation to assure that standing exists.” Pavlock v. Holcomb, 35
F.4th 581, 588 (7th Cir. 2022) (quoting Summers v. Earth Island
Inst., 555 U.S. 488, 499 (2009)). Article III limits federal courts’
jurisdiction to “cases” and “controversies.” U.S. Const. art. III,
§ 2. The “irreducible constitutional minimum” of standing re‐
quires that the plaintiff has “(1) suffered an injury in fact,
(2) that is fairly traceable to the challenged conduct of the de‐
fendant, and (3) that is likely to be redressed by a favorable
judicial decision.” Spokeo, Inc. v. Robins, 578 U.S. 330, 338
(2016). In TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021),
the Supreme Court reiterated that “standing is not dispensed
in gross; rather, plaintiffs must demonstrate standing for each
claim that they press and for each form of relief that they
seek.” Id. at 2208.
Oshkosh argues that Albert lacks standing to bring ERISA
claims challenging investment options he never held in his

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10 No. 21‐2789
own investment account. In doing so, Oshkosh raises a factual
challenge to standing. Apex Digital, Inc. v. Sears, Roebuck & Co.,
572 F.3d 440, 444 (7th Cir. 2009). (“[A] factual challenge lies
where the complaint is formally sufficient but the contention
is that there is in fact no subject matter jurisdiction.”) (internal
quotation marks omitted). When considering a factual chal‐
lenge to jurisdiction, courts “may properly look beyond the
jurisdictional allegations of the complaint and view whatever
evidence has been submitted on the issue to determine
whether in fact subject matter jurisdiction exists.” Id. (internal
quotation marks omitted).
There is no serious dispute that Albert has standing with
respect to the following claims, which seemingly affect all
participants in the Plan: excessive recordkeeping fees, exces‐
sive investment‐advisor fees, breach of the duty of loyalty,
failure to monitor, prohibited transactions, and breach of the
duty to disclose. See Boley v. Universal Health Servs., Inc., 36
F.4th 124, 131–33 (3d Cir. 2022) (holding that plaintiffs had
standing for recordkeeping, investment‐selection, and fail‐
ure‐to‐monitor claims because a common course of conduct
affected all plan participants).3 Instead, Oshkosh objects to Al‐
bert’s standing with respect to funds not in his own invest‐
ment account. We agree that Albert’s claim for excessive in‐
vestment‐management fees is more complicated because each
3 In Boley, plan participants alleged three breaches of fiduciary duty,
two of which echo Albert’s complaint: (1) failing to monitor and reduce
excessive recordkeeping fees; and (2) failing to use a “prudent investment
evaluation process,” resulting in a needlessly expensive menu of invest‐
ment options. Id. at 131. The plaintiffs’ third theory, offering a needlessly
expensive suite of funds (the Fidelity Freedom Funds), does not align
closely with Albert’s complaint.

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No. 21‐2789 11
investment option charges a different expense ratio. If Albert
did not personally invest in a fund with an imprudent ex‐
pense ratio, then it is difficult to see how he suffered an injury
in fact. Similarly, if Albert invested solely in passively man‐
aged index funds, then excessive fees for the Plan’s actively
managed funds would not harm him.4
The amended complaint does not specify which invest‐
ment options Albert actually holds, but an uncontested decla‐
ration from an Oshkosh benefits analyst makes clear that he
invested in at least some actively managed funds.5 That is suf‐
ficient at this juncture to conclude Albert has standing for his
investment‐management fee claims. See Boley, 36 F.4th at 133
(recognizing that defendants’ “concerns regarding the repre‐
sentation of absent class members might implicate class certi‐
fication or damages but are distinct from the requirements of
Article III”). To be sure, the existence of standing at the plead‐
ing stage does not absolve ERISA plaintiffs of their continuing
obligation to “maintain their personal interest in the dispute
4 The Supreme Court’s decision in Thole does not shed much light on
standing for participants in defined contribution plans. Thole held that
participants in a defined benefit plan lacked standing to pursue claims for
breach of fiduciary duty because retirees enrolled in such plans receive a
fixed amount of money per month, no matter how the plan itself is man‐
aged. 140 S. Ct. at 1619. The Court explained that the difference between
defined contribution plans and defined benefit plans was of “decisive im‐
portance” to the Article III analysis. Id. at 1618; see also Ortiz v. Am. Airlines,
Inc., 5 F.4th 622, 629 n.9 (5th Cir. 2021) (declining to extend Thole to defined
contribution plans).
5 According to the declaration, Albert invested in thirteen of the Plan’s
investment options. Twelve of those thirteen investment options appear
in the amended complaint. Based on the expense ratios alleged in the com‐
plaint, eleven of those funds are actively managed.

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12 No. 21‐2789
at all stages of litigation.” TransUnion, 141 S. Ct. at 2208. Infor‐
mation revealed during discovery could very well change the
standing analysis. Furthermore, “there may be some situa‐
tions where typicality for an ERISA class would not be satis‐
fied unless the class representative invested in each of the
challenged funds.” Boley, 36 F.4th at 136.
B. Duty of Prudence Claims
29 U.S.C. § 1104(a)(1)(B) requires plan fiduciaries to act
prudently when managing an employee benefit plan. That be‐
ing said, “ERISA does not require fiduciaries of an [individual
account plan] to act as personal investment advisers to plan
participants.” White v. Marshall & Ilsley Corp., 714 F.3d 980, 994
(7th Cir. 2013), abrogated on other grounds by Dudenhoeffer, 573
U.S. 409. And “the ultimate outcome of an investment is not
proof of imprudence.” Divane, 953 F.3d at 992, vacated and re‐
manded on other grounds sub nom. Hughes, 142 S. Ct. 737 (quot‐
ing DeBruyne v. Equitable Life Assurance Soc’y of the U.S., 920
F.2d 457, 465 (7th Cir. 1990)).
To state a breach of the duty of prudence under ERISA, a
plaintiff must plead “(1) that the defendant is a plan fiduciary;
(2) that the defendant breached its fiduciary duty; and (3) that
the breach resulted in harm to the plaintiff.” Allen v. GreatBanc
Tr. Co., 835 F.3d 670, 678 (7th Cir. 2016). Oshkosh does not
dispute that the named Defendants are plan fiduciaries under
29 U.S.C. § 1002(21) or that higher fees may have harmed plan
participants in some sense. Instead, Oshkosh argues that there
was no breach because the allegations, taken as true, do not
show that it acted imprudently.

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No. 21‐2789 13
1. Recordkeeping Fees (Count I)
Albert’s first duty of prudence claim is that the Plan paid
Fidelity excessive recordkeeping fees by “fail[ing] to regu‐
larly solicit quotes and/or competitive bids.” For support, Al‐
bert compares publicly available data for the Plan with nine
other plans that are supposedly prudent when it comes to
recordkeeping fees. (ERISA and the Internal Revenue Code
require the annual submission of Form 5500s for employee
benefit plans.) These comparator plans have similar numbers
of participants (between around 10,000 and 16,000) and total
assets (between $355 million and $2.1 billion) as the Plan. Be‐
tween 2014 and 2018, the comparator plans paid an average
annual recordkeeping fee of $32 to $45 per plan participant.
By contrast, during the same period, the Oshkosh Plan paid
an average annual recordkeeping fee of $87 per participant.
Based on this data, Albert argues that “a prudent Plan Fidu‐
ciary would have paid on average an effective annual [record‐
keeping] fee of around $40 per participant, if not lower.”
Oshkosh responds that the amended complaint is devoid
of allegations as to the quality or type of recordkeeping ser‐
vices the comparator plans provided. This court has repeat‐
edly emphasized that the cheapest investment option is not
necessarily the one a prudent fiduciary would select. See
Loomis v. Exelon Corp., 658 F.3d 667, 670 (7th Cir. 2011) (noting
that “nothing in ERISA requires every fiduciary to scour the
market to find and offer the cheapest possible fund (which
might, of course, be plagued by other problems)”) (quoting
Hecker, 556 F.3d at 586). Defendants argue the same logic ap‐
plies to recordkeeping fees, meaning that Albert cannot pro‐
ceed to discovery solely on the basis that the Plan paid higher

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14 No. 21‐2789
recordkeeping fees than a potentially random assortment of
nine other plans from around the country.
In Divane, we rejected the notion that a failure to regularly
solicit quotes or competitive bids from service providers
breaches the duty of prudence. See Divane, 953 F.3d at 990–91
(holding that defendant “was not required to search for a
recordkeeper willing to take $35 per year per participant as
plaintiffs would have liked” (citing Hecker, 556 F.3d at 586)),
vacated on other grounds by Hughes, 142 S. Ct. 737. The parties
dispute whether the line of cases we relied upon in Divane—
namely, Hecker and Loomis—are also under a cloud of suspi‐
cion post‐Hughes.
Albert overstates the significance of Hughes on this point.
Hughes did not hold that fiduciaries are required to regularly
solicit bids from service providers. Nor did it suggest that the
reasoning in Hecker and Loomis no longer stands. 6 Hughes
merely rejected this court’s assumption that the availability of
a mix of high‐cost and low‐cost investment options in a plan
insulated fiduciaries from liability. Hughes, 142 S. Ct. at 742
(“The Seventh Circuit erred in relying on the participants’ ul‐
timate choice over their investments to excuse allegedly im‐
prudent decisions by respondents.”); see also Dean v. Nat’l
Prod. Workers Union Severance Tr. Plan, ___ F.4th ___, No. 21‐
6 The Sixth Circuit distinguished Hecker and Loomis with respect to a
claim Albert does not raise here: that plan fiduciaries should have offered
institutional share classes instead of retail share classes of certain invest‐
ment options. Forman v. TriHealth, Inc., 40 F.4th 443, 452 (6th Cir. 2022)
(noting that Hughes “rejected a bright line rule, derived from Hecker and
Loomis, that a broad menu of funds could itself defeat an imprudence
claim premised on one particular offering that performed poorly or had
high fees”).

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No. 21‐2789 15
1872, 2022 WL 3355075, at *7 n.4 (7th Cir. Aug. 15, 2022). Alt‐
hough Hughes is still pending on remand in this court, the
Sixth Circuit recently held that an ERISA plaintiff failed to
state a duty of prudence claim where the complaint “failed to
allege that the [recordkeeping] fees were excessive relative to
the services rendered.” Smith v. CommonSpirit Health, 37 F.4th
1160, 1169 (6th Cir. 2022) (internal quotation marks omitted).
The Smith court did not consider Hughes to have any bearing
on the analysis of such claims, and neither do we. See also For‐
man v. TriHealth, Inc., 40 F.4th 443, 449 (6th Cir. 2022) (con‐
cluding plaintiffs failed to state a claim as to “overall plan
fees” where “the employees never alleged that these fees were
high in relation to the services that the plan provided”).
Although the district court repeatedly cited Divane in its
discussion of Albert’s recordkeeping claim, we affirm the dis‐
missal of Count I. That claim fails under our precedent that
Hughes left untouched. In so holding, we emphasize that
recordkeeping claims in a future case could survive the “con‐
text‐sensitive scrutiny of a complaint’s allegations” courts
perform on a motion to dismiss. Dudenhoeffer, 573 U.S. at 425.
Albert’s complaint simply does not provide “the kind of con‐
text that could move this claim from possibility to plausibil‐
ity” under Twombly and Iqbal. Smith, 37 F.4th at 1169.
2. Investment‐Management Fees (Count II)
Next, Albert alleges that Oshkosh breached its duty of
prudence by paying unreasonably high fees to Fidelity for in‐
vestment management. Recall that the Plan selected Fidelity
as both its recordkeeper and its investment‐management pro‐
vider. As the Plan’s recordkeeper, Fidelity received direct and
indirect compensation. Indirect compensation refers to reve‐
nue‐sharing arrangements in which some of the money raised

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16 No. 21‐2789
via expense ratios for investment‐management fees is shared
with the recordkeeper. If the recordkeeper does not use all of
the fees it collects through expense ratios, some of that money
can be returned to participants’ individual investment ac‐
counts.
As with his recordkeeping claims, Albert compares the in‐
vestment‐management fees that the Plan paid to the fees that
nine allegedly comparable and prudent plans paid. Albert
claims that the key indication of whether investment fees are
prudent is the “Net Investment Expense to Retirement Plans.”
Albert defines this concept as “the share class that gives plan
participants access to portfolio managers at the lowest net fee
for the services of the portfolio manager.” Under this theory,
“[w]hen two identical service options are readily available ...
a prudent Plan Fiduciary ensures that the least expensive of
those options is selected.” Albert further alleges that if Osh‐
kosh had chosen investment options that Albert believes are
prudent alternatives, “the Plan’s Participants would have []
received virtually identical portfolio management services at
a lower cost.”
The problem is that the Form 5500 on which Albert relies
does not require plans to disclose precisely where money
from revenue sharing goes. Some revenue sharing proceeds
go to the recordkeeper in the form of profits, and some go
back to the investor, but there is not necessarily a one‐to‐one
correlation such that revenue sharing always redounds to in‐
vestors’ benefit. Albert’s “net investment expense to retire‐
ment plans theory” assumes that there is such a correlation; if
that assumption is wrong, then simply subtracting revenue
sharing from the investment‐management expense ratio does

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No. 21‐2789 17
not equal the net fee that plan participants actually pay for
investment management.
Complicating matters further, Count II encompasses two
different duty of prudence theories. First, Albert claims that
the Plan should have offered higher‐cost share classes of cer‐
tain mutual funds because the “net expense” of those funds
would be lower in light of revenue sharing. This is the inverse
of what ERISA plaintiffs typically argue—that a plan should
have offered cheaper institutional share classes instead of
more expensive retail share classes. Second, Albert claims that
the Plan should not offer certain actively managed funds be‐
cause those funds are more expensive than passively man‐
aged funds.
a. Net‐Expense Theory
We agree with Oshkosh that the amended complaint does
not allege sufficient facts to make this novel theory plausible.
We have not found, and Albert does not cite, any court deci‐
sions crediting this theory. While a prudent fiduciary might
consider such a metric, no court has said that ERISA requires
a fiduciary to choose investment options on this basis. Cf.
Loomis, 658 F.3d at 670 (“[N]othing in ERISA requires every
fiduciary to scour the market to find and offer the cheapest
possible fund (which might, of course, be plagued by other
problems).”) (quoting Hecker, 556 F.3d at 586). We see no rea‐
son to impose such a requirement here. See Hughes, 142 S. Ct.
at 742 (“[T]he circumstances facing an ERISA fiduciary will
implicate difficult tradeoffs, and courts must give due regard
to the range of reasonable judgments a fiduciary may make
based on her experience and expertise.”).

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18 No. 21‐2789
b. Actively Managed Funds Theory
Albert’s second theory is more common: that some of the
Plan’s actively managed funds were too expensive. The fact
that actively managed funds charge higher fees than pas‐
sively managed funds is ordinarily not enough to state a claim
because such funds may also provide higher returns. See
Smith, 37 F.4th at 1165 (“We know of no case that says a plan
fiduciary violates its duty of prudence by offering actively
managed funds to its employees as opposed to offering only
passively managed funds.”); Davis v. Washington Univ. in St.
Louis, 960 F.3d 478, 484 (8th Cir. 2020) (“[A] complaint cannot
simply make a bare allegation that costs are too high, or re‐
turns are too low. ... Rather, it ‘must provide a sound basis for
comparison—a meaningful benchmark.’”) (quoting Meiners v.
Wells Fargo & Co., 898 F.3d 820, 822 (8th Cir. 2018)).
Once again, the Sixth Circuit’s decision in Smith reinforces
that Hughes does not require a radically different approach to
claims alleging excessive investment‐management fees. The
Smith court held that an ERISA plaintiff failed to state a duty
of prudence claim where the plan merely “offer[ed] actively
managed funds in its mix of investment options.” Smith, 37
F.4th at 1165. In fact, “denying employees the option of ac‐
tively managed funds, especially for those eager to undertake
more or less risk, [could] itself be imprudent.” Id. Albert’s al‐
legations are similarly threadbare: that “Defendants failed to
consider materially similar and less expensive alternatives to
the Plan’s investment options.” In the absence of more de‐
tailed allegations providing a “sound basis for comparison,”
Meiners, 898 F.3d at 822, we affirm the dismissal of Count II
under this theory as well.

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No. 21‐2789 19
3. Investment‐Advisor Fees (Count III)
Albert alleges that the fees the Plan paid to SAI (alternately
called “service provider fees” or “investment‐advisor fees”)
were excessive and therefore imprudent. According to Albert,
“the fee rate paid to SAI was over 50 basis points for services
that add no additional value compared to other alternative
services available to plan participants.” SAI’s services “pro‐
vided virtually no value to some Participants and a negative
value to other Participants compared to other similar services
and options available in the Plan, e.g., the Fidelity Freedom
Funds.” Other than this brief reference to Fidelity Freedom
Funds, Albert does not explain why the fees SAI charged were
excessive and unreasonable in comparison to other service
providers. Instead, he alleges upon information and belief
that the Plan’s fiduciaries “did not solicit competitive bids
from other service providers similar to SAI or evaluate
whether other service providers could provide the same or
superior benefits and services ostensibly provided by SAI, at
a lower cost to Plan Participants.”
This claim is particularly thin because Albert does not pro‐
vide any basis for comparison between the fees paid to SAI
and fees paid to other service providers. See Davis, 960 F.3d at
484 (“[A] complaint … ‘must provide a sound basis for com‐
parison—a meaningful benchmark.’”) (quoting Meiners, 898
F.3d at 822); Smith, 37 F.4th at 1169 (complaint failed to state
a claim in the absence of allegations that “fees were excessive
relative to the services rendered”). Without more, Albert has
failed to state a duty of prudence claim as to the fees the Plan
paid to SAI.

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20 No. 21‐2789
C. Duty of Loyalty Claims
Counts I, II, and III also purport to encompass breaches of
the duty of loyalty. To recap, the duty of loyalty requires a
plan fiduciary to “discharge his duties with respect to a plan
solely in the interest of the participants and beneficiaries,”
with “the exclusive purpose” of “providing benefits to partic‐
ipants and their beneficiaries” and “defraying reasonable ex‐
penses of administering the plan.” 29 U.S.C. § 1104(a)(1)(A).
Albert argues that the facts supporting his duty of prudence
claims are technically not identical to his duty of loyalty
claims; the latter hinge on allegations relating to the Plan’s use
of SAI, a subsidiary of Fidelity, as the Plan’s investment advi‐
sor. Nonetheless, because only Count III involves SAI, Al‐
bert’s duty of loyalty claim is more accurately limited to that
count.
Albert alleges upon information and belief that “Fidelity
urged Defendants to select SAI” as the Plan’s investment ad‐
visor, thereby enabling “Fidelity to obtain additional revenue
from SAI services delivered with a very high profit margin.”
Albert again contends that SAI’s services provided little to no
value (or even a negative value), and he faults Defendants for
failing to solicit bids from other service providers. We agree
with Oshkosh that these allegations are insufficient to state a
claim for breach of the duty of loyalty.
First, it is hard to see why Oshkosh violated its duty of loy‐
alty when Fidelity encouraged the Plan to use SAI as its in‐
vestment advisor. Albert does not allege, for example, that Fi‐
delity gave Oshkosh kickbacks in exchange for selecting SAI.
Cf. Braden v. Wal–Mart Stores, Inc., 588 F.3d 585, 590 (8th Cir.
2009) (complaint survived motion to dismiss where plaintiff
alleged that “revenue sharing payments were not reasonable

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No. 21‐2789 21
compensation for services rendered by Merrill Lynch, but ra‐
ther were kickbacks paid by the mutual fund companies in
exchange for inclusion of their funds in the Plan”). In other
words, there are no allegations that Oshkosh engaged in self‐
dealing at the expense of the Plan. See Forman, 40 F.4th at 450
(plaintiffs failed to state duty of loyalty claim where no alle‐
gations suggested “the fiduciary’s operative motive was to
further its own interests”).
Second, to the extent that there is anything untoward about
a company encouraging a customer to use its subsidiary’s ser‐
vices, Fidelity is neither a named defendant nor a fiduciary.7
What matters is whether Oshkosh discharged its duties
“solely in the interest of the [Plan’s] participants and benefi‐
ciaries.” 29 U.S.C. § 1104(a)(1)(A); see also Loomis, 658 F.3d at
671 (“Plaintiffs do not contend that the funds that Exelon [the
plan administrator] selected had any control over it, or it over
them; there is no reason to think that Exelon chose these funds
to enrich itself at participants’ expense.”); Hecker, 556 F.3d at
586 (“As for the allegation that [the plan administrator] im‐
properly limited the investment options to Fidelity mutual
funds, we find no statute or regulation prohibiting a fiduciary
from selecting funds from one management company.”).
Third, Albert has not identified any comparator invest‐
ment advisors. Without allegations suggesting that the fees
SAI charged are unreasonable in light of available
7 As explained below, Fidelity and SAI may be “parties in interest”
within the meaning of 29 U.S.C. § 1002(14), but that does not mean they
owe fiduciary duties to plan participants and beneficiaries.

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22 No. 21‐2789
alternatives, Albert has failed to state a claim for breach of the
duty of loyalty. 8
D. Duty to Monitor Claims
Counts IV, V, and VI allege that Oshkosh breached its
duty to monitor other fiduciaries with respect to record‐keep‐
ing fees, investment‐management fees, and service‐provider
fees, respectively. Albert concedes that his duty to monitor
claims rise or fall with his duty of prudence and duty of loy‐
alty claims. See, e.g., Rogers v. Baxter Int’l Inc., 710 F. Supp. 2d
722, 740 (N.D. Ill. 2010) (noting that “several [district] courts
have held that a failure to monitor claim is derivative in na‐
ture and must be premised [on] an underlying breach of fidu‐
ciary duty”). Because we affirm the dismissal of Albert’s fidu‐
ciary duty claims, these claims fail as well.
E. Prohibited Transaction Claims
Counts VII, VIII, and IX allege that Oshkosh engaged in
prohibited transactions with Fidelity and SAI by paying ex‐
cessive fees for Plan services. ERISA expressly prohibits cer‐
tain kinds of transactions between a plan and a “party in in‐
terest.” 29 U.S.C. § 1106(a)(1). This provision “supplements
the fiduciary’s general duty of loyalty ... by categorically bar‐
ring certain transactions deemed likely to injure the pension
8 Albert relies on an out‐of‐circuit district court decision allowing sim‐
ilar allegations to survive a motion to dismiss. See Henderson v. Emory
Univ., 252 F. Supp. 3d 1344, 1356 (N.D. Ga. 2017) (“Whether the Plans’ fi‐
duciaries intended to benefit TIAA, Fidelity, and Vanguard is an issue that
can be better determined at the motion for summary judgment stage.”).
But that language comes from the court’s discussion of the plaintiff’s pro‐
hibited‐transaction claims. The court’s discussion of the duty of loyalty is
cursory (only two sentences) and unpersuasive. See id. at 1357.

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No. 21‐2789 23
plan.” Harris Tr. & Sav. Bank v. Salomon Smith Barney, Inc., 530
U.S. 238, 241–42 (2000) (internal quotation marks omitted).
The statute provides:
A fiduciary with respect to a plan shall not cause the
plan to engage in a transaction, if he knows or should
know that such transaction constitutes a direct or indi‐
rect—
(A) sale or exchange, or leasing, of any property be‐
tween the plan and a party in interest;
(B) lending of money or other extension of credit be‐
tween the plan and a party in interest;
(C) furnishing of goods, services, or facilities between the
plan and a party in interest;
(D) transfer to, or use by or for the benefit of a party in
interest, of any assets of the plan; or
(E) acquisition, on behalf of the plan, of any employer
security or employer real property in violation of sec‐
tion 1107(a) of this title.
29 U.S.C. § 1106(a)(1) (emphasis added). In turn, ERISA de‐
fines a “party in interest” of an employee benefit plan as:
(A) any fiduciary (including, but not limited to, any ad‐
ministrator, officer, trustee, or custodian), counsel, or
employee of such employee benefit plan;
(B) a person providing services to such plan; [or]
(C) an employer any of whose employees are covered
by such plan;
...
29 U.S.C. § 1002(14) (emphasis added).

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24 No. 21‐2789
Under a literal reading of §§ 1002(14)(B) and 1106(a)(1)(C),
ERISA would prohibit payments by a plan to an entity
providing services for the plan, such as Fidelity and SAI. Sev‐
eral courts have declined to read ERISA that way because it
would prohibit fiduciaries from paying third parties to per‐
form essential services in support of a plan. See Sweda v. Univ.
of Pa., 923 F.3d 320, 337 (3d Cir. 2019) (“Reading § 1106(a)(1)
as a per se rule barring all transactions between a plan and
party in interest would miss the balance that Congress struck
in ERISA, because it would expose fiduciaries to liability for
every transaction whereby services are rendered to the
plan.”); Sellers v. Anthem Life Ins. Co., 316 F. Supp. 3d 25, 34
(D.D.C. 2018) (“Subsections (A) through (D) [of § 1106(a)(1)]
cannot be read to categorically prohibit the very transactions
that cause a person to obtain the status of a party in interest.”);
Sacerdote, 2017 WL 3701482, at *13 (“[I]t is circular to suggest
that an entity which becomes a party in interest by providing
services to the Plans has engaged in a prohibited transaction
simply because the Plans have paid for those services.”), va‐
cated on other grounds by 9 F.4th 95 (2d Cir. 2021).
Albert’s interpretation is also inconsistent with the pur‐
pose of the statute as a whole. See, e.g., 29 U.S.C. § 1001(a)
(“[T]he continued well‐being and security of millions of em‐
ployees and their dependents are directly affected by these
plans,” and “it is therefore desirable in the interests of em‐
ployees and their beneficiaries ... that minimum standards be
provided assuring the equitable character of such plans and
their financial soundness.”). As the Supreme Court recog‐
nized in Lockheed Corp. v. Spink, 517 U.S. 882 (1996),
§ 1106(a)(1) prohibits transactions that “generally involve
uses of plan assets that are potentially harmful to the plan.”
Id. at 893. It would be nonsensical to read § 1106(a)(1) to

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No. 21‐2789 25
prohibit transactions for services that are essential for defined
contribution plans, such as recordkeeping and administrative
services. See id. at 895 (“When [§ 1106(a)(1)(D)] is read in the
context of the other prohibited transaction provisions, it be‐
comes clear that the payment of benefits in exchange for the
performance of some condition by the employee is not a
‘transaction’ within the meaning of [§ 1106(a)(1)(D)].”).
Albert insists that payments by the Plan to Fidelity and
SAI were nonetheless “prohibited transactions.” For support,
Albert points to language in this court’s decision in Allen v.
GreatBanc Trust Co., 835 F.3d 670 (7th Cir. 2016). In Allen, par‐
ticipants in an employee stock ownership plan alleged that
the plan’s trustee engaged in prohibited transactions by pur‐
chasing stock from the employer (and plan sponsor) and issu‐
ing a loan to the plan to fund the stock purchase. The em‐
ployer’s stock price later plummeted, and plan participants
perversely had to pay interest on the loan to their own em‐
ployer. Id. at 673–74. The court concluded that both transac‐
tions “are indisputably prohibited transactions within the
meaning of [§ 1106].”9 Id. at 675. The court’s more important
holding, however, was that the exemptions for prohibited‐
transaction claims outlined in § 1108 are affirmative defenses
that a plaintiff need not anticipate in a complaint. Id. at 676.
Albert points to Allen for the broad proposition that a
plaintiff can state a prohibited‐transaction claim merely by
9 The court seems to have reasoned that the employer, as a plan spon‐
sor, was a party in interest under § 1002(14)(C). When the trustee, acting
as a fiduciary, directed the plan to purchase the employer’s stock, that was
a “prohibited transaction” under § 1106(a)(1)(A). Similarly, when the em‐
ployer (via its shareholders) lent money to the plan to purchase its own
stock, that was a “prohibited transaction” under § 1106(a)(1)(B).

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26 No. 21‐2789
identifying a “party in interest” under § 1002(14) and alleging
that the party in interest engaged in one of the transactions
listed in § 1106(a)(1). The Third Circuit seems to have read Al‐
len this way and expressly declined to follow it. See Sweda, 923
F.3d at 326–27. By contrast, Oshkosh suggests that the Allen
court simply did not confront the circularity problem dis‐
cussed above because the transactions at issue did not trans‐
form the defendants into parties in interest. We agree that the
transactions in Allen looked like self‐dealing, unlike routine
payments for plan services. See Sweda, 923 F.3d at 336 (“[T]he
transactions the Seventh Circuit scrutinized in Allen were a far
cry from the ordinary service arrangements at issue here.”).
Albert’s argument that he need not anticipate affirmative
defenses at the pleading stage is a red herring. While it is true
that “an ERISA plaintiff need not plead the absence of exemp‐
tions to prohibited transactions,” Allen, 835 F.3d at 676, Osh‐
kosh is not asserting an affirmative defense under § 1108. 10 In‐
stead, Oshkosh is arguing that a literal reading of
§§ 1002(14)(B) and 1106(a)(1)(C) would lead to absurd results
that are inconsistent with ERISA’s statutory purpose. If rou‐
tine payments by plan fiduciaries to third parties in exchange
for plan services are prohibited, that would seem to put plan
participants and beneficiaries in a worse position: Employee
benefit plans would no longer be able to outsource tasks like
recordkeeping, investment management, or investment
10 Albert suggests that Oshkosh would invoke § 1108(b)(2)(A) (“Con‐
tracting or making reasonable arrangements with a party in interest for ...
services necessary for the establishment or operation of the plan, if no
more than reasonable compensation is paid therefor.”).

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No. 21‐2789 27
advising, which in all likelihood would result in lower returns
for employees and higher costs for plan administration.
In short, the district court properly dismissed Albert’s pro‐
hibited transactions claims for failure to state a claim.
F. Duty to Disclose Claim
Finally, Albert alleges that Oshkosh failed to disclose fees
that are charged to participants and specifically the method
of calculating revenue‐sharing fees. Albert relies primarily on
a Department of Labor regulation, which states in relevant
part:
When the documents and instruments governing an
individual account plan ... provide for the allocation of
investment responsibilities to participants or benefi‐
ciaries, the plan administrator ... must take steps to en‐
sure, consistent with [the fiduciary duties of loyalty
and prudence], that such participants and beneficiar‐
ies, on a regular and periodic basis, are made aware of
their rights and responsibilities with respect to the in‐
vestment of assets held in, or contributed to, their ac‐
counts and are provided sufficient information regarding
the plan, including fees and expenses, and regarding des‐
ignated investment alternatives, including fees and ex‐
penses attendant thereto, to make informed decisions with
regard to the management of their individual accounts.
29 C.F.R. § 2550.404a‐5(a) (emphases added).
As an initial matter, the Department of Labor regulation
does not clearly require the kinds of disclosures Albert claims
Oshkosh should have made. Albert’s argument is also hard to
square with this court’s decision in Hecker. There, we held that
plaintiffs had failed to state a breach of fiduciary duty claim

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28 No. 21‐2789
on the basis of either a revenue‐sharing agreement or the fail‐
ure to disclose information about that agreement. Hecker, 556
F.3d at 585. The court explained that the plan administrator
acted appropriately by disclosing the total fees for funds of‐
fered in the plan and directing participants to fund prospec‐
tuses for more information. “The total fee, not the internal,
post‐collection distribution of the fee, is the critical figure for
someone interested in the cost of including a certain invest‐
ment in her portfolio and the net value of that investment.”
Id. at 586. Because information about how fees are distributed
internally was “not material” to a participant’s decision‐mak‐
ing process, the failure to disclose such information was “not
a breach of [] fiduciary duty.” Id.
Albert argues that Hecker is no longer good law in light of
the Supreme Court’s decision in Hughes. We agree with Osh‐
kosh that this reading of Hughes is untenable; that decision
had nothing to do with the duty to disclose. Moreover, the
amended complaint does not identify any additional breaches
of the duty to disclose beyond revenue sharing. 11 The district
court properly dismissed Albert’s duty to disclose claim.
III. Conclusion
For the foregoing reasons, the district court’s judgment is
A FFIRMED.
11 Albert’s reliance on Baird v. BlackRock Institutional Trust Co. is un‐
persuasive because that case is nonprecedential, out of circuit, and did not
discuss revenue sharing at all. 403 F. Supp. 3d 765, 781–82 (N.D. Cal. 2019).

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