Robert Mator v. Wesco Distribution, Inc.

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
______
No. 22-2552
______
ROBERT MATOR; NANCY MATOR, individually and as
representatives
of a class of participants and beneficiaries in and on behalf of
WESCO Distribution, Inc. Retirement Savings Plan,
Appellants
v.
WESCO DISTRIBUTION, INC.; THE ADMINISTRATIVE
AND INVESTMENT
COMMITTEE FOR WESCO DISTRIBUTION INC
RETIREMENT SAVINGS PLAN;
JOHN AND JANE DOES 1-30
______
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. No. 2-21-cv-00403)
District Judge: Honorable Marilyn J. Horan
______
Argued on April 18, 2023
Before: HARDIMAN, PORTER and FISHER, Circuit
Judges.

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(Filed: May 16, 2024)
Timothy L. Foster
Paul R. Wood
Franklin D. Azar & Associates
14426 East Evans Avenue
Aurora, CO 80014
Mariah Heinzerling
Beena M. McDonald
Steven A. Schwartz [ARGUED]
Chimicles Schwartz Kriner & Donaldson-Smith
361 W Lancaster Avenue
One Haverford Centre
Haverford, PA 19041
Counsel for Appellant
Deborah S. Davidson
Morgan Lewis & Bockius
110 N Wacker Drive
Suite 2800
Chicago, IL 60606
Michael E. Kenneally
Matthew J. Sharbaugh [ARGUED]
Morgan Lewis & Bockius
1111 Pennsylvania Avenue NW
Suite 800 North
Washington, DC 20004
Stephanie R. Reiss
Morgan Lewis & Bockius

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301 Grant Street
One Oxford Centre, Suite 3200
Pittsburgh, PA 15219
Counsel for Appellee
Jordan Bock
Goodwin Procter
100 Northern Avenue
Boston, MA 02210
Jaime A. Santos
Goodwin Procter
1900 N Street NW
Washington, DC 20036
Jordan Von Bokern
United States Chamber Litigation Center
1615 H Street NW
Washington, DC 20062
Counsel for Amicus Appellee
______
OPINION OF THE COURT
______
FISHER, Circuit Judge.
Plaintiffs Nancy Mator and Robert Mator participate in
the Wesco Distribution, Inc. Retirement Savings Plan. On
behalf of themselves and a class of participants and
beneficiaries, the Mators sued the Plan, its fiduciaries, and
Wesco Distribution, Inc. (collectively, “Wesco”). The Mators
allege Wesco violated fiduciary duties imposed by the
Employee Retirement Income Security Act of 1974 (ERISA)
because it paid excessive recordkeeping fees and failed to

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monitor the Plan. The District Court dismissed the complaint
with prejudice. But under controlling law, the complaint
properly states these claims. We will therefore vacate and
remand.
At the motion-to-dismiss stage, the facts are limited to
the allegations in the complaint. In re Asbestos Prods. Liab.
Litig. (No. VI), 822 F.3d 125, 133 (3d Cir. 2016). Courts accept
the factual allegations as true and view them in the light most
favorable to the plaintiff. Doe v. Princeton Univ., 30 F.4th 335,
340 (3d Cir. 2022). Courts may also “consider documents
integral to or explicitly relied upon in the complaint or any
undisputedly authentic document that a defendant attaches as
an exhibit to a motion to dismiss if the plaintiff’s claims are
based on the document.” In re Asbestos Prods., 822 F.3d at 133
n.7 (internal quotation marks, citations, and emphasis omitted);
see also Steinhardt Grp. Inc. v. Citicorp, 126 F.3d 144, 145 &
n.1 (3d Cir. 1997) (considering contracts underlying the
complaint, which were attached to the motion to dismiss).
To its motion to dismiss, Wesco attached the Plan’s fee
disclosures and excerpts of the Plan’s service agreements. It
also attached several Form 5500s, which are reports that
retirement plans must file annually with the federal
government. The Mators did not take exception to Wesco’s
attachments and, in fact, drew on them in amending their
complaint. No one has disputed the documents’ authenticity
and the Mators’ claims are based on them. The District Court
therefore properly relied on these documents, and we may as
well. See In re Asbestos Prods., 822 F.3d at 133 n.7. According
to the documents, as well as the allegations in the complaint,
the facts are as follows.

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1. The Plan and its recordkeeping fees
Wesco Distribution, Inc., a Pittsburgh company,
maintains the Wesco Distribution, Inc. Retirement Savings
Plan. The Plan is subject to ERISA. Wesco and its
Administrative and Investment Committee are the Plan’s
administrators, which makes them ERISA fiduciaries. See 29
U.S.C. § 1002(21)(A). At the end of 2020, the Plan had about
$837 million in assets and nearly 8,300 participants. Among
those participants are plaintiffs Robert Mator and Nancy
Mator.
The Plan is a defined contribution plan. Thus, it
“promises the participant the value of [his or her] individual
account at retirement.” Boley v. Universal Health Servs., Inc.,
36 F.4th 124, 128 n.2 (3d Cir. 2022) (quoting LaRue v.
DeWolff, Boberg & Assocs., 552 U.S. 248, 250 n.1 (2008)).
That value is determined by how much was put into the account
on the participant’s behalf, whether the chosen investments
gain or lose value, and how much the account pays in fees. Id.
Between 2015 and 2020, Wells Fargo was the Plan’s
recordkeeper. Wells Fargo provided participants with internet
access to their accounts, transaction processing, quarterly
statements, communications including disclosures and
newsletters, retirement education, telephone support, and a
“brokerage window” that allowed participants to invest in
stocks that were not part of the plan’s menu of options. App.
2137.
Wells Fargo was paid for these recordkeeping services
through direct and indirect fees. Direct fees are paid from a
plan’s assets: “the fiduciary contracts with the recordkeeper to
obtain services in exchange for a flat annual fee based upon the
number of participants.” App. 2130. Indirect fees are paid by
participants as a result of revenue-sharing agreements between
recordkeepers and plan investments, such as mutual funds. “In

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a revenue sharing arrangement, the mutual fund pays the plan’s
recordkeeper putatively for providing recordkeeping and
administrative services for the [mutual] fund.” App. 2131.
Indirect fees paid through revenue sharing are based on the
amount of assets in participants’ mutual fund accounts.
The Mators allege the retirement plan services market
is “highly competitive,” App. 2126, and large plans like
Wesco’s “have the bargaining power to obtain the highest level
of service and the lowest fees,” App. 2121. Such plans “possess
tremendous economies of scale,” App. 2127, because “the
marginal cost of adding an additional participant to a
recordkeeping platform is relatively low” and recordkeeping
services for any participant cost about the same regardless of
the participant’s account balance, App. 2126. “Therefore, . . .
[a]s the number of participants in the plan increases, the cost
per[ ]participant to deliver the recordkeeping and
administrative services decreases.” App. 2127.
Given these dynamics, “a flat price per participant . . .
ensures that the compensation [paid to a recordkeeper] is tied
to the actual services provided and does not grow” just because
participants have contributed more to their accounts or the
market has gone up. App. 2130–31. Indirect fees, “if not
closely monitored,” may become unreasonable because they
“bear no relation to the actual cost to provide reasonable
recordkeeping and administrative services.” App. 2133–34.
The Mators allege the fiduciary’s standard of care for
negotiating and monitoring recordkeeping fees is “well
established . . . based on [Department of Labor] guidelines,
case law, and best practices as shared by retirement plan
professionals.” App. 2134. With regard to the substance of the
standard, the Mators cite a consulting firm’s publication to
allege prudent plan fiduciaries pay administrative fees on a per-
participant basis, benchmark and negotiate fees every other

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year, ensure that only contractually required fees are actually
paid, and review services annually. And they allege a survey
of retirement plans determined that plans with 5,000 to 10,000
participants (like the Plan) pay $40 to $60 in fees.
The Mators further allege that “[r]ecordkeeping fees for
large plans have declined significantly in recent years due to
increased technological efficiency, competition, and increased
attention to fees . . . .” App. 2135. Thus, “fees that may have
been reasonable at one time may have become excessive.” Id.
The Mators allege that to avoid overpaying, prudent fiduciaries
regularly ask other recordkeepers to bid on services. Getting
bids is easy, they allege, because plans need only provide a few
basic facts: the number of participants and, possibly, the
amount of assets. The Mators claim the competitive bidding
process should be conducted “at least once every three to five
years.” App. 2136. Yet Wesco failed to do so for over ten years.
From 2015 through 2020, the Plan paid Wells Fargo
direct fees of between $50 and $82 per participant—on
average, $66. As opposed to a typical direct fee (a flat amount
of dollars per participant), this was a “direct asset-based fee”—
a percentage of each participant’s account balance paid directly
from his or her account to Wells Fargo. App. 2138. Wells
Fargo was also paid indirect fees (revenue sharing payments
from Plan investments) of between $80 and $103—on average,
$91. Thus, the total per-participant fees (direct plus indirect)
ranged from $110 to $185—on average, $153–$154. This is
something like two to four times the alleged $40 to $60
industry average as of 2018. Fees were not capped, nor was
Wells Fargo “required to refund any excess amounts
collected.” App. 2138–39. The Mators allege “the Plan should
unquestionably have been able to obtain recordkeeping and
administrative services [at] significantly lower rates” than it
paid. App. 2141. And the Plan’s fees “were excessive relative

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to the type and quality of the services received by the Plan
when benchmarked against other similar-sized plans for the
same or similar recordkeeping and administrative services.”
App. 2137–38. “These excessive fees led to lower net returns”
for Plan participants. App. 2138.
The Mators provide a table in their complaint showing
five other plans for which Wells Fargo provided recordkeeping
services. In 2018, these plans had between 6,500 and 12,700
participants (compared to the Plan’s 8,600 participants) and
$219 million to $1.1 billion in plan assets (compared to the
Plan’s $671 million). The other plans allegedly paid $37 to $52
per participant—an average of $44—while the Plan paid $154.
The Mators next provide a table showing eleven plans
that received recordkeeping services from other providers such
as Vanguard and Fidelity. In 2018, these plans had between
4,950 and 13,500 participants and plan assets between $221
million and $2.1 billion. The other plans allegedly paid from
$31 to $53 per participant—an average of $42—compared to
the Plan’s $154.
But there is a caveat to these comparisons: the Mators
do not have complete information. They calculated direct fees
based on publicly available information, including the plans’
Form 5500s. The Form 5500—a joint creation of the IRS, the
Department of Labor, and the Pension Benefit Guaranty
Corporation—is the “Annual/Return Report of [an] Employee
Benefit Plan.” 2018 Instructions for Form 5500;1 see also 29
U.S.C. §§ 1021, 1024(a) (requiring plans to file annual
1 https://www.dol.gov/sites/dolgov/files/EBSA/employ
ers-and-advisers/plan-administration-and-
compliance/reporting-and-filing/form-5500/2018-
instructions.pdf [https://perma.cc/6RP3-6N5C].

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reports). The Form 5500 requires a plan to list the amount of
direct compensation it paid.
But the Form 5500 asks only whether indirect
compensation was paid—yes or no—rather than asking the
dollar amount. To determine indirect fees, the Mators looked
at the list of investments a plan offered its participants (such as
money market funds and various types of mutual funds) and
then sussed out the revenue sharing rates for those investments
by checking a different part of the Form 5500 or using
“publicly available” rates. App. 2142. While these allegations
provide a somewhat detailed description of how the Mators
calculated indirect fees, they do not allow us to replicate the
calculations. For instance, the complaint does not say where
the revenue-sharing rates were publicly available or what the
rates were.
Much of the dispute about the sufficiency of the
complaint turns on whether it provides apples-to-apples
comparisons between the Plan and other plans. The Mators
beefed up successive versions of their complaint to show their
comparisons are valid. For instance, they allege that either the
Plan’s “direct fees alone” or its “indirect fees alone” were
“unreasonable compared to the total fees . . . that other similar
plans paid.” App. 2138, 2139. The implication is that the Plan
overpaid, even if the comparisons are imperfect.
To support the contention that the comparisons actually
are sound, the Mators repeatedly allege that all defined
contribution plans buy essentially the same bundle of
recordkeeping services with no appreciable difference in
quality. App. 2125 (“For large plans . . . , any minor variations
in the way that these essential services are delivered have no
material impact on the fees charged . . . .”); App. 2137
(recordkeeping services Wells Fargo provided to the Plan were
“typical of the services provided to any large defined

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contribution plan”); App. 2145 (“During the Class Period,
Fidelity, Vanguard, T. Rowe Price, Voya and Transamerica all
provided identical or similar services of the same quality to the
comparator plans as those provided by Wells Fargo to the
Plan.”).
Finally, the Mators allege that in July 2020, the Plan
switched to Fidelity for recordkeeping services and paid a
much lower flat fee of $54 per participant. “Plaintiffs and other
Plan participants received the same services from Fidelity that
they had previously received from Wells Fargo” and “did not
experience a reduction in the level or quality of retirement plan
services . . . .” App. 2147–48. “This further confirms that the
services offered by Fidelity (and other large recordkeepers) are
substantially similar in all material respects to the services
offered by Wells Fargo.” App. 2148.
In sum, the Mators allege that as a result of Wesco’s
imprudence, the Plan paid “four times the reasonable cost of
recordkeeping,” which caused the participants to lose “millions
of dollars in their retirement savings over the last six-plus
years.” App. 2149.
2. Mutual fund share classes offered by the Plan
The Mators allege the Plan imprudently offered
participants expensive classes of mutual fund shares. Mutual
funds offer multiple classes of shares that are identical in every
way except cost. The more expensive retail-class shares “are
targeted at smaller investors with less bargaining power, while
lower-cost shares are targeted at institutional investors with
more assets, generally $1 million or more, and therefore greater
bargaining power.” App. 2151. The Mators allege that “[e]ven
when a plan does not yet meet the investment minimum to
qualify for the cheapest available share class, it is well-known
among institutional investors that mutual fund companies will

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typically waive those investment minimums for a large plan.”
App. 2152. The Mators concede that “plans often select mutual
fund share classes that include revenue sharing to pay for some
or all of the plan administrative expenses.” Id. But, they allege,
“prudent fiduciaries monitor the amount of revenue sharing” to
make sure indirect fees do not become “unreasonably high.”
Id. If they do, the plans switch to cheaper share classes or
obtain rebates.
The Mators say that for nineteen of the mutual funds
Wesco offered participants, it chose expensive share classes
that were subject to revenue sharing and therefore “had higher
operating expenses than other available classes of the same
mutual funds.” Id. The Mators allege the Plan was already
paying too much in direct fees, so if the defendants had been
monitoring properly, “they would have realized that it was not
necessary to allow Wells Fargo to collect additional fees
[indirectly] through revenue sharing.” App. 2153. Offering
expensive share classes allegedly caused participants to pay
“excess costs of between $700,000 and $900,000 per year.”
App. 2155. And the fees allegedly paid for services that were
not needed because Wells Fargo was already providing them.
Finally, the Mators allege the higher-cost share class offerings
show that Wesco did not have “a prudent process to evaluate,
negotiate, and/or monitor . . . fees.” Id.
3. Failure to monitor
The Mators allege Wesco had the duty to monitor those
“responsible for overseeing retirement plan service fees for the
Plan to ensure that they were adequately performing their
fiduciary obligations.” App. 2161. They allege Wesco
breached that duty by, among other things, failing to monitor
the responsible individuals and the processes by which those
individuals administered the Plan.

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The Mators filed their complaint in March 2021. In
Count I, they alleged Wesco breached its duty of prudence by
causing the Plan to pay excessive recordkeeping fees and by
offering mutual fund investment options in higher-cost share
classes. In Count II, they alleged Wesco breached its duty to
monitor the processes and people administering the Plan.
Wesco moved to dismiss for failure to state a claim, and the
District Court granted the motion without prejudice. The Court
held that in order for the excessive fee allegations to “pass from
‘possible to the plausible,’ an apples-to-apples comparison is
necessary.” App. 57. But the Mators “allege[d] no facts about
the level of services provided to the Plan’s participants” and
did “not allege the complete nature and scope of services
provided by the alleged comparator plans.” App. 56. The
share-class allegations were “conclusory.” App. 59. The Court
held the failure-to-monitor claim was insufficient as a matter
of law because it was derived from Count I, the excessive-fee
and share-class claims.
The Mators amended their complaint in October 2021,
but the District Court again dismissed it. Their final amended
complaint, filed in April 2022, met with the same fate—except
this time it was dismissed with prejudice. The Court continued
to view the successive iterations of the complaint as conclusory
and insufficiently specific. The Mators appeal.

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2
Congress enacted ERISA to protect “employees and
their dependents” whose “well-being and security” was
affected by “the lack of . . . adequate safeguards” for employee
benefit plans. 29 U.S.C. § 1001(a). Congress also did not want
“to create a system that is so complex that administrative costs,
or litigation expenses, unduly discourage employers from
offering welfare benefit plans in the first place.” Fifth Third
Bancorp v. Dudenhoeffer, 573 U.S. 409, 425 (2014) (quoting
Varity Corp. v. Howe, 516 U.S. 489, 497 (1996)). ERISA
therefore “represents a careful balancing between ensuring fair
and prompt enforcement of rights under a plan and the
encouragement of the creation of such plans.” Id. at 424
(internal citation and quotation marks omitted); see also Sweda
v. Univ. of Pa., 923 F.3d 320, 327 (3d Cir. 2019) (ERISA
furthers the distinct goals of “safeguarding anticipated
employee benefits” and “assuring a predictable set of
liabilities” for employers) (quoting first Cutaiar v. Marshall,
590 F.2d 523, 529 (3d Cir. 1979), then Renfro v. Unisys Corp.,
671 F.3d 314, 321 (3d Cir. 2011)).
ERISA requires the appointment of “one or more named
fiduciaries who . . . shall have authority to control and manage
the operation and administration” of an employee benefit plan.
29 U.S.C. § 1102(a)(1). A fiduciary must administer the plan
“solely in the interest of the participants and beneficiaries and
2 The District Court had jurisdiction under 28 U.S.C.
§ 1331 (actions arising under the laws of the United States) and
29 U.S.C. § 1132(e)(1) and (f) (ERISA civil enforcement
actions). This Court has jurisdiction under 28 U.S.C. § 1291
(final orders of district courts). We review on a plenary basis
an order granting a motion to dismiss for failure to state a
claim. In re Asbestos Prods., 822 F.3d at 131.

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. . . with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent [person] acting in
a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims.”
Id. § 1104(a)(1). “A fiduciary’s process must bear the marks of
loyalty, skill, and diligence expected of an expert in the field.
It is not enough to avoid misconduct, kickback schemes, and
bad-faith dealings. The law expects more than good
intentions.” Sweda, 923 F.3d at 329.
ERISA entitles a participant in a defined contribution
plan to “the value of his account unencumbered by any
fiduciary impropriety.” Graden v. Conexant Sys. Inc., 496 F.3d
291, 297 (3d Cir. 2007). A participant may sue a fiduciary who
breaches his duties, 29 U.S.C. § 1132(a)(2), and the fiduciary
is “personally liable to make good to such plan any losses to
the plan resulting from each such breach,” id. § 1109(a).
The standard for pleading an ERISA claim is, of course,
key to the resolution of this case. As in all civil cases, the
familiar pleading standards of Federal Rules of Civil Procedure
8(a) and 12(b)(6) require an ERISA plaintiff to “allege enough
facts to state a claim to relief that is plausible on its face.”
Renfro, 671 F.3d at 320–21 (quoting Matrixx Initiatives, Inc.
v. Siracusano, 563 U.S. 27, 46 n.12 (2011)). When assessing
the sufficiency of the complaint, we pay attention to “the
context of [the] claim, including the underlying substantive
law.” Id. This means we evaluate the allegations bearing in
mind ERISA’s twin goals of protecting participants and
encouraging plan creation through a predictable set of
liabilities for employers. Sweda, 923 F.3d at 326.
In addition to the legal context, the factual context is
paramount. “[A]pplying the pleading standard discussed in
Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 173 L. Ed. 2d
868 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544,

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127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007),” to ERISA fiduciary
breach claims “will necessarily be context specific” because
“‘the content of the duty of prudence turns on the
circumstances . . . prevailing at the time the fiduciary acts.’”
Hughes v. Nw. Univ., 595 U.S. 170, 177 (2022) (quoting
Dudenhoeffer, 573 U.S. at 425). The circumstances
confronting a fiduciary sometimes require “difficult tradeoffs,”
so “courts must give due regard to the range of reasonable
judgments a fiduciary may make based on her experience and
expertise.” Id. To plead a breach of the duty of prudence under
ERISA, then, a plaintiff must plausibly allege fiduciary
decisions outside a range of reasonableness. Id.
Consistent with these rules, a plaintiff alleging an
ERISA fiduciary breach need not “rule out every possible
lawful explanation for the conduct he challenges.” Sweda, 923
F.3d at 326 (quoting Braden v. Wal-Mart Stores, Inc., 588 F.3d
585, 597 (8th Cir. 2009)). In addition to the Eighth Circuit, the
Second and Seventh Circuits agree on this point. See Hughes
v. Nw. Univ., 63 F.4th 615, 629 (7th Cir. 2023); Sacerdote v.
New York Univ., 9 F.4th 95, 108 (2d Cir. 2021). However, the
Rules require dismissal when fiduciary defendants offer an
alternative explanation for their conduct that is “obvious,”
“natural,” or simply “more likely” than the plaintiff’s theory of

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misconduct. See Twombly, 550 U.S. at 567–68 (“obvious,”
“natural”); Iqbal, 556 U.S. at 680 (“more likely”).3
The elements of an ERISA breach of fiduciary duty
claim are: “(1) a plan fiduciary (2) breaches an ERISA-
imposed duty (3) causing a loss to the plan.” Sweda, 923 F.3d
at 328 (quoting Leckey v. Stefano, 501 F.3d 212, 225–26 (3d
Cir. 2007). The parties dispute only the second element. In the
two counts of their complaint, the Mators allege Wesco
(A) breached its duty of prudence by causing or permitting the
Plan to pay excessive fees for recordkeeping services and
offering retail-class shares of mutual funds, and (B) breached
its duty to monitor the fiduciaries and the administration of the
Plan.
1. Excessive recordkeeping fees
To explain why the Mators’ complaint states a claim,
we return to Sweda, where we reversed a dismissal. 923 F.3d
at 320. Sweda alleged the following: the market for
recordkeeping services is competitive; large plans offer
economies of scale for recordkeeping; “paying for
recordkeeping with asset-based revenue sharing,” though “not
per se [a] violation of ERISA, . . . can lead to excessive fees if
not monitored and capped”; and competitive bids should be
3 In Sweda, we held that “Twombly’s discussion of
alleged misconduct that is ‘just as much in line with a wide
swath of rational and competitive business strategy’ is specific
to antitrust cases.” 923 F.3d at 326 (quoting Twombly, 550 U.S.
at 554). The Supreme Court recently abrogated that specific
portion of Sweda by reiterating that in ERISA cases, courts are
to “apply[] the pleading standard discussed in [Iqbal] and
[Twombly].” Hughes, 595 U.S. at 177.

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obtained for recordkeeping services. Amended Complaint,
Sweda v. Univ. of Pa., No. 16-4329, Dkt. No. 27, pp. 44–48
(E.D. Pa. Nov. 21, 2016). Sweda alleged the University of
Pennsylvania retirement plan paid fees of about $220 to $250
per participant—but based on the plan’s features, the
recordkeeping services provided, the number of participants,
and market conditions, “experts in the recordkeeping industry”
determined the plan should have paid no more than $35 per
participant. Id. at 50–51. Sweda did not support that allegation
with any comparisons to other plans. See id.
Keeping in mind the importance of context and the
regard due to the “range of reasonable judgments” a fiduciary
might make when faced with “difficult tradeoffs,” Hughes, 595
U.S. at 177, we observe that the Mators’ allegations are more
specific than Sweda’s and provide more context. As in Sweda,
the Mators allege the Plan’s fees were several times larger than
what similar plans paid; the Plan’s fiduciary did not negotiate
a fee cap or solicit bids (although revenue sharing rates fell on
a percentage basis); the asset-based fee structure caused the
Plan’s fees to rise when there was no corresponding increase
in services; and similarly situated fiduciaries requested
proposals and negotiated with recordkeepers to keep fees
reasonable. Unlike Sweda, the Mators provide context for
these allegations by making additional allegations about the
amount of the fees paid by comparator plans. These
comparisons nudge their complaint across the line from
conceivable to plausible. See Twombly, 550 U.S. at 570.
Although reasonable fiduciaries need not prioritize cost
minimization above all else, there is enough evidence alleged
here of a failure to act prudently.
The District Court held that the comparisons merely
provided a “side by side list,” not an “apples to apples”
comparison. App. 19 (citation omitted), 22. It reached this

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conclusion for three main reasons: differences in services
provided by the comparator plans’ recordkeepers, differences
in plan sizes, and problems with how the Mators calculated the
fees paid by the Plan and its comparators. But a close
examination of the complaint and attached documents shows
that the District Court’s criticisms do not scuttle the
comparisons or the complaint.
Services provided by the various recordkeepers. On the
Form 5500, plans are asked to list codes showing what services
were rendered by the provider. The District Court held that the
complaint did not account for the differences in the
recordkeeping services listed on the comparator plans’ Form
5500s. There are indeed variations between the service codes,
but the differences are not fatal.
From 2015 to 2019, the Plan obtained six services from
recordkeeper Wells Fargo: “Recordkeeping and information
management (computing, tabulating, data processing),”
“Trustee (bank, trust company),” “Direct payment from the
plan,” “Float revenue,” “Participant loan processing,” and
“Recordkeeping fees.” App. 2260, 2303, 2346, 2387, 2427; see
also 2018 Form 5500 Instructions p. 27 (providing list of
service codes). In 2020, when Fidelity became the Plan’s
recordkeeper, the Plan’s Form 5500 retained two of these
service codes, “Participant loan processing” and
“Recordkeeping fees,” and listed three new ones: “Sub-transfer
agency fees,” “Account maintenance fees,” and “Securities
brokerage commissions and fees.” App. 2697.
The Form 5500 for one comparator, the Red Lobster
plan, lists six service codes that exactly match the Plan’s six
service codes from 2015 to 2019. But the other comparators’
codes differ from the Plan’s and from one another’s. In
addition to the previously mentioned services, some
comparators listed: “Contract administrator,” “Consulting,”

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“Trustee (directed),” “Investment advisory (participants),”
“Securities brokerage,” “Investment management fees paid
indirectly by plan,” and “Sub-transfer agency fees.” App.
2495, 2535, 2574, 2612, 2649, 2748.
The different service codes do not undermine the
Mators’ comparisons because they apparently overlap. All of
the plans list either “Recordkeeping fees,” “Recordkeeping and
information management (computing, tabulating, data
processing),” or both. These two codes seem similar. Other
codes seem to overlap as well, such as “Securities brokerage”
and “Securities brokerage commissions and fees.”
“Consulting” could cover a wide variety of services and could
intersect with other categories. And it is unclear why the code
“Direct payment from the plan” exists at all, since every dollar
reported on this part of Form 5500 is “direct compensation paid
by the plan.” See, e.g., App. 2260. At this stage, the record does
not reveal the codes’ precise meanings, nor whether all plans
define the codes consistently. But given that all the plans
received some portion of an overlapping constellation of
recordkeeping services, the comparisons help nudge the
Mators’ claims across the line from possible to plausible.
For their part, the Mators argue that “due to the nature
and competitiveness of the market at the top levels [of]
recordkeeping service for large plans, it would be reasonable
to infer that similar services” were provided. Appellants’ Br.
41–42. Their complaint emphasizes this point. It alleges, for
instance, that “[f]or large plans with greater than 5,000
participants, like the Plan, any minor variations in the way that
these essential services are delivered have no material impact
on the fees charged,” which is demonstrated by the fact that
“all service providers quot[e] fees on a per-participant basis
without regard for any individual differences in services
requested.” App. 2125. Assuming the truth of this allegation,

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the information about comparator plans helps render the
Mators’ claim plausible despite the differences in service
codes.4
Plan sizes. Second, the District Court faulted the Mators
for providing comparators that did “not match the Plan relative
to number of participants or asset sizes, or the average of all
other plans of similar sizes.” App. 21. We know of no authority
on how close comparators must be in size, and the Mators’
choices are sound. The comparator plans ranged from 4,950 to
13,502 participants and had assets of $221 million to $2.1
billion. The Plan—with 8,600 participants and $671 million in
assets—falls roughly in the middle of that range. If we were to
limit comparators to the 7,000 to 10,000 participant range, that
would leave six of the eleven comparators. If we were to limit
comparators to the $350 million to $1 billion asset range, that
would leave four of the eleven comparators. Four does not
seem insufficient. See Johnson v. PNC Fin. Servs. Grp., Inc.,
2022 WL 973581, at *1 (W.D. Pa. Mar. 31, 2022) (denying
motion to dismiss complaint that made allegations about four
comparator plans).
Wesco says that if we consider only those comparator
plans whose participants and assets are 75% to 125% of the
Plan’s 2018 participants and assets, three comparators would
4 Amicus Chamber of Commerce argues that
“[r]ecordkeeping services are highly customizable” and
“myriad services are available at different fee levels,” usually
with “extraordinarily complicated” fee arrangements. Amicus
Br. 17–18. If the Chamber is correct, it would be virtually
impossible for a plaintiff to identify plans that buy precisely
the same bundle of services as a defendant plan. That would
make it more important for courts not to disregard every less-
than-identical comparator.

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remain. Wesco does not offer any authority supporting a 75%-
to-125% limitation. Regardless, even accepting Wesco’s
argument, the three remaining comparators allegedly paid
2018 per-participant fees of $51, $31, and $44, compared to
the Plan’s $154. That is a stark difference. Drawing bright lines
would run counter to the required contextual analysis, so we do
not adopt any rules limiting comparator size or requiring a
specific number of comparators. Regardless, winnowing the
comparators as Wesco proposes would not leave the complaint
bereft of allegations that help make a fiduciary breach
plausible.
By rejecting the comparator plans on the basis of size,
the District Court erroneously failed to view the allegations in
the light most favorable to the Mators. Construed most
favorably to them, the comparisons show the Plan paid well
above what others did. Moreover, assuming the truth of the
allegations that large plans have superior bargaining power and
the cost per participant falls as participant numbers increase,
the smaller comparators actually strengthen the complaint. If
smaller plans can obtain lower fees than the Plan despite less
bargaining power and higher per-participant costs, it is more
likely the Plan’s fiduciaries breached their duty of prudence.
Fee calculations. Third, the District Court faulted the
Mators’ comparisons based on their fee calculations. To
understand the complications in calculating recordkeeping
fees, we begin with Form 5500, which asks for the amount of
“direct compensation paid by the plan to service providers.”
See, e.g., App. 2260. With this data, ascertaining direct
compensation seems straightforward enough. But for indirect
compensation, the form asks only whether such fees were paid,
not their amount.
The District Court observed that for some
comparators—two, to be precise—the Mators allege that the

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total fee amounts are the same as the direct fee amounts shown
on the Form 5500s, even though the plans also reported they
paid indirect fees. We can infer that by leaving out indirect
fees, the Mators underreported the total fees paid by these two
plans. But even if we disregard the two plans, we are left with
fourteen comparators that paid significantly lower fees than the
Plan.
Like the District Court, Wesco finds fault with the
Mators’ calculations of comparators’ fees, saying: “Plaintiffs
. . . claim to be adding indirect fee amounts ‘using publicly
available revenue sharing rates’,” but “[t]hey do not explain
where or how those rates for other plans are ‘publicly
available.’” Appellees’ Br. 40–41 (quoting App. 2142–43). In
other words, Wesco argues the Mators need to explain
precisely how they calculated the fees alleged in the complaint.
Although plaintiffs may be well advised to do so, we have not
required this in the past. The Sweda plaintiff did not say how
she calculated Penn’s indirect fees—only that her allegations
were based on Penn’s Form 5500s and “information from
sources including industry experts.” Sweda, No. 16-4329 (E.D.
Pa.), Amended Complaint, ECF No. 27, p. 49. Yet her
allegations, in context, stated a claim. Sweda, 923 F.3d at 332.
The same is true here.
In sum, the Mators’ comparisons between the Plan and
other plans, while not perfect, are sufficient to plausibly state a
claim for breach of fiduciary duty.
Wesco cites several cases in support of its argument for
affirmance. We agree with our sister Circuits’ articulation of
the relevant law in those cases. See Matousek v. MidAmerican
Energy Co., 51 F.4th 274, 278–79 (8th Cir. 2022); Smith v.
CommonSpirit Health, 37 F.4th 1160, 1164–65 (6th Cir. 2022).
Contrary to Wesco’s arguments, however, the fact that
Matousek and Smith affirmed dismissal of the respective

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complaints has little bearing on our decision. The complaints
in both cases fell short in ways the Mators’ does not. The Smith
opinion mostly analyzes a fiduciary breach claim based on
excessive investment fees—which is a type of claim the Mators
do not allege. 37 F.4th at 1165–69.5 The portion of Smith
dealing with what we are looking at here—excessive
recordkeeping fees—held the complaint was properly
dismissed because the plaintiff’s only comparators were
averages from an industry publication. Id. at 1169. That
“fail[ed] to give the kind of context that could move [the] claim
from possibility to plausibility,” because the plaintiff did “not
plead[] that the services that CommonSpirit’s fee covers are
equivalent to those provided by the plans comprising the
average in the industry publication that she cites.” Id. Matousek
is similar. See 51 F.4th at 279–80 (“[T]he way to plausibly
plead a claim of this type is to identify similar plans offering
the same services for less,” but “[r]ather than point to the fees
paid by other specific, comparably sized plans, the plaintiffs
rel[ied] on industry-wide averages” without accounting for
differences in the services purchased.). Here, as we have
explained, the Mators give the context the Smith and Matousek
plaintiffs omitted: they provide specific plan comparators, not
just industry averages, and plausibly allege that the services
purchased were sufficiently similar to render the comparisons
valid.
5 Another of Wesco’s cases, Forman v. TriHealth, Inc.,
is distinguishable insofar as it discussed excessive investment
fees and breaches of the duty of loyalty. 40 F.4th 443, 449–50
(6th Cir. 2022). When it came to the share class claim, which
is similar to the Mators’ claim we discuss below, the Sixth
Circuit concluded—as we do here—that the complaint was
sufficient. Id. at 450–51; see also Part II.A.2., below.

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Wesco contends the statute of limitations does not allow
us to consider the Mators’ allegation that Wesco failed to
engage in a bidding process every three to five years. Wesco’s
argument goes as follows: the six-year ERISA statute of
limitations permits us to look back only as far as 2015, and
because less than five years elapsed between that point and the
Plan’s 2020 change in recordkeepers, the Mators are unable to
allege that Wesco failed to get bids for more than five years.
The Mators reply that allegations in the complaint are
not bounded by the statute of limitations. They agree they
cannot collect damages for breaches before 2015, but argue it
is proper for their allegations to encompass a longer time
period to allow for the necessary context-specific analysis.
Reply Br. 16. They are correct. Discovery may be permitted
for “events that occurred before an applicable limitations
period” if “the information sought is . . . relevant to issues in
the case.” Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340,
352 (1978). Therefore, Wesco’s statute-of-limitations based
argument is unpersuasive. We agree with the Seventh Circuit
that “a failure to regularly solicit quotes or competitive bids
from service providers” does not necessarily give rise to an
imprudence claim. Albert v. Oshkosh Corp., 47 F.4th 570, 579
(7th Cir. 2022). Still, “fiduciaries who fail to monitor the
reasonableness of plan fees and fail to take action to mitigate
excessive fees . . . may violate their duty of prudence.” Hughes,
63 F.4th at 625–26 (emphasis added).
Wesco argues the complaint was correctly dismissed
because the Plan’s recordkeeping fees fell between 2015 and
2020, from fourteen to six basis points (that is, from 0.14% to
0.06%), and the Plan rebated some fees to participants. As the
Supreme Court instructs, we must give “due regard to the range
of reasonable judgments a fiduciary may make.” Hughes, 595
U.S. at 177. We agree that “[s]ometimes an alternative

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explanation for an ERISA fiduciary’s conduct may be patently
more reasonable and better supported by the [alleged] facts
than any theory of fiduciary duty violation pleaded by a
plaintiff,” and in those circumstances “courts should not
hesitate to dismiss.” Hughes, 63 F.4th at 630. But Wesco’s
alternative explanation is not more reasonable or better
supported than the Mators’ theory of misconduct, given the
magnitude of the differences in fees—about two to four times
what comparable plans paid.
Wesco also attacks the Mators’ calculations of the
Plan’s fees. Wesco says that by adding direct and indirect fees
to come up with the total fees, the Mators “essentially double-
count” because “Wells Fargo did not receive any ‘direct’ fees
from the Plan, as confirmed by the absence of any such fees in
the participant disclosures.” Appellees’ Br. 42 n.6 (citing App.
2200–30). But the Plan’s Form 5500s seem to say otherwise:
each year, the Plan reported paying hundreds of thousands of
dollars to Wells Fargo as “direct compensation.” App. 2260,
2303, 2346, 2387, 2427. Wesco’s explanation is therefore not
obvious, natural, or more likely than the allegations of
misconduct. See Twombly, 550 U.S. at 567–68; Iqbal, 556 U.S.
at 680.
Wesco also contends that “[f]or price comparisons to
raise an inference of an imprudent fiduciary process, there
must also be nonconclusory, fact-based allegations that the
cheaper services were as good as or better.” Appellees’ Br. 33–
34. There are. The Mators allege that when the Plan switched
to Fidelity for recordkeeping services, lowering fees from
about $154 to $54 per participant, there was no change in the
kind or quality of recordkeeping services provided to
participants. In other words, Fidelity’s services allegedly were
as good as Wells Fargo’s, but at a fraction of the price.

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Although the Mators are correct that their complaint
states a claim, it is worth noting that two of their arguments are
off base. First, they assert the District Court applied an
incorrect dismissal standard. They point out that the Court,
when dismissing the original complaint, quoted another district
judge’s opinion that erroneously said “allegations must cross
‘the threshold from possible to probable.’” App. 55 (quoting
Johnson v. PNC Fin. Servs. Grp., Inc., 2021 WL 3417843, at
*4 (W.D. Pa. Aug. 3, 2021)) (emphasis added). The correct
standard is less demanding: the allegations must move the
claim “from conceivable to plausible.” Twombly, 550 U.S. at
570 (emphasis added). When dismissing the amended and
second amended complaints, the District Court retained the
flawed citation, thus replicating the mistake. But despite this
error, the Court stated the correct “plausibility” standard
numerous times and clearly applied it. App. 23; see also App.
17, 19, 20, 38, 39, 42, 48, 55.
Second, the Mators go too far when they contend the
District Court improperly weighed credibility and decided
facts by pointing out problems with their calculations. Judges
draw on “common sense” when “[d]etermining whether a
complaint states a plausible claim for relief.” Iqbal, 556 U.S.
at 679. And if allegations are based on incorrect arithmetic,
common sense says they are not well-pled. The calculation
problems are not fatal here because even taking those problems
into account, there are enough comparators, and the
comparators are sufficiently similar to the Plan, to state a claim.
But in a different case, calculation errors could conceivably
lead to dismissal of a complaint.
When considering whether a plaintiff has stated a claim
for breach of fiduciary duty under ERISA, “we employ a
holistic approach” that takes into account all of the well-pled
facts. Sweda, 923 F.3d at 331. “The complaint should not be

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‘parsed piece by piece to determine whether each allegation, in
isolation, is plausible.’” Id. (quoting Braden, 588 F.3d at 594).
Here, the District Court parsed the allegations, found some of
them not well-pled, and dismissed. But the Court’s criticisms,
although partly valid, only nibble around the edges of the
complaint. Even allowing for these criticisms, what remains
plausibly states a claim.
2. Retail-class mutual fund shares
The District Court concluded the Mators did not state a
claim for breach of fiduciary duty based on their allegation that
the Plan offered retail-class shares of some mutual funds,
rather than identical but cheaper institutional-class shares.
Wesco argues we should affirm. It points to the allegation that
more expensive share classes that include revenue sharing can
help pay for a plan’s administrative expenses. It argues that the
more expensive share classes the Plan chose—which did
indeed pay revenue sharing to the recordkeeper—represented
a choice to pay some fees indirectly rather than directly.
Therefore, Wesco says, the share-class claim is “interrelated[]”
with the excessive-fee claim: if the fees were not too high
overall, then paying them partly through revenue sharing was
not imprudent. Appellees’ Br. 45.
Wesco is correct that, as the Mators have pled their
fiduciary breach claim, the excessiveness of the recordkeeping
fees and the impropriety of offering retail-class shares are
intertwined. But, as explained above, the excessive-fee claim
is adequately pled. Because the Mators plausibly allege the
fees were too high overall, it is therefore also plausible that it
was a fiduciary breach to cause participants to pay indirect fees
by offering mutual fund shares subject to revenue sharing.
The District Court dismissed partly based on its
conclusion that the Mators did not “address[] whether the retail

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share class may have offered other benefits.” App. 42. To the
contrary, the Mators do so. They allege plans might choose
share classes subject to revenue-sharing agreements in order
“to pay for some or all of the plan administrative expenses.”
App. 2152. But the Mators allege this benefit was not realized
here: first, the direct fees alone were too high, so paying
additional fees through revenue sharing was imprudent; and
second, the direct fees were already paying for the needed
administrative services, so there was no reason to pay for more
services indirectly.
Although the Mators have alleged a fiduciary breach
based on the Plan’s offerings of retail-class mutual fund shares,
they overstate the holdings of Tibble v. Edison International,
575 U.S. 523 (2015), and Hughes, 595 U.S. 170. In both cases,
the Supreme Court reversed the dismissal of share-class
claims. Tibble, 575 U.S. at 525–26, 530; Hughes, 595 U.S. at
176–77. But in neither case did the Court decide whether
offering retail-class shares breaches a fiduciary’s duty. In
Tibble, the Ninth Circuit had erroneously held some claims
were time-barred. 575 U.S. at 530. In Hughes, the Seventh
Circuit had erroneously held that offering an array of cheap and
expensive investment options insulates a fiduciary from
liability. 595 U.S. at 176. The Supreme Court rejected those
bases for dismissal and remanded for further proceedings
without expressing a “view on the scope of [defendants’]
fiduciary duty.” Tibble, 575 U.S. at 531; Hughes, 595 U.S. at
177. We therefore decline to articulate a bright-line rule that a
plan administrator breaches its fiduciary duty merely by
offering retail-class investment shares.
Count II of the complaint alleges Wesco breached its
fiduciary duty by failing to monitor those responsible for the

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Plan and the processes by which it was administered. “[F]ailure
to ‘monitor . . . investments and remove imprudent ones’ may
constitute a [fiduciary] breach.” Sweda, 923 F.3d at 328
(quoting Tibble, 575 U.S. at 530). Whether a “monitoring
claim survives depends on whether [the] underlying breach of
fiduciary duty . . . claims survive.” In re Allergan ERISA Litig.,
975 F.3d 348, 354 n.11 (3d Cir. 2020) (citation omitted).
The District Court held the failure to monitor claim
should be dismissed because the underlying fiduciary breach
claim failed. Id. The parties agree the failure to monitor claim
derives from the primary claim of breach of the duty of
prudence. Having vacated the Court’s dismissal of the
fiduciary breach claim, we will vacate its dismissal of the
derivative monitoring claim as well.
For all these reasons, we will vacate and remand for
further proceedings.

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