Fourth Circuit strikes down class action strategy in DC ERISA fiduciary cases

On March 10, 2026, a three-judge panel of the Fourth Circuit reversed and vacated a lower court’s certification of a class action in Trauernicht, et al. v. Genworth Financial Inc., a case in which plaintiffs claimed that the inclusion of BlackRock LifePath Index Funds in the Genworth 401(k) plan’s fund menu was inherently imprudent, because the funds allegedly underperformed certain “comparator” target date funds. (This case is part of a series of cases targeting plans that used BlackRock TDFs.)

In this article we provide a brief note on the Fourth Circuit’s decision and its possible implications for DC fiduciary litigation generally.

The issue and why it matters

While defendants in these BlackRock TDF lawsuits have generally won their motions to dismiss, in this case the lower court (among other actions) denied that motion.

At issue on appeal, however, is the lower court’s certification of a class consisting of:

All participants and beneficiaries in the Genworth Financial Inc. Retirement and Savings Plan at any time on or after July 29, 2016 and continuing to the date of judgment, or such earlier date that the Court determines is appropriate and just, including any beneficiary of a deceased person who was a participant in the Plan at any time during the Class Period.

As noted, the Fourth Circuit reversed and vacated this class certification decision, holding that (as we’ll discuss in more detail below) in fiduciary claims for money “damages” in defined contribution plans, class actions are generally inappropriate.

We are not experts on federal courts pleading, but it is clear that this decision holds the possibility of taking away a critical tool in plaintiffs lawyers’ toolkit: the ability, via class action litigation, to bundle thousands of small, relatively trivial claims into one big one. That could put an end to a large piece of DC plan fiduciary litigation.

What the court said

The court found that class certification was inappropriate for two reasons:

First, in a lawsuit like this (i.e., an ERISA claim for monetary compensation based on fiduciary imprudence) with respect to a DC plan (and unlike such a lawsuit with respect to a defined benefit plan), plaintiffs’ claims are “individualized monetary claims” and therefore cannot be joined – as the lower court had joined them – in a “mandatory certified class.”

Second (and even more significantly), class certification under an alternative rule, where “there are questions of law or fact common to the class,” could not be applied in this case because there was no such “commonality.” Specifically, each class member’s claim would be different because it would depend on, e.g., which TDF sleeve he or she invested in, during what period. Moreover, the lower court would have to “resolve [before class certification] whether, when determining injury, the BlackRock LifePath Index Funds, which are passive funds, could appropriately be compared to active funds, as the plaintiffs maintain.”

In these circumstances, the Fourth Circuit held that the lower court must conduct “a rigorous analysis of commonality” that would “address whether class members suffered different injuries resulting from their different circumstances arising in the context of a defined contribution plan.” In this regard, the court observed:

The record shows that each plaintiff, as well as each class member, participated in the plan in a materially different way. Each participant made his or her own investment decisions with respect to his or her individual account, and the participant could change that decision on any given day. Moreover, the participants selected different vintages of the BlackRock LifePath Index Funds at different times during different market conditions. And the different BlackRock TDF vintages carried different risks, depending on the retirement date selected. Finally, each participant withdrew assets from the Plan at different times. And during these times, the market [and thus the comparator funds] performed uniquely each day.

In so holding, the court rejected the finding of the lower court that DC fiduciary litigation “inherently present[ed] issues common to [a] class because liability [arose] out of the defendant’s conduct with respect to the plan which [did] not vary depending on which participant [brought] the action.”

Broader implications

Oversimplifying somewhat, in this case the Fourth Circuit held that ERISA fiduciary lawsuits claiming monetary compensation with respect to a participant-directed DC plan present issues of fact – whether and to what extent each particular participant was (or was not) injured – that make class action certification generally unsuitable.

The context of this case is alleged underperformance of certain funds (BlackRock TDFs) in a fund menu. But this holding might also be applied much more broadly, e.g., in an “excessive fee” litigation.

And – to put it bluntly – if you blow up class certification/class actions, you significantly weaken the ability of plaintiffs’ lawyers to bring big-dollar lawsuits, requiring them (instead) to sue sponsors “one plaintiff at a time.” That could possibly significantly reduce ERISA DC fiduciary litigation

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We will continue to follow this issue.