March 14, 2019

The BlackRock Retirement Savings Plan board urged a California federal judge Thursday to toss most of a putative class action accusing it of violating the Employee Retirement Income Security Act and costing participants over $100 million, arguing the board operated within the terms of its contracts.

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Plaintiffs Charles Baird and Lauren Slayton hit BlackRock Inc., its subsidiaries and board members, along with BlackRock's investment consultant Mercer Investment Counseling, with a sprawling, 134-page, 11 count amended complaint in August. The suit alleges with the aid of Mercer, BlackRock mismanaged retirement plans by charging excessive hidden fees, selecting investments that charged up to 871 percent in premiums, violating ERISA and costing participants hundreds of millions of dollars in losses.

The suit seeks to certify a class made up of BlackRock Retirement Savings Plan participants and a "CTI class," made up of participants whose employee benefit plans were invested in BlackRock proprietary collective trust investment funds.

At the start of the hearing Thursday, Judge Gilliam said this is an "odd motion to dismiss," because discovery is almost over and the defendants filed hundreds of pages of documents and asked him to review a "substantial amount of material."

"It seems to me I'm being asked to consider a substantial amount of material … that is outside the four corners of the complaint," Judge Gilliam said. "This actually feels more like a summary judgment proceeding."

The judge asked the parties to explain what documents they think he should consider to help him decide the motions, instead of repeating what's in their briefings.

Boyle apologized for the "avalanche of papers," but blamed it on the plaintiffs, arguing they "complicated the issue."

Meanwhile, counsel for the plaintiffs, Michelle C. Yau of Cohen Milstein Sellers & Toll PLLC, gave the judge a list of the documents she thinks he should look at to inform his ruling. Yau argued that ultimately all of the individual agreements BlackRock and its board submitted to the court in its defense are trumped by its trustee document.

"The idea that BlackRock could just contract away its fiduciary duties set forth in its trust documents and ERISA is just nonsensical," Yau said.

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The second amended complaint says that as of Dec. 31, 2016, the BlackRock Plan had approximately $1.78 billion in assets and approximately 10,000 participants. Thousands of BlackRock employees and former employees invest, on average and in the aggregate, $125 million in the BlackRock Plan, according to the complaint.

Plaintiffs Baird and Slayton are represented by Michelle C. Yau of Cohen Milstein Sellers & Toll PLLC and Todd F. Jackson of Feinberg Jackson Worthman & Wasow LLP.

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