Allen v. Greatbanc Trust Co., No. 15-3569 (7th Cir. 2016)

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Justia Opinion Summary

GreatBanc, the fiduciary for Personal-Touch home-health-care employee stock ownership plan, facilitated a transaction in which the Plan purchased shares in the company from the company’s owners with a loan from the company itself. It is not clear whether GreatBanc obtained independent advice or a valuation. GreatBanc had been appointed as trustee by the owners. The value of the shares fell until they were worth much less than the Plan paid, leaving the Plan with no valuable assets and heavily indebted to the company’s principal shareholders. The Plan’s participants were liable for interest payments on the loan. Employees filed suit under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1132. The district court dismissed. The Seventh Circuit reversed. The plaintiffs plausibly alleged both a prohibited transaction and a breach of fiduciary duty.

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In the United States Court of Appeals For the Seventh Circuit ____________________ No. 15 3569 LISA ALLEN and MISTY DALTON, Plaintiffs Appellants, v. GREATBANC TRUST CO., Defendant Appellee. ____________________ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 15 C 3053 — James B. Zagel, Judge. ____________________ ARGUED APRIL 12, 2016 — DECIDED AUGUST 25, 2016 ____________________ Before WOOD, Chief Judge, and FLAUM and WILLIAMS, Cir cuit Judges. WOOD, Chief Judge. GreatBanc is the fiduciary for an em ployee stock ownership plan (“the Plan”) for employees of Personal Touch, a home health care company. In that role, it facilitated a transaction in which the Plan purchased a num ber of shares in the company with a loan from the company itself. Unfortunately, the shares turned out to be worth much 2 No. 15 3569 less than the Plan paid, leaving the Plan with no valuable as sets and heavily indebted to the company’s principal share holders. The Plan’s participants, all employees of Personal Touch, wound up being on the hook for interest payments on the loan. Employees Lisa Allen and Misty Dalton brought this action under section 502 of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1132, raising two theories of recovery: first, that GreatBanc engaged in transactions that section 406 of ERISA prohibits, see 29 U.S.C. § 1106; and sec ond, that GreatBanc breached its fiduciary duty under ERISA section 404, 29 U.S.C. § 1104, by failing to secure an appropri ate valuation of the Personal Touch stock. The district court initially dismissed the complaint without prejudice, but it later converted the judgment to one with prejudice after plaintiffs opted not to amend their complaint. Because the plaintiffs plausibly alleged both a prohibited transaction and a breach of fiduciary duty, we reverse the judgment of the dis trict court and remand for further proceedings. I At this stage, we present the facts as alleged in the com plaint in the light most favorable to plaintiffs. Employee stock ownership plans (ESOPs) are meant to be a way for compa nies to provide employees with a stake in the enterprise. See 29 U.S.C. § 1002. Personal Touch, a privately held entity, is the sponsor of the Plan at issue here. See 29 U.S.C. § 1002(16)(B). Sponsors are responsible for administering ESOPs and often appoint independent trustees to carry out that job. Personal Touch appointed GreatBanc as Trustee of the Plan in 2010 for the purpose of representing the Plan in the proposed stock purchase transaction. No. 15 3569 3 On December 9, 2010, GreatBanc instructed the Plan to ac quire an unknown amount of stock from Personal Touch’s shareholders for $60 million. Before this acquisition, Personal Touch’s principal shareholders owned 100 percent of its shares. The plaintiffs do not know whether GreatBanc hired any financial advisors to review the transaction. The principal shareholders arranged for the Plan to finance this transaction through a loan they gave to the Plan at a 6.25% interest rate; the record does not reveal why the Plan did not use outside funding. The ink was hardly dry on the acquisition papers when the value of Personal Touch’s stock began to tank. Twenty two days later, the complaint asserts and GreatBanc accepts for present purposes, the Plan’s stock was estimated to be worth some $13 million (almost 22%) less than what the Plan paid for it. By late 2011, the estimated value of the stock had declined by almost 50%, and by December 31, 2013, the Plan’s shares were worth only around $26.6 million. The selling shareholders, however, were relatively untouched by these developments. Rather than holding a rapidly depreciating as set in the form of the stock, they had become creditors of the Plan (and thus indirectly the employees) and the recipients of a secure flow of principal and interest payments on the origi nal $60 million loan. The plaintiffs felt that they had drawn the short straw: they sued GreatBanc, alleging that it violated its fiduciary responsibilities under ERISA by approving a purchase of stock at too high a price and by facilitating two prohibited transactions: (1) the Plan’s purchase of stock from the company, and (2) the loan to the Plan that funded the pur chase. See 29 U.S.C. § 1106(a) and (b). 4 No. 15 3569 The complaint alleges that GreatBanc did not conduct any inquiry into whether whoever was responsible for Personal Touch’s financial projections had a conflict of interest, did not undertake an independent investigation of Personal Touch’s revenues, and failed to seek any remedy for the overpayment for the stock. The complaint originally alleged that 4.25% was the customary interest rate for an ESOP transaction such as the one that took place, but it retracted that detail in sur reply. Last, the complaint notes that GreatBanc entered into a settle ment with the Department of Labor in 2014 (after the transac tion), binding it to specific policies and procedures for analyz ing stock valuation in ESOP transactions; the settlement, plaintiffs imply, was designed to address its record of short comings as a fiduciary. The district court dismissed the complaint, finding that the plaintiffs had not sufficiently pleaded breach of fiduciary duty according to the standard outlined in Fifth Third Bancorp v. Dudenhoeffer, 134 S. Ct. 2459 (2014). Dudenhoeffer held that “where a stock is publicly traded, allegations that a fiduciary should have recognized from publicly available information alone that the market was over or undervaluing the stock are implausible as a general rule, at least in the absence of special circumstances.” Id. at 2471 (emphasis added). A plaintiff in this type of case must therefore point to those “special circum stances” in her complaint, in order to survive a motion to dis miss. Believing that this rule applied and that no special cir cumstances existed, the district court dismissed the breach of fiduciary duty claim. It rejected the prohibited transaction claim for much the same reason, finding that the question whether the Plan paid a fair price for the stock was not properly alleged. No. 15 3569 5 II We apply the usual de novo standard of review to the dis trict court’s rulings and accept the facts as alleged for present purposes. Wilczynski v. Lumbermens Mut. Casualty Co., 93 F.3d 397, 401 (7th Cir. 1996); Alexander v. United States, 721 F.3d 418, 423 (7th Cir. 2013). No heightened pleading standard applies here; it is enough to provide the context necessary to show a plausible claim for relief. See Dudenhoeffer, 134 S. Ct. at 2471 (citing Ashcroft v. Iqbal, 556 U.S. 662, 677–80 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 554–63 (2007)). We con sider first the plaintiffs’ prohibited transaction argument, and then their broader claim for breach of fiduciary duty. A ERISA identifies a number of transactions that are flatly prohibited between a plan and a party in interest, or a plan and a fiduciary. See ERISA § 406, 29 U.S.C. § 1106. The provi sion at issue here are the prohibitions in section 406(a), which provides as follows: Except as provided in section 1108 of this title: (1) 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 indirect– (A) sale or exchange, or leasing, of any property between the plan and a party in interest; (B) lending of money or other extension of credit between the plan and a party in interest; 6 No. 15 3569 (C) furnishing of goods, services, or facil ities between the plan and a party in in terest; (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 section 1107(a) of this title. (2) No fiduciary who has authority or discretion to control or manage the assets of a plan shall permit the plan to hold any employer security or employer real property if he knows or should know that holding such security or real prop erty violates section 1107(a) of this title. 29 U.S.C. § 1106(a). The exceptions found in section 408, 29 U.S.C. § 1108, include the acquisition of employer stock if it is for “adequate consideration.” 29 U.S.C. § 1108(e)(1). Section 408(b)(3) exempts a loan to an ESOP if the loan is primarily for the benefit of plan participants and beneficiaries and at an interest rate “not in excess of a reasonable rate.” 29 U.S.C. § 1108(b)(3). The complaint alleges a purchase of employer stock by the Plan and a loan by the employer to the Plan, both of which are indisputably prohibited transactions within the meaning of section 406. GreatBanc can prevail only if it can take ad vantage of one of section 408’s exemptions. It never raised any such affirmative defense, however; it took the position in stead that the plaintiffs have the burden of pleading facts that No. 15 3569 7 would negate the applicability of section 408’s exemptions and that they failed to do so. Plaintiffs counter that GreatBanc had the burden of both pleading and proving the applicability of a section 408 exemption. The district court noted, correctly, that GreatBanc would carry the burden at trial of proving that the Plan had paid ad equate consideration for the Personal Touch stock. But at that point, it jumped ahead and found that both the prohibited transaction and the fiduciary breach claim would turn on the same question: whether the Plan paid a fair price for the stock. It found the complaint deficient on that point, criticizing it for failing adequately to allege that the interest rate provided by Personal Touch was unreasonable. This, it concluded, was fa tal to both theories plaintiffs were presenting. There are a number of problems with this approach, but we will focus primarily on the procedural ones. A plaintiff al leging a claim arising out of a prohibited transaction involv ing an exchange of stock between a plan and a party in inter est need not plead the absence of adequate consideration, and so here plaintiffs were under no obligation to say anything about the interest rate on the inside loan GreatBanc received from the stockholders. It was enough that the transaction was a prohibited one; fair consideration enters the picture only through section 408(b)(3) and (e)(1). GreatBanc defends the district court’s reasoning by blend ing plaintiffs’ two theories together. It argues (on the assump tion that the fiduciary duty claim is inadequate) that allowing a prohibited transaction claim to proceed based on the same facts as a dismissed fiduciary breach claim would cause the “perverse result … [that] a complaint may fail to state suffi 8 No. 15 3569 cient facts to support a breach of fiduciary duty claim, yet sur vive a motion to dismiss as to a companion prohibited trans action claim notwithstanding those same deficient facts.” But there is nothing perverse about this at all. Congress saw fit in ERISA to create some bright line rules, on which plaintiffs are entitled to rely. Nothing compelled Congress to mimic the common law of breach of fiduciary duty in the statute. More fundamentally, an ERISA plaintiff need not plead the absence of exemptions to prohibited transactions. It is the defendant who bears the burden of proving a section 408 ex emption, Fish v. GreatBanc Trust Co., 749 F.3d 671, 685 (7th Cir. 2014); Keach v. U.S. Trust Co., 419 F.3d 626, 633 (7th Cir. 2005), and the burden of pleading commonly precedes the burden of persuasion. See Gomez v. Toledo, 446 U.S. 635, 640 (1980) (burden of pleading defense rests with the defendant). The fact that this court may not have had the occasion to label the section 408 exemptions as affirmative defenses is of no mo ment. GreatBanc itself argued in Fish that section 408 exemp tions are affirmative defenses, and therefore a plaintiff need not have actual knowledge of facts constituting a section 408 exemption in order for the statute of limitations to begin run ning. Evidently it has had a change of heart in this case, but it was right the first time. We now hold squarely that the section 408 exemptions are affirmative defenses for pleading pur poses, and so the plaintiff has no duty to negate any or all of them. See Stuart v. Local 727, Int’l Bhd. of Teamsters, 771 F.3d 1014, 1018 (7th Cir. 2014) (“A plaintiff is not required to negate an affirmative defense in his or her complaint[.]”). Five of our sister circuits agree with the position that sec tion 408 exemptions are affirmative defenses, or that the de fendant bears the burden of proof, or both. See Braden v. Wal No. 15 3569 9 Mart Stores, Inc., 588 F.3d 585, 601 n.10 (8th Cir. 2009) (“[A] plaintiff need not plead facts responsive to an affirmative de fense before it is raised[.]”); Harris v. Amgen, Inc., 788 F.3d 916, 943 (9th Cir. 2015), rev d on other grounds, 136 S. Ct. 758 (2016) (“[T]he existence of an exemption under § 1108(e) is an affirm ative defense[.]”); Elmore v. Cone Mills Corp., 23 F.3d 855, 864 (4th Cir. 1994) (proper allocation of § 408 burden waived by plaintiffs by not raising at trial); Lowen v. Tower Asset Mgmt., Inc., 829 F.2d 1209, 1215 (2d Cir. 1987) (burden on fiduciary to prove exemption); Donovan v. Cunningham, 716 F.2d 1455, 1467–68 (5th Cir. 1983) (“[W]e hold that the ESOP fiduciaries will carry their burden to prove that adequate consideration was paid[.]”). Although some of these decisions from other circuits predate Twombly and Iqbal, Dudenhoeffer post dates those cases and makes it clear that there is no special pleading regime for this part of ERISA. GreatBanc attempts to differentiate the section 408 exemp tions from affirmative defenses by reference to Twombly’s dis tinction between an affirmative defense and an “obvious al ternative explanation.” Twombly, 550 U.S. at 567. In the latter case, the plaintiff needs to include enough to dispel the alter native story (or more accurately, to indicate that a rational trier of fact could so find). But the exemptions from prohibited transactions do not provide alternative explanations; they as sume that a transaction in the prohibited group occurred, and they add additional facts showing why that particular one is acceptable. That is how affirmative defenses work. In our case, it would make little sense to characterize payment of a fair price for employer stock or lending money to the Plan at a reasonable interest rate as an “obvious alternative explana tion,” rather than as an additional fact justifying the otherwise troublesome deal. 10 No. 15 3569 GreatBanc’s last argument here is an appeal to policy: it argues that there will be a flood of prohibited transaction lit igation if all that must be alleged is the occurrence of a section 406 transaction. This strikes us as overwrought. Rational plans will sue only when (taking Rule 11 constraints into ac count, among others) there is a reason to do so. If an ESOP transaction is successful, employees who have invested in the ESOP will not have any motive to bring an ERISA lawsuit over the exchange of stock between the company and the Plan. If it fails, they are likely to give it closer scrutiny, but not all failures stem from ERISA violations. A district court has ample tools to screen frivolous claims, and the Twombly Iqbal pleading standards require the plaintiffs to cross the line from the “possible” violation to the “plausible.” GreatBanc fears that our holding will allow a suit any time a trustee so much as purchases something as trivial as a chair for a person to sit in, or pays a financial adviser for investment advice. But why would a beneficiary sue the trustee over a chair? And a beneficiary would have reason to sue over in vestment advice only if she had no reason to believe the trans action was exempt under section 408; otherwise, it would be a waste of time and resources. As the attorney for amicus cu riae Department of Labor pointed out at oral argument, po tential plaintiffs’ cost benefit analyses will also weigh against bringing suits where the plaintiff cannot point to any actual harm that was caused by the prohibited transaction. Sanctions under Federal Rule of Civil Procedure 11 serve as an addi tional deterrent against obviously exempt prohibited transac tion claims. If there is an administrative problem to be worried about, it is the chance that courts would start requiring plaintiffs to No. 15 3569 11 negate all section 408 exemptions in their complaints. Plead ing the absence of the exemption in subsection (b)(19), for ex ample, would be particularly burdensome: it exempts “cross trading” between a plan and an account managed by the same investment manager where nine specific conditions are met, some of which have further exceptions contained within them. 29 U.S.C. § 1108(b)(19). Requiring a plaintiff to demon strate that subsection (b)(19) is not met in order to bring a pro hibited transaction claim would prematurely defeat many claims where the plaintiffs lack access to detailed information about the plan manager’s dealings with other entities. Alt hough GreatBanc contended at oral argument that it is a Rule 11 violation “not to even ask” a defendant for information about, for instance, how stock was valued, we find it implau sible that any would be defendant would voluntarily turn over confidential financial information of that kind without the protections of the discovery process. We decline to add a pre pleading requirement that plaintiffs ask nicely for infor mation they need—but cannot compel access to—before filing their complaint. ERISA is a “remedial statute to be liberally construed in favor of employee benefit fund participants.” Kross v. W. Elec. Co., Inc., 701 F.2d 1238, 1242 (7th Cir. 1983). Section 408 ex emptions are affirmative defenses for the defendant, not items that a prohibited transaction plaintiff must address in her complaint. B In order to state a claim for breach of fiduciary duty under ERISA, the 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.” 12 No. 15 3569 Kenseth v. Dean Health Plan, Inc., 610 F.3d 452, 464 (7th Cir. 2010) (citing Kannapien v. Quaker Oats Co., 507 F.3d 629, 639 (7th Cir. 2007)). The first and third elements are not at issue here; we need address only whether the plaintiffs sufficiently pleaded breach. The facts alleged must “provide sufficient de tail to present a story that holds together.” Alexander, 721 F.3d at 422 (internal quotation marks omitted). ERISA imposes duties of loyalty and prudence on a plan fiduciary. 29 U.S.C. § 1104(a)(1)(A)–(B). Loyalty requires a fi duciary to act “for the exclusive purpose” of providing bene fits to participants. Id. (“[A] fiduciary shall discharge his du ties with respect to a plan solely in the interest of the partici pants and beneficiaries[.]”). Prudence requires the fiduciary to act “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. This includes choosing wise investments and mon itoring investments to remove imprudent ones. Tibble v. Edi son Int’l, 135 S. Ct. 1823, 1828–29 (2015). In order to assess the prudence of the fiduciary’s actions, they must be evaluated in terms of both procedural regularity and substantive reasona bleness. Fish, 749 F.3d at 680. 1 The central allegation in the present complaint is that GreatBanc failed to conduct an adequate inquiry into the value of Personal Touch’s stock. See Armstrong v. LaSalle Bank Nat. Ass n, 446 F.3d 728 (7th Cir. 2006) (reversing district court summary judgment order on triable issue of fact of whether ESOP trustee exercised prudence in stock valuation for pur poses of setting a redemption price). Although the plaintiffs No. 15 3569 13 could not describe in detail the process GreatBanc used, no such precision was essential. It was enough to allege facts from which a factfinder could infer that the process was inad equate. As the Eighth Circuit explained in Braden, a district court errs in making the “assumption that [the plaintiff] was required to describe directly the ways in which appellees breached their fiduciary duties”; rather, it is “sufficient for a plaintiff to plead facts indirectly showing unlawful behav ior.” 588 F.3d at 595. This is particularly true in ERISA cases because “ERISA plaintiffs generally lack the inside infor mation necessary to make out their claims in detail unless and until discovery commences.” Id. at 598. We agree with the Eighth Circuit: an ERISA plaintiff alleging breach of fiduciary duty does not need to plead details to which she has no access, as long as the facts alleged tell a plausible story. The plaintiffs met this burden: they alleged that the stock value dropped dramatically after the sale (implying that the sale price was inflated), that the loan came from the employer seller rather than from an outside entity (indicating that out side funding was not available), and that the interest rate was uncommonly high (implying that the sale was risky, or that the shareholders executed the deal in order to siphon money from the Plan to themselves). These facts support an inference that GreatBanc breached its fiduciary duty, either by failing to conduct an adequate inquiry into the proper valuation of the shares or by intentionally facilitating an improper trans action. This was enough to permit the plaintiffs to move ahead with their case. GreatBanc remains free to move for summary judgment after discovery on the grounds that its process for conducting a valuation of the stock was adequate. It can also 14 No. 15 3569 argue that a fiduciary need not be prescient about future stock value movements. See DeBruyne v. Equitable Life Assur ance Soc’y of the United States, 920 F.2d 457, 465 (7th Cir. 1990). But plaintiffs will be free to compare whatever steps Great Banc actually took with the procedures that a prudent fiduci ary would use. GreatBanc’s (and the district court’s) reliance on Duden hoeffer is unwarranted. In Dudenhoeffer, the Supreme Court held that ERISA fiduciaries conducting ESOP transactions can generally prudently rely on the market value of publicly traded stock, absent special circumstances. Dudenhoeffer, 134 S. Ct. at 2471. The Court suggested that the special circumstances might include something like available public information tending to suggest that the public market price did not reflect the true value of the shares. Id. at 2472. As we have just em phasized, however, the Court’s holding was limited to pub licly traded stock and relies on the integrity of the prices pro duced by liquid markets. Private stock has no “market price,” for the obvious reason that it is not traded on any public mar ket. The transaction between Personal Touch and the Per sonal Touch ESOP was an exchange involving only private stock. There is no market price to explain away, and so no rea son to apply any “special circumstances” rule. Additionally, another part of Dudenhoeffer’s rationale—the need to protect fiduciaries from running up against insider trading law by re lying on non public information for stock valuation—has no application to the private stock context. GreatBanc responds that Dudenhoeffer’s rationale should be extended to the private stock situation because “an unbi ased, independent trustee[’s]” assessment of the value of stock is at least as reliable as the stock market’s, and therefore No. 15 3569 15 the special circumstances pleading requirement should apply to private stock as well. But saying so does not make it so, and GreatBanc has assumed things that may or may not be true in a particular case. Was the trustee unbiased? Was it independ ent? Did it have solid data behind its assessment? None of those questions is important in the case of public markets; all of them and more are for private holdings. The inference from the plaintiffs’ complaint is that GreatBanc did not rely on an unbiased, independent assessment, nor did it use an assess ment that started with a trustworthy benchmark. We note as well that the Secretary of Labor, although he takes no position on the question whether the facts pleaded here are sufficient to allege a breach of fiduciary duty, urges that Dudenhoeffer does not apply to sales of non public shares. The district court said that in order for the complaint to survive, the plaintiffs needed to allege “special circumstances regarding, for example, a specific risk a fiduciary failed to properly assess.” Allen v. GreatBanc Trust Co., No. 15 C 3053, 2015 WL 5821772, at *3 (N.D. Ill. Oct. 1, 2015). There is no sup port, however, for such a stringent pleading requirement. All the plaintiff must do is to plead the breach of a fiduciary duty, such as prudence, and to explain how this was accomplished. Plaintiffs here accused GreatBanc of failing to conduct an in dependent assessment of the value of stock and relying in stead on an interested party’s number. This is enough to give notice of the claim and to allow the suit to proceed. 2 GreatBanc maintains that the facts on which plaintiffs rely—the post transaction decline in stock value and the 6.25% interest rate—are equally consistent with acceptable performance and breach of fiduciary duty and so not enough 16 No. 15 3569 under Twombly and Iqbal. If drop in price were enough, Great Banc argues, every ESOP transaction where there was any de cline in value after the transaction would be subject to suit. But the complaint says more than this. It alleges that Great Banc did not engage in a reasonable and prudent process, and notes in particular the absence of outsider financing (or any other objective benchmark of pricing) for the deal. While the plaintiffs originally claimed that GreatBanc was aware that 4.25% was the customary interest rate for a trans action of the kind it was facilitating, they retracted that spe cific number in their sur reply, which said more generally that the 6.25% interest rate was exorbitant. This was not such an outlandish allegation that it could be dismissed out of hand. We note that on December 15, 2010, the Federal Reserve prime interest rate was 3.25%. See https://www.comptrol That aside, the retrac tion of the specific number is unimportant. At this stage, we are obliged to take as true the plaintiffs’ alleged facts in deter mining the sufficiency of the complaint, and one of the alleged facts is that the interest rate on the loan from the principal shareholders was unreasonably high. The district court should not have dismissed this claim as “conclusory,” be cause this was a factual claim, not a legal one. If the plaintiffs are unable after discovery to show that the rate was indeed high, GreatBanc may be entitled to summary judgment (though that will depend on the entire record at that time). GreatBanc argues that the post transaction decline in stock value is precisely what economists predict should happen af ter an ESOP transaction, and therefore it is not evidence of fi duciary breach. But whether the 22% decline in value—a de cline that lasted not months but years and ballooned to nearly No. 15 3569 17 50%—was the result of normal economic forces or something more sinister is a matter for a later stage of litigation. We need not answer whether any post ESOP transaction decline in stock value is enough for a complaint; the decline here was significant and accompanied by other indications of a breach of fiduciary duty. C We note, finally, that the 2014 settlement agreement be tween GreatBanc and the Department of Labor, in which GreatBanc agreed to a specific set of policies and procedures for analyzing stock valuation in ESOP transactions because of its history of failing properly to execute its fiduciary duties, has no effect on the motion to dismiss. GreatBanc points out that a settlement agreement is sometimes just a rational busi ness decision and not an admission of any wrongdoing, that the complaint does not identify what the agreed upon poli cies and procedures were, and that the complaint does not al lege that GreatBanc was not previously following those poli cies and procedures. Even though it may seem odd for a party to enter into a settlement agreement in which it undertakes to do exactly what it has been doing, that is neither here nor there at this stage. The plaintiffs would like to use the agreement as evi dence from which an absence of prudence could be inferred, but the plaintiffs do not need such particular evidence yet. We leave it to the district court to determine, if and when neces sary, whether the settlement is admissible for evidentiary purposes. 18 No. 15 3569 III Because the district court erred in dismissing the plaintiffs’ claims of breach of fiduciary duty and prohibited transactions in violation of ERISA, we REVERSE its judgment and REMAND for additional proceedings consistent with this opinion.