CLANCY et al v. BLACKROCK INVESTMENT MANAGEMENT, LLC et al, No. 3:2014cv01165 - Document 153 (D.N.J. 2018)

Court Description: REDACTED OPINION filed re 147 Opinion. Signed by Judge Freda L. Wolfson on 6/13/2018. (mmh)

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CLANCY et al v. BLACKROCK INVESTMENT MANAGEMENT, LLC et al Doc. 153 *FOR PUBLICATION* UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY In re BLACKROCK MUTUAL FUNDS ADVISORY FEE LITIGATION Civil Action No. 14-1165 (FLW) (TJB) REDACTED OPINION WOLFSON, United States District Judge: Deendants BlackRock Advisors, LLC ("BA"), BlackRock Investment Management, LLC ("BRIM"), and BlackRock Intenational Limited ("BRIL") (collectively, "BlacRock" or "Deendants") 1 move or summary judgment, pursuant to Federal Rule of Civil Procedure 56, on Plaintifs Owen Clancy, Cindy Tarchis, and Brendan Foote's (collectively, "Plaintifs") Consolidated Complaint (the "Complaint"). Plaintifs are shareholders in two mutual unds managed by BRA, the BlackRock Global Allocation Fund, Inc. ("Global Allocation") and the BlackRock Equity Dividend Fund ("Equity Dividend") (collectively, the "Funds"). The Complaint asserts claims under § 36(b) of the Investment Company Act of 1940 (the "ICA" or "Act"), 15 U.S.C. § 80a-35(b), alleging that Deendants breached their iduciary duties by receiving excessive investment advisory ees rom the Funds. Plaintifs oppose Deendants' Motion, and have also moved to preclude Deendants rom relying on certain evidence and arguments, pursuant to Federal Rule of Civil Procedure 3 7, on the ground that Plaintifs ailed to produce complete discovery as to those topics. 1 The abbreviations and deined terms reerenced in this Opinion are set orth in the Glossary of Abbreviations and Deined Terms attached as the Appendix thereto. Dockets.Justia.com This Court held oral argument on Deendants' Motion on May 29, 2018. For the reasons that ollow, Deendants' Motion or Summary Judgment is granted, insoar as Deendants seek a uling that the decision of the Funds' board of directors and board of trustees to approve BRA's advisory ees with the Funds is entitled to substantial deerence, and denied, insoar as Deendants seek the dismissal of Plaintifs' claims. Plaintifs' Motion to Preclude is denied without prejudice. I. BACKGROUND 2 A. The Parties Plaintif Owen Clancy has been a shareholder of Global Allocation since October 2011, and iled suit against Deendants on February 21, 2014. Deendants' Local Civil Rule 56.1 Statement of Material Facts Not in Dispute ("SOF"), r 1. 3 Plaintif Brendan Foote has been a shareholder of Global Allocation since June 2012, and commenced his case against Deendants on March 28, 2014. d. at r 2. Plaintif Cynthia Tarchis has been a shareholder of Global Allocation since 1993 and Equity Dividend since 2012. I. at r 3. Tarchis joined this action on June 16, 2015. Id. BlackRock was established in 1988, and is one of the world's largest investment advisers, with over $4 trillion in assets under management ("AUM"). I. at r 20. BlackRock provides investment advice and invests capital on behalf of a broad array of clients through various investment products, including open-end and closed-end mutual unds, exchange-traded unds ("ETFs"), and other pooled investment vehicles. Id. at r 21. 2 The acts are taken rom the parties' Local Rule 56.1 statements, and are construed in the light most avorable to Plaintifs, the non-moving parties on Deendants' Motion. These acts are undisputed, except where noted. 3 For the sake of brevity, all citations to the parties' Rule 56.1 statements in this Opinion incorporate the evidentiary citations contained therein. B. The Funds 4 The Funds are open-end mutual unds, registered with the United States Securities and Exchange Commission (the "Commission" or "SEC") under the ICA. I. at r 4. Global Allocation began ofering shares or sale to the public on February 3,1989. I. at r 8. From February 21,2013 through November 2015 (the "Relevant Period"),5 Global Allocation had AUM of between $51 billion and $58 billion. Id. at rr 12-13. Equity Dividend began ofering shares or sale to the public on November 25, 1987. I. at r 14. During the Relevant Period, Equity Dividend managed between $20 billion and $30 billion in assets. Id. at r 19. 1. The Funds' Investment Management Agreements wth BA As with most mutual unds,the Funds do not have employees or acilities of their own. Plaintifs' Supplemental Statement of Disputed Material Facts ("PSSOF"),r 5. Pursuant to investment management agreements ("IMAs") with Global Allocation and Equity Dividend, BRA,a subsidiary of BlackRock,serves as the investment adviser to the Funds. SOF rr 26-27. The IMAs are reviewed annually,and are subject to the approval of Global Allocation's board of 6 directors and Equity Dividend's board of tustees (collectively,the "Board"). Id. at r 27. Pursuant to the IMAs,BA provides investment advisory services 7 to the Funds,including: (i) "supervis[ing] and manag[ing] the investment and reinvestment of the [Funds'] assets"; (ii) "A muual und is a pool of assets,consisting primarily of portolio securities,and belonging to the individual investors holding shares in the und." Burks v. Lasker, 441 U.S. 471,480 (1979). 5 The Court's reerence to the "Relevant Period" is used solely to reer to the period in which the parties obtained discovery and made certain inancial calculations,and should not be construed as a limitation upon the damages period in this case,which the parties,through a joint stipulation entered by this Court,have agreed uns rom "one year prior to the commencement of the [original complaint (Febuary 21,2013)] through the date of trial . . .. Stipulation and Order " dated June 16,2016,ECF No. 68 at r 5. 6 While Global Allocation is overseen by a board of directors and Equity Dividend is overseen by a board of trustees,the same individuals comprise both boards. SOF r 30. 7 The services that BA provides to the Funds are set orth in greater detail, inra. 3 4 "supervis[ing] continuously the investment program of the [Funds] and the composition of [their] investment portolio[ s ]"; (iii) "arrang[ing] .. . or the purchase and sale of securities and other assets held in the investment portolio of the [Funds]"; (iv) "provid[ing] investment research to the [Funds]"; and (v) "select[ing] brokers" to execute the transactions or the [Funds]." PSSOF r 20; Certiication of Andrew Muscato in Support of Deendants' Motion or Summary Judgment ("Muscato Cert."), Ex. 14, GA Fund IMA at§§ 2, 4(b)(i); Muscato Cert., Ex. 15, ED Fund IMA at§§ 2, 4(b)(i). In exchange or providing advisory services to the Funds, the IMAs require the Funds to pay BRA an annual advisory ee (the "Advisory Fee"). SOF r 29. The Advisory Fee is calculated as a percentage of the Funds' AUM, pursuant to a ee schedule containing "breakpoints," which operate to reduce BRA's Advisory Fee as the Funds' AUM increase. Id. The ollowing table depicts Global Allocation's ee schedule during the Relevant Period: Global Allocation Fee Schedule (2013-2015} AUM Percentage(%) of AUM Up to $10 billion .75% $10 billion to $15 billion .69% $15 billion to $20 billion .68% $20 billion to $25 billion .67% $25 billion to $30 billion .65% 4 $30 billion to $40 billion .63% $40 billion to $60 billion .62% $60 billion to $80 billion .61% Over $80 billion .60% d. at 168. Under this ee schedule, the efective Advisory Fee received by BRA rom Global Allocation was .66% of AUM in 2013 and 2014, and .67% of AUM in 2015. I. at 169. In total, Global Allocation paid BRA more than $1.2 billion in Advisory Fees during the Relevant Period ($412,500,349 in 2013 + $441,347,281 in 2014 + $407,768,884 in 2015). PSSOF 124. The pro rata amount of BRA's Advisory Fee allocable to each of the Fund's shareholders during the same period ranged between $6 and $7 or every $1,000 invested. SOF 170. Likewise, under its IMA with Equity Dividend, BRA received an Advisory Fee calculated as a percentage of Equity Dividend's AUM, pursuant to a ee schedule that included breakpoints. I. at 1171-72. In 2013, BRA's Advisory Fee rom Equity Dividend was calculated pursuant to the ollowing ee schedule: Eguiv Dividend Fee Schedule (2013) AUM Percentage(%) of AUM Up to $8 billion .60% $8 billion to $10 billion .56% 5 $10 billion to $12 billion .54% $12 billion to $17 billion .52% $17 billion to $25 billion .51% $25 billion to $35 billion .50% $35 billion to $50 billion .49% Over $50 billion .48% Id. at 73. n 2014 and 2015, BRA's Advisory Fee rom Equity Dividend was adjusted in accordance with the ollowing ee schedule: Eguiv Dividend Fee Schedule (2014-15} AUM Percentage(%) of AUM Up to $8 billion .60% $8 billion to $10 billion .56% $10 billion to $12 billion .54% $12 billion to $17 billion .52% $17 billion to $25 billion .51% 6 $25 billion to $30 billion .50% $30 billion to $40 billion .49% Over $40 billion .48% Id. at 74. Under those ee schedules, the efective Advisory Fee received by BRA rom Equity Dividend during the Relevant Period was .54% of AUM. I. at 76. Equity Dividend paid BRA over $450 million in Advisory Fees during that time ($144,192,714 in 2013 + $162,300,957 in 2014 + $151,855,019 in 2015). PSSOF 25. The pro rata amount ofBRA's Advisory Fee allocable to each of Equity Dividend's shareholders during the Relevant Period ranged between $5 and $6 or every $1,000 invested. SOF 77. 2. he Funs' Separate pense Agreements with BA Apart rom BRA's Advisory Fee under the IMAs, the Funds also have separate agreements with BRA that provide or the payment of certain expenses incurred by BRA, including accounting, transer agency, proessional, and registration ees. d. at 78. Pursuant to a Shareholders Administrative Services Agreement (the "SAS Agreement") with BRA, the Funds reimburse BRA or the expenses that it incurs in providing the personnel and inrastructure required to operate a Shareholder Service Center. 8 d. at 79. Under the SAS 8 Plaintifs contend that, in addition to reimbursement or the personnel and inrastructure required to operate the Shareholder Service Center, the SAS Agreement separately provides or reimbursement of expenses incured in: "(i) responding to telephone, written or other inquiries or instructions rom shareholders, dealers and prospective investors concerning accounting balances, available shareholder services, account statements, transaction conirmations, procedures or purchasing and redeeming shares and similar matters and services"; and (ii) Agreement, Global Allocation reimbursed BRA or $764,594 of expenses in 2013, $543,076 of expenses in 2014, and $601,419 of expenses in 2015. Id. at r 81. Additionally, Equity Dividend reimbursed BRA or $370,634 of expenses in 2013, $133,544 of expenses in 2014, and $191,989 of expenses in 2015. Id. The Funds also have an Accounting Support Services Agreement (the "Accounting Agreement"), which requires the Funds to partially reimburse BRA or the pro rata share of expenses that BRA incurs in providing certain speciied accounting services to the Funds, up to an annual maximum of $1.6 million in the aggregate. Id. at r 83. The parties dispute whether the services provided pursuant to the Accounting Agreement overlap with the services that BRA renders to the Funds under the IMAs. See i.; PRSOF at r 83. Under the Accounting Agreement, Global Allocation reimbursed BRA or $584,806 of expenses in 2013 and $597,630 of expenses in 2014. SOF r 83. Equity Dividend reimbursed BRA or $300,993 of expenses under the Accounting Agreement in 2013, and $306,211 of expenses in 2014. d. at r 84. The expenses paid by the Funds under both the SAS Agreement and the Accounting Agreement required the Board's approval. Id. 3. The Funds' Agreements with Thrd-Party Service Providers Through various agreements with the Funds, third-party service providers also assist in perorming various operations necessary to operate the Funds. PSSOF r 6. In that regard, under an Administrative Services Agreement (the "State Street Adm. Agreement") between the Funds and State Street Bank and Trust Company ("State Street"), State Street perorms administrative 9 "receiving telephone transaction instructions and inputting such instructions into" a third-paty service provider's computer system. Plaintifs' Response to Deendants' Local Civil Rule 56.1 Statement of Material Facts ("PRSOF"), r 79. 9 The administrative services listed in the State Street Adm. Agreement include: overseeing the custodian or the Funds in the maintenance of books and records as required under Rule 3 l a-1 (b) and accounting services 10 or the Funds. Id. at ll 28-30. The parties dispute the number of employees that provide services or the Funds under the State Street Adm. Agreement. Id. at 1 32; Deendants' Response to Plaintifs' Supplemental Local Civil Rule 56.1 Statement ("DRSOF"), 1 32. The State Street Adm. Agreement requires the Funds to pay an annual ee to State Street that is calculated as a percentage of the Funds' AUM, plus additional monthly expenses. PSSOF 133. Under this agreement, Global Allocation paid State Street $19,820,722 in administrative ees rom 2013 to 2016, and Equity Dividend paid State Street administrative ees of $9,834,041 during the same period. I. at ll 34-35. The Funds also entered into a Transer Agency and Shareholders Services Agreement (the "BNY Agreement") with BNY Mellon Investment Servicing (US) Inc. ("BNY"), pursuant to which BNY served as the Funds' transer agent, registrar, dividend disbursing agent, and shareholder servicing agent during the Relevant Period. Id. at 137. According to Plaintifs, the services that BNY perorms or the Funds under the BNY Agreement include: preparing and of the ICA; calculating and arranging or the payment of the Funds' expenses; preparing the Funds' inancial inormation or shareholder reports, proxy statements, and other shareholder communications; preparing and ling the Funds' periodic inancial reports required to be iled with the SEC; preparing reports on the business and afairs of the Funds; making reports and recommendations to the Board concening the peromance of the Funds' independent accounts, as well as the perormance and ees of the Funds' custodian, transer agent, and dividend disbursing agent; consulting with the Funds' oicers, independent accountants, legal counsel, custodian, and transer agent in establishing accounting policies or the Funds; providing compliance monitoring services to assist BRA in complying with the requirements of the Internal Revenue Code ("IRC"), the ICA, and the limitations set orth in the Funds' prospecuses; and assisting the Funds and the Funds' legal counsel in handling regulatory matters. PSSOF 130 (citing Declaration of Robert. L. Laind in Opposition to Deendants' Motion or Summary Judgment ("Laind Deel."), Ex. 16, State Street Adm. Agreement at 4-5). 10 The accounting services listed in the State Street Adm. Agreement include: maintaining the books of account and other inancial records of the Funds in accordance with applicable law; recording general ledger entries; calculating daily net income; reconciling activity to the trial balance; calculating and publishing daily net asset value; and preparing account balances. PSSOF 129 (citing State Street Adm. Agreement at 3-4). 9 certifying shareholder lists in conjunction with proxy solicitations; processing and accounting or purchases and redemptions of the Funds' shares, dividends, and distributions; mailing all communications by the Funds to its shareholders; tracking the cumulative efects (gains/losses) of as-of transactions on the Funds' net asset value ("NAV"); and maintaining accurate records of shareholder accounts.11 Id. at r 38. Plaintifs assert that BNY also reports to the Funds on: NAV gains and losses; account activities; und details; reconciliations; daily prices; correspondence tracking; Rule 12b- l and load commission repots; trade monitoring reports; and compliance certiications.12 I. at r 39. For the iscal years 2013 to 2016, Global Allocation paid BNY $208,793 219 in ees under the BNY Agreement. I. at r 41. During the same period, Equity Dividend paid BNY $150,303,636 in ees under the BNY Agreement. I. at r 42. Additionally, Global Allocation entered into an agreement (the "BBH Custodian Agreement") with Brown Brothers Harriman & Co. ("BBH"), under which BBH served as the custodian and oreign custody manager or Global Allocation during the Relevant Period. Id. at 11 Deendants dispute Plaintifs' representations regarding BNY's services, stating that the "services actually rendered by BNY to the Funds pursuant to the [BNY Agreement] vary by Fund to the extent applicable to and needed by the Fund." DRSOF r 38. 12 Defendants dispute Plaintifs' representations regarding BNY's reporting services, stating that the reports provided by BNY to the Funds pursuant to the BNY Agreement "vary by Fund." DRSOF r 39. 10 r 44. Pursuant to the BBH Custodian Agreement, BBH provides custodial, 13 tax, 1 4 and proxy 15 services to Global Allocation. Id. at rr 45-48. For the iscal years 2013 to 2016, Global Allocation paid BBH $22,437,592 in ees under the BBH Custodian Agreement. I. at r 50. Similarly, Equity Dividend entered into an agreement (the "State Street Custodian Agreement") 13 The parties dispute the scope of custodial services provided by BBH to Global Allocation. See PSSOF r 45; DRSOF r 45. Plaintifs claim that, under the BBH Custodian Agreement, the custodial services that BBH perorms or the Funds include: receiving, maintaining, holding, and keeping saely the property of each Fund; notifying the Fund of property deliveries or transfers; paying or and receiving securities purchases or the account of a Fund; making delivery of securities that have been sold or the account of a Fund; receiving and collecting all stock dividends, rights, and oreign tax reclaims; releasing unds or securities to the Shareholder Servicing Agent or otherwise applying unds or securities, insoar as available, or the payment of dividends or other distributions to the Fund shareholders, and maintaining complete and accurate records with respect to securities and other assets held or the account of each Fund. PSSOF r 45. Deendants contend that the "services actually rendered by BBH to [Global Allocation] under the BBH Custodian Agreement vary according to the needs of the GA Fund." DRSOF r 45. 14 The parties also dispute the scope of tax services provided by BBH to Global Allocation. See PSSOF r 47; DRSOF r 47. Plaintifs claim that, under the BBH Custodian Agreement, the tax services that BBH perorms or the Funds include: "apply[ing] or a reduction of withholding tax and any reund of any tax paid or credits that apply in each applicable market in which a Fund invests"; "promptly l[ing] any certiicates or other aidavits or the reund or reclaim of oreign taxes paid, and otherwise us[ing] all lawul available measures customarily used to minimize the imposition of oreign taxes at the source"; and "perorm[ing] tax reclaim services with respect to taxation levied by the revenue authorities of the countries in which the Custodian provides global custody services." PSSOF r 47 (quoting Laind Deel., Ex. 28, BBH Custodian Agreement, Sch. C). Deendants argue that the tax "services actually rendered by BBH to [Global Allocation] under the BBH Custodian Agreement vary according to the needs of the GA Fund." DRSOF r 47. 15 Once again, the parties dispute the scope of proxy services provided by BBH to Global Allocation. See PSSOF r 48; DRSOF r 48. Plaintifs claim that the proxy services provided by BBH to Global Allocation include: "notices by the Custodian to a Fund or Series of the dates of pending shareholder meetings, resolutions to be voted upon, and the required retun dates"; and "promptly deliver[ing] or mail[ing] to Proxy Monitor, or such other proxy vendor as may be appointed rom time to time by the Fund, all orms of proxies and all notices of meetings and any other notices or announcements or related proxy materials," including "annual reports, explanatory material concerning resolutions, management recommendations, or other relevant materials." PSSOF r 48 (quoting Lakind Deel., Ex. 28, BBH Custodian Agreement, Sch. D). Deendants contend that the "services actually rendered by BBH to [Global Allocation] under the BBH Custodian Agreement vary according to the needs of the GA Fund." DRSOF r 48. 11 with State Street, whereby State Street served as Equity Dividend's custodian during the Relevant Period. d. at 52. Plaintifs assert, and Deendants contest, that State Street perorms substantially the same custodial services or Equity Dividend that BBH provides to Global Allocation. See id. at 53; DRSOF 53. From 2013 to 2016, Equity Dividend paid State Street $4,560,375 in custodial ees under the State Street Custodian Agreement. PSSOF 55. Finally, the Funds have a distribution agreement (the "Distribution Agreement") with BlackRock Investments, Inc. ("BlackRock Investments"), pursuant to which BlackRock Investments serves as the principal underwriter and distributor or the Funds. I. at 57. According to Plaintifs, under the Distribution Agreement, BlackRock Investments is responsible or sales and promotional activities or the Funds, including coordinating and overseeing distribution partners, maintenance of state registration, monitoring market timing, and related distribution services. 16 Id. at 58. Pursuant to the Distribution Agreement, the Funds pay a distribution ee and service or account maintenance ee to BlackRock Investments. Id. at 59. For the iscal years 2013 to 2016, Global Allocation paid BlackRock Investments $803,669,615 in service and distribution ees under the Distribution Agreement. Id. at 60. C. Board Oversight of the Funds 1. The Board BRA and the Funds are overseen by the Board. SOF 30. During the Relevant Period, the Board was comprised of thirteen individuals. d. at 31. From a statutory perspective, ten of the thirteen Board members (collectively, the "Independent Trustees") were not "interested persons," as that term is deined under§ 80a of the ICA. I. at 31; see 15 U.S.C.§§ 80a-10(a) 16 Deendants dispute Plaintifs' representations regarding BlackRock Investments' services under the Distribution Agreement, arguing that they are "conclusion[s] oflaw to which no response is required under Local Civil Rule 56.1." DRSOF 58. 12 and 80a-2(a)(l 9(B). The Board is comprised of individuals hailing rom diverse proessional backgrounds, including chief executive oicers of various corporations, law irm partners, ormer high-ranking govement oficials, and a graduate proessor at Harvard University's Graduate School of Business Administration. SOF, 34. The Chairman of the Board, Robet Hernandez (the "Board Chairman"), is an Independent Trustee and has served as a member of the Board or ten years. Id. at, 32. The Board has ive standing committees: the Audit Committee, the Governance and Nominating Committee, the Compliance Committee, the Perormance Oversight Committee, and the Executive Committee (collectively, the "Standing Committees"). I. at, 53. Each Standing Committee is chaired by an Independent Trustee, and with the exception of the Executive Committee, the Standing Committees met regularly each quarter throughout the Relevant Period to discuss action items pertaining to their respective responsibilities. Id. at,, 53-64. Under the ICA, the Board is charged with overseeing various aspects of the Funds' management, including reviewing and approving the Funds' IMAs and BRA's Advisory Fee on an annual basis. I. at, 33. During the Relevant Period, the Board met regularly, holding two day meetings each quarter, and additional ad-hoc in person or telephonic meetings as necessary. Id. at,, 39-41. In the course of perorming its oversight responsibilities, the Board received and reviewed voluminous materials pertaining to various aspects of the Funds' operations and perormance throughout the Relevant Period, as well as additional inormation on a broad range of new developments and emerging issues. Id. at,, 42-44. For example, the Board received an update regarding BlacRock's pricing philosophy, including the actors that BRA considers annually when ormulating its Advisory Fee proposal to the Board. d. at, 44. The Board also met with senior BlackRock personnel, including its Chairman and Chief Executive Oicer, the 13 heads of its investment divisions, and the Funds' portolio managers. d. at ii 45-50. For example, in May 2015, the Board met with the team responsible or Global Allocation's investment management to discuss, among other things, Global Allocation's perormance relative to peer unds managed by BRA's competitors. d. at i 46. During the Relevant Period, the Board also met with leaders in various ields of interest, including a 2013 presentation rom the Chairman of the SEC. d. at i 52. The Board receives assistance rom various third-party service providers in discharging its duties under the ICA. d. at i 35. In that regard, during the Relevant Period, the law irm of Debevoise & Plimpton LLP (the "Board's Counsel"), in its role as counsel to the Board, provided advice to the Board regarding, inter alia, issues related to the renewal of the Funds' IMAs with BRA. d. at ii 36, 93. During the same period, the law irm of Willkie Farr & Gallagher LLP (the "Funds' Counsel") served as counsel to the Funds, providing legal advice regarding the duties of the Board in connection with reviewing the contracts between the Funds and their service providers. I. at i 37. Moreover, the Board received analysis and inormation rom the ollowing third-party service providers: (i) Lipper, Inc. ("Lipper"), a inancial services company that provided the Board with data and inormation regarding the Funds' perormance and ees relative to peer unds; (ii) Moningstar, nc. ("Moningstar"), an investment management company that provided the Board with analysis and ratings of the Funds' perormance relative to peer unds 17; (iii) PricewaterhouseCoopers ("PwC"), a third-party irm that, at least on one occasion, provided the Board with analysis of the cost allocation 17 n their response to Deendants' Rule 56.1 statement, Plaintifs object to consideration of the Lipper and Morningstar reports, arguing that they are inadmissible hearsay. See PRSOF ii 1011. However, Plaintifs have not ormally moved to preclude consideration of that evidence on this Motion. In any event, because the Court does not rely on that inormation in this Opinion, the admissibility of those reports are not at issue here. 14 methodology employed by BRA to estimate its proitability in managing the Funds; and (iv) Ernst & Young LLP ("E&Y"), a third-party irm that provided analysis of the strucure of BA's Advisory Fee. Id. at r 38. 2. The Board's Process for Approving BRA 's Advisoy Fee In addition to its quarterly meetings, the Board met each April during the Relevant Period to consider, among other things, whether to renew the Funds' IMAs with BA (the "Fee Approval Meeting"). 18 I. at rr 39-41. Planning or the relevant Fee Approval Meetings occurred months in advance, and involved BlackRock, the Board's Counsel, and Lipper. Id. at r 88. Prior to the Fee Approval Meetings, the Board received extensive inormation, spanning more than 25,000 pages of material potentially relevant to BRA's Advisory Fee, including comparative ee and perormance data rom Lipper, and inormation on each of the actors outlined in Gartenberg v. errill Lynch Asset Mgmt., Inc., 694 F.2d 923 (2d Cir. 1982) 19 and adopted in ones v. Harris Assocs. L.P., 559 U.S. 335 (2010).20 Id. at rr 95, 97. As the Board Chairman testiied, in deciding whether to approve BRA's proposed Advisory Fee, the Board looked at "the Gartenberg actors and anything else we consider[ed] relevant," including each of the Gartenberg actors. Deposition Transcript of Robert Hernandez ("Hernandez Dep."), 35:311. At a subsequent meeting, usually held in May, the Board voted on whether to renew BRA's Advisory Fee. SOF r 87. 18 Plaintifs dispute that the relevant Fee Approval Meetings were limited to consideration of whether to renew the Funds' MAs with BlackRock, arguing that the Board also considered BlackRock's contracts with third-party service providers and the renewal of BlackRock's subadvisory agreements with independent mutual unds. See PRSOF r 41. Nonetheless, Plaintifs do not dispute that the Board did, in act, consider whether to renew BRA's Advisory Fee during the Fee Approval Meetings. See id. 19 The Court will explain the Gartenberg actors, ira. 20 As discussed, inra, Plaintifs dispute the suiciency of the inormation provided to the Board regarding BRA's Advisory Fee. See PRSOF r 97. 15 During and ater the Fee Approval Meetings that were held in 2013, 2014, and 2015, the Board and the Board's Counsel also submitted to BlackRock written questions and requests or additional inormation and materials.21 Id. at r 142. During the Relevant Period, BlackRock provided over 300 pages of written responses and materials to the Board's ollow-up inquiries. d. at r 143. For example, in 2014, the Board asked BlackRock or additional inormation regarding the ees that BlackRock receives or advisory services rendered to institutional investors, and requested that BlackRock perorm a review of the advisory ee breakpoints contained in ee schedules across all unds under BlackRock's management. d. at r 145. The parties dispute the adequacy ofBlacRock's responses to these inquiries. See i.; PRSOF r 145. On at least two occasions during the Relevant Period, the Board negotiated to obtain ee concessions in avor of shareholders. First, in 2014, the Board asked BlackRock to consider a voluntary ee reduction as a result of Equity Dividend's perormance and BRA's estimated proit margin. SOF r 146. Although BlackRock initially rejected the Board's overtures, - based on its belief that Equity Dividend was priced competitively and the act that additional breakpoints had been added to Equity Dividend's ee schedule in recent years - BlackRock ultimately agreed to modiy the breakpoints in Equity Dividend's ee schedule to provide or reductions in BRA's Advisory Fee. See id. at r 146. Additionally, in 2015, the Board asked BlackRock to agree to a temporary reduction in BRA's Advisory Fee or the Funds. SOF r 148. Ater initially objecting to these proposed ee reductions, BlackRock later agreed to temporarily waive a portion (.025%) of Equity Dividend's management ee. Id. at r 148. D. BA's Services to the Funds 21 Plaintifs dispute that the Board's inquiries during the Relevant Period related solely to the Funds, and that BlackRock's responses to the Board's inquiries were complete and accurate. See PRSOF r 143; PSSOF rr 196-218. 16 To operate the Funds, BRA relies on a team of investment and non-investment personnel, including portolio managers, senior analysts, quantitative strategists, marketing and communications strategists, research analysts, and administrative sta. ee i. at rr 149-150. It is undisputed that BRA provides certain investment advisory services to the Funds in exchange or the Advisory Fee, including investment research, securities selection and trading, and risk management. I. at r 149. The parties diverge, however, on the degree to which BRA, as opposed to third-party irms, provides the additional services necessary to operate the Funds and as to whether BRA is compensated or any such additional services under the Advisory Fee, as opposed to under separate agreements. According to Deendants, in addition to investment advisory services, BRA perorms or oversees the ollowing services (collectively, the "Support Services") required to operate the Funds: (i) providing accounting services, including the publication and veriication of Funds' NAY, i. at rr 154-58; (ii) designing and implementing the Funds' compliance program, i. at rr 159-176; (iii) providing legal services to the Funds, i. at rr 177-84; (iv) suppoting the Board in perorming its repoting and management duties, i. at rr 185-97; (v) hiring and overseeing the Funds' service providers, including the Funds' accountant, custodian, and transer agent, i. at rr 198-222; (vi) coordinating and ensuring compliance with the Funds' regulatory reporting and inancial disclosure requirements, i. at rr 223-30; (vii) overseeing the Funds' distribution partners and the distribution of the Funds' shares through various distribution channels, i. at rr 231-34; (viii) managing the Funds' dividend requirements, i. at rr 235-36; (ix) complying and managing tax issues conronted by the Funds, i. at rr 237-39; and (x) providing recordkeeping services. I. at rr 241-43. Deendants contend that BRA perorms these Support Services in exchange or the Advisory Fee. 17 Conversely, Plaintifs maintain that the Suppot Services are not perormed by BRA under the IMAs or in exchange or the Advisory Fee. PSSOF i 27. In that regard, Plaintifs point to the language of the Funds' contracts with third-party service providers - including the State Street Adm. Agreement, the BNY Agreement, the BBH Custodian Agreement, the State Street Custodian Agreement, and the Distribution Agreement - and contend that many of the Support Services identiied by Deendants are actuaJly provided by third-party service providers, or a separate ee. See id. at ii 27-61. Moreover, Plaintifs assert that, to the extent BRA plays a role in providing any of the Support Services to the Funds, the Funds pay ees and expenses to BRA separate rom the Advisory Fee. ee id. at i 62-78. Speciically, Plaintifs claim that, pursuant to certain reimbursement provisions in the IMAs, BA receives separate compensation or various Support Services, including separate compensation or compliance services such as the compensation of the Funds' Chief Compliance Oicer ("CCO"). See id. at ii 62-67. Plaintifs also assert that the Funds have reimbursed BA or accounting services under the terms of the Accounting Agreement, and have reimbursed BRA or shareholder services pursuant to the SAS Agreement. See id. at ii 68-73. Finally, Plaintifs contend that the Funds pay directly or certain operating expenses, including or reimbursement of the CCO's compensation and disinterested directors' ees, printing expenses, proessional ees, registration ees, and other miscellaneous expenses. See id. at ii 74-76. In total, Plaintifs asset that, in addition to and apart rom the Advisory Fee, Global Allocation paid BRA and third-party service providers approximately $846,095,752 in ees and expenses during the Relevant Period, with Equity Dividend paying approximately $330,617,830 in additional expenses and ees over the same timerame. d. at ii 77-78. E. The Subadvised Funds 18 The core of this case surrounds the scope and extent of the services that BRIM, an afiliate of BlackRock, perorms as a subadvisor or seven mutual unds (collectively, the "Subadvised Funds")22 organized and sponsored by various inancial institutions unafiliated with BlackRock, which serve as the investment advisers or the Subadvised Funds (collectively, the "Independent Advisers"). 2 3 SOF ii 244-45. Like the Funds, the Subadvised Funds are open end mutual unds registered under the ICA. PSSOF i 80. Each Subadvised Fund has its own board of directors or trustees. SOF ii 253, 255. The Subadvised Funds retain their own service providers, including advisers, transer agents, and custodians. Id. at i 255, PSSOF i 83. These service providers conduct the Subadvised Funds' operations under the oversight of the Independent Advisers. d. at i 255; PSSOF i 83. Through subadvisory agreements with the Independent Advisers, BRIM renders subadvisory services to the Subadvised Funds in exchange or a ee (the "Subadvisory Fee"). SOF i 244; PSSOF i 85. The parties agree that BRIM perorms substantially the same investment advisory (i.e., portolio management) services or the Subadvised Funds that BRA perorms or the Funds, including using substantially the same investment strategies, research 22 The "Subadvised Funds" consist o: (1) the AZL BlackRock Global Allocation Fund (the "Allianz GA Fund"); (2) the Transamerica Global Allocation Fund (the "Transamerica GA Fund"); (3) the JNL/BlackRock Global Allocation Fund (the "Jackson GA Fund"); (4) the MassMutual Select Global Allocation Fund (the "MassMuual GA Fund"); (5) the VALIC Dividend Value Fund (the "VALIC ED Fund"); (6) the LVIP BlacRock Euity Dividend RPM Fund (the "Lincoln ED Fund"); and (7) the MassMuual ncome and Growth Fund (the "MassMutual ED Fund"). SOF f 245. 23 Speciically,_Allianz Investment Management, LLC is the investment adviser or the Allianz GA Fund, Transamerica Asset Management, Inc. is the investment adviser or the Transamerica GA Fund; Jackson National Asset Management, LLC is the investment adviser or the Jackson GA Fund; MML Investment Advisors, LLC is the investment adviser or the MassMutual GA Fund and the MassMutual ED Fund; The Variable Annuity Lie Insurance Company is the investment adviser or the VALIC ED FND; and Lincoln Investment Advisors Corporation is the investment adviser or the Lincoln ED Fund. SOF ii 246-252. 19 and analysis, and systems, technology, and other resources in providing investment advisory services. SOF rr 261-63; PRSOF rr 261-63. Outside of portolio management services, however, the parties signiicantly dispute the scope and extent of the subadvisory services that BRIM renders to the Subadvised Funds. See SOF rr 257-93; PRSOF rr 257-93; PSSOF rr 88126; DRSOF rr 88-126. Speciically, the parties dispute whether BRIM perorms the same Support Services, such as risk management, legal and compliance services, shareholder services, and accounting services, or the Subadvised Funds that BRA perorms or the Funds, and, to the extent that BRIM does perorm any of the same Support Services or the Subadvised Funds, the parties dispute the scope and extent of BRIM's role in providing those services. See SOF rr 257-93; PRSOF rr 257-93; PSSOF rr 88-126; DRSOF rr 88-126. In the same way that BRA receives an Advisory Fee rom the Funds, the Independent Advisers receive an advisory ee or perorming advisory services or the Subadvised Funds. SOF r 256. During the Relevant period, those ees were as ollows: The Inde!endent Advisers' Adviso: Fees or the Subadvised Funds Allian Transameric Jackso MassMutua VLi Lincol MassMutua zGA aGA Fund nGA I GA Fund CED nED IED Fund Fund Fund24 Fund Fund 2013 .75% .68% .74% .80% .73% .75% .65% 2014 .75% .72% .72% .80% .72% .74% .65% 2015 .75% .69% .72% .78% .72% .73% .65% 24 Plaintifs dispute the advisory ee rate listed or the Lincoln ED Fund, contending that it ails to account or the ollowing waivers in Lincoln Investment Advisors Coporation's ee: .07% in 2013, .08% in 2014, and .04% in 2015. PRSOF r 256. 20 SOF 256. Additionally, as noted, BRIM received a Subadvisory Fee or providing services to the Subadvised Funds. See id. at SOF 294-303. During the Relevant Period, BRIM's Subadvisory Fee was calculated pursuant to the ollowing ee schedules: • Jackson GA Fund and the Allianz GA Fund. .42% or the irst $500 million of AUM; .40% or AUM between $500 million and $1 billion; and .375% or AUM over $1.5 billion. Id. at 294-95. • Transamerica GA Fund. .44% or the irst $100 million of AUM and .32% or AUM over $100 million.25 Id. at 296. • MassMutual GA Fund. .60% of AUM up to $500 million and .40% of AUM over $500 million. Id. at 297. • Lincoln ED Fund. Beore October 2015, BRIM received .35% AUM up to $250 million; .325% of AUM rom $250 million to $500 million; .30% of AUM rom $500 million to $1 billion; and .275% of AUM over $1 billion. Id. at 298. Ater October 2015, BRIM received .325% of AUM up to $250 million; .305% of AUM rom $250 million to $500 million; .275% of AUM rom $500 million to $1 billion; and .255% of AUM over $1 billion. Id. at 299. • MassMutual ED Fund. .375% of AUM up to $250 million; .35% of AUM rom $250 million to $500 million; .325% of AUM rom $500 million to $1 billion; and .30% of AUM over $1 billion.26 Id. at 300. • VALIC ED Fund: BRIM received .35% AUM up to $250 million; .325% AUM rom $250 million to $500 million; .30% AUM rom $500 million to $1 billion; and .275% AUM over $1 billion.27 Id. at 301. Plaintifs note that on July 1, 2016, the ee schedule or BRM's Subadvisory Fee rom the Transamerica GA Fund was revised in the ollowing way: .42% of AUM or the irst $100 million, .32% of AUM between $100 million and $3 billion; and .31% of AUM over $3 billion. PRSOF 296. 26 Plaintifs dispute these iures, contending that efective December 1, 2015, BRIM's Subadvisory Fee or the MassMutual ED Fund was calculated as ollows: .325% of AUM up to $250 million; .30% of AUM rom $250 million to $500 million; .275% of AUM rom $500 million to $1 billion; and .25% of AUM over $1 billion. PRSOF 300. 27 Plaintifs dispute these igures, contending that efective December 1, 2015, BRIM's Subadvisory Fee or the V ALIC ED Fund was calculated as ollows: .325% of AUM up to $250 25 21 II. PROCEDURAL HISTORY Following the consolidation oftheir various individual actions, Plaintifs iled the Consolidated Complaint on May 27, 2014, asserting two claims against Deendants under§ 36(b) ofthe ICA. ECF Nos. 19, 27. On September 25, 2017, Deendants iled the instant Motion or Summary Judgment. ECF Nos. 100-01. Deendants' Motion has been ully brieed. ECF Nos. 110, 117. Plaintifs iled a Motion to Preclude Deendants rom relying upon certain evidence on November 11, 2017, which Motion has also been ully brieed. ECF Nos. 108-09, 115-16, 119. On May 29, 2018 this Court held oral argument on Deendants' Motion. ECF No. 144. III. STANDARD OF REVIEW Summary judgment is appropriate where the Court is satisied that "there is no genuine issue as to any material act and that the movant is entitled to a judgment as a matter oflaw." FED. R. Crv. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Orson, nc. v. Miramx Film Corp., 79 F.3d 1358, 1366 (3d Cir. 1996). A actual dispute is genuine only if there is "a suicient evidentiary basis on which a reasonable jury could ind or the non-moving party," and it is material only if it has the ability to "afect the outcome ofthe suit under govening law." aucher v. Couny of Bucks, 455 F.3d 418, 423 (3d Cir. 2006); see aso Anerson v. Libery Lobby, Inc., 477 U.S. 242, 248 (1986). Disputes over irrelevant or unnecessary acts will not preclude a grant ofsummary judgment. Anderson, 477 U.S. at 248. "n considering a motion or summary judgment, a district court may not make credibility million; .30% ofAUM rom $250 million to $500 million; .275% ofAUM rom $500 million to $1 billion; and .25% ofAUM over $1 billion. PRSOF 301. 22 determinations or engage in any weighing of the evidence; instead, the non-moving party's evidence 'is to be believed and all justiiable inerences are to be drawn in his avor."' Marino v. nus. Crating Co., 358 F.3d 241,247 (3d Cir. 2004) (citation omitted). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material act. Celotex, 477 U.S. at 322. If the movant satisies its initial burden,the nonmoving party cannot rest upon mere allegations in the pleadings to withstand summary judgment; rather,the nonmoving party "must counter with speciic acts which demonstrate that there exists a genuine issue or trial." Orson, 79 F.3d at 1366. Speciically,the nonmoving party "must make a showing suficient to establish the existence of each element of his case on which he will bear the burden of proof at trial." Huangv. BP Amoco Cop, 271 F.3d 560,564 (3d Cir. 2001); see Orsatti v. New Jersey State Police, 71 F.3d 480,484 (3d Cir. 1995) ("[A] plaintif cannot resist a properly supported motion or summary judgment merely by restating the allegations of his complaint,but must point to concrete evidence in the record that supports each and every essential element of his case."). Thus, "a mere 'scintilla of evidence' in the nonmovant's avor" is insuicient to create a genuine issue of act." Ramara, nc. v. esfield Ins. Co., 814 F.3d 660,666 (3d Cir. 2016) (citation omitted); see Lacyv. eart of Lancaster Reg'! Me. Cr., 704 F. App'x 41,45 (3d Cir. 2017) ("There is a genuine dispute of material act if the evidence is suficient or a reasonable actinder to return a verdict or the nonmoving party."). Ultimately,it is not the Court's role to make indings of act,but to analyze the acts presented and determine if a reasonable jury could return a verdict or the nonmoving party. See Broos v. Kyler, 204 F.3d 102,105 n. 5 (3d Cir. 2000). IV. MOTION FOR SUMMARY JUDGMENT A. The Investment Company Act of 1940 23 The Investment Company Act of 1940 "regulates investment companies,including uual unds." Jones, 559 U.S. at 338. A mutual und, which may have no employees of its own,is typically created and managed by a separate entity known as an investment adviser. d.; Sivolella v. A Equitable Lfe Ins. Co., No. 11-4194,2016 WL 4487857,at *1 (D.N.J. Aug. 25, 2016). The investment adviser selects the und's directors,manages its investments,and provides additional managerial services or the und. See Jones, 559 U.S. at 338; Burks v. Laser, 441 U.S. 471,481 (1979). Because the investment adviser oten provides the und with almost all managerial services,including supervision of the und's daily operations and selection of its board members,"a mutual und cannot,as a practical matter sever its relationship with the adviser. Thereore,the orces of arm's-length bargaining do not work in the mutual und industry in the same manner as they do in other sectors of the American economy." Burks, 441 U.S. at 481 (citing S. EP. No. 91-184, p. 5 (1969)); see Daily Income Fund, Inc. v. Fox, 464 U.S. 523,536 (1984). Congress enacted the ICA in response to "the potential or abuse inherent in the stucure of investment companies." Burks, 441 U.S. at 480. "Recognizing that the relationship between a und and its investment adviser was 'raught with potential conlicts of interest,"' the ICA provides various protections to mutual und shareholders. Jones, 559 U.S. at 339 (quoting Daily Income Fund, 464 U.S. at 536). Among other things,the ICA regulates transactions between investment unds and their advisers,limits the number of persons afiliated with the investment adviser who may serve on the und's board of directors,and requires that the board of directors and shareholders of the und approve the ees received by the und's investment advisers. See Jones, 559 U.S. at 339; Daily Income Fund, 464 U.S. at 537. 24 Mutual unds enjoyed enormous growth in the years ollowing the passage of the ICA, "prompting a number of sudies of the efectiveness of the Act in protecting investors." Daily Income Fund, 464 U.S. at 537. In particular, several studies commissioned or authored by the SEC "identiied problems relating to the independence of investment company boards and the compensation received by investment advisers." ones, 559 U.S. at 339. As a response to those issues, Congress amended the ICA in 1970, bolstering shareholder protections in two primary ways. I. First, recognizing that scrutiny of investment adviser compensation by a ully inormed, independent board of directors serves as the principal check on conlicts of interest within mutual unds, the amendments imposed heightened requirements or independence on the board. See id. n that regard, the amendments provided that no more than sixty percent of a und's board of directors may be "persons who are interested persons of such registered company," i.e., persons who have an interest in or afiliation with the investment adviser.28 15 U.S.C. § 80a-10(a); Jones, 559 U.S. at 339. The ICA assigned those board members "a host of special responsibilities involving supervision of management and inancial auditing." Burks, 441 U.S. at 483. For example, the independent directors "must 'review and approve the contracts of the 28 For the purposes of the ICA, an "afiliated person" includes: (1) a person who owns, controls, or holds the power to vote 5 percent or more of the securities of the investment adviser; (2) an entity which the investment adviser owns, controls, or in which it holds the power to vote more than 5 percent of the securities; (3) any person directly or indirectly controlling, controlled by, or under common control with the investment adviser; (4) an oficer, director, partner, copartner, or employee of the investment adviser; (5) an investment adviser or a member of the investment adviser's board of directors; or (6) the depositor of an unincorporated investment adviser. ones, 559 U.S. at 340 n. 1 (citing 15 U.S.C. § 80a-2(a)(3)). The Act deines an "interested person" to include "not only all afiliated persons but also a wider swath of people such as the immediate amily of afiliated persons, interested persons of an underwriter or investment adviser, legal counsel or the company, and interested broker-dealers." ones, 559 U.S. at 340 n. 1 (citing 15 U.S.C. § 80a-2(a)(19)). 25 investment adviser,' annually, and a majority of these directors must approve an adviser's compensation." Jones, 559 U.S. at 340 (quoting Burks, 441 U.S. at 483); see 15 U.S.C.§ 80a15(c). Second, and most relevant to the instant action, the ICA "imposed upon investment advisers a 'iduciary duty' with respect to compensation received rom a mutual und, and granted individual investors a private right of action or breach of that duty." Jones, 559 U.S. at 340 (citing 15 U.S.C.§ 80a-35(b)). In that regard, prior to the adoption of the 1970 amendments, "shareholders challenging investment adviser ees under state law were required to meet common-law standards of corporate waste, under which an unreasonable or unair ee might be approved unless the court deemed it 'unconscionable' or 'shocking,' and security holders challenging adviser ees under the [ICA] itself had been required to prove gross abuse of trust." Jones, 559 U.S. at 340 (citation and internal quottion marks omitted). The "iduciary duty" standard contained in§ 36(b) represented a "delicate compromise," because, even though it is "more avorable to shareholders than the previously available remedies," it does not "permit a compensation agreement to be reviewed in court or 'reasonableness.' Jones, 559 U.S. at 341. Among other eatures,§ 36(b) places the burden of proving a breach of iduciary duty on the plaintif. See 15 U.S.C.§ 80a-35(b). B. Section 36(b) Excessive Fee Claims In the case at bar, Plaintifs challenge BA's Advisory Fee as excessive under§ 36(b) of the ICA. In Jones, the Supreme Court resolved a split among the Courts of Appeals over the proper standard or claims brought pursuant to§ 36(b). See 559 U.S. at 343. In determining the meaning of the phrase "iduciary duty" within the context of§ 36(b), the Jones Court explained that "' [t]he essence of the test is whether or not under all the circumstances the transaction 26 carries the earmarks of an arm's length bargain."' d. at 347 (quoting Pper v. Litton, 308 U.S. 295, 299 (1939)). Thus, or liability to attach under§ 36(b), "an investment adviser must charge a ee that is so disproportionately large that it bears no reasonable relationship to the services rendered and could not have been the product of arm's length bargaining." ones, 559 U.S. at 346. In determining whether an investment adviser has breached its iduciary duty by charging an excessive ee under§ 36(b), Jones teaches that "all relevant circumstances be taken into account," including the actors set orth in Gartenberg v. Merrill Lynch Asset Mgmt., Inc., 694 F.2d 923 (2d Cir. 1982). ones, 559 U.S. at 347; see Gallus v. Amerprise Fin., nc., 675 F.3d 1173, 1178 (8th Cir. 2012) ("[A]II relevant circumstances must be taken into account, and the benchmark or reviewing challenged ees is 'the range of ees that might result rom am's length bargaining."') (citation omitted). The Gartenberg actors include: (1) the nature and quality of the services provided to und shareholders; (2) the proitability of the und to the adviser; (3) all-out beneits - i.e., collateral benefits accruing to the investment adviser due to the existence of the und; (4) economies of scale; (5) comparative ee structures; and (6) the independence and conscientiousness of the trustees. See Jones, 559 U.S. at 345 n. 5 (citing Gartenberg, 694 F.2d at 929-32). Of particular note, the Jones Court explained that Gartenberg 's approach, which directs courts to consider the independence and conscientiousness of the board of directors in its decision to approve the adviser's ee, properly "relects§ 36(b)'s place in the [ICA's] statutory scheme." Jones, 559 U.S. at 348. In that regard, "scrutiny of investment adviser compensation by a ully inormed mutual und board is the 'conerstone of the [ICA's] efot to control conlicts of interest within mutual unds.' ones, 559 U.S. at 348 (quoting Burs, 441 U.S. at 27 482). Speciically,the I CA places disinterested directors in the role of "independent watchdogs," who unish a check upon the relationship between mutual unds and their investment advisers. ee Burs, 441 U.S.at 484. "To provide these directors with the inormation needed to judge whether an adviser's compensation is excessive, the Act requires advisers to nish all inormation 'reasonably ...necessary to evaluate the terms' of the adviser's contract,and gives the SEC the authority to enorce that requirement." Jones, 559 U.S. at 348 (citing 15 U.S.C. 80a-15(c) and 80a-41). Thus, Congress structured the I CA such that §§ "actions under§ 36(b),on the one hand,and directorial approval of adviser contracts,on the other,[would] act as independent checks on excessive ees." Daily Income Fund, 464 U.S.at 541; ones, 559 U.S.at 348 ("Board scrutiny of adviser compensation and shareholder suits under§ 36(b),are mutually reinorcing but independent mechanisms or controlling conlicts."). In recognition of the watchdog role imposed on disinterested directors,the Act directs courts to give board approval of an adviser's compensation "such consideration ...as is deemed appropriate under all the circumstances." 15 U.S.C. 80a-35(b). Interpreting this statutory § language, the ones Court observed that a "measure of deerence to a board's judgment may be appropriate in some instances," but "the appropriate measure of deerence varies depending on the circumstances." ones, 559 U.S.at 349. "Where a board's process or negotiating and reviewing investment-adviser compensation is robust, a reviewing court should aford commensurate erence to the outcome of the bargaining process." ones, 559 U.S.at 351 (emphasis added). Indeed,it would have been "paradoxical or Congress to have been willing to rely largely upon 'watchdogs' to protect shareholder interests and yet,where the 'watchdogs' have done precisely that,require that they be totally muzzled." Burs, 441 U.S.at 485. Thus,"if the disinterested directors considered the relevant actors,their decision to approve a paticular 28 ee agreement is entitled to considerable weight, even ifa court might weigh the actors diferently." ones, 559 U.S.at 351. Conversely, "where the board's process was deicient or the adviser withheld important inormation, the court must take a more rigorous look at the outcome. When an investment adviser ails to disclose material inormation to the board, greater scrutiny is justiied because the withheld inormation might have hampered the board's ability to unction as 'an independent check upon the management."' Jones, 559 U.S.at 351-52 (quoting Burks, 441 U.S.at 484). Ultimately, however, "the standard or iduciary breach under§ 36(b) does not call or judicial second-guessing of inormed board decisions " or "require courts to engage in a precise calculation ofees representative ofarm's-length bargaining." Jones, 559 U.S.at 352. To the contrary, Congress' approach in§ 36(b) recognizes that that courts are ill-suited to render precise ees calculations. I. at 353. As a result, although the conlicts ofinterest inherent in the structure ofmutual unds warrant some judicial restraint "'upon the unettered discretion ofeven disinterested mutual und directors,' ...they do not suggest that a court may supplant the judgment ofdisinterested directors apprised ofall relevant inormation, without additional evidence that the ee exceeds the arm's-length range." I. at 352 (quoting Burs, 441 U.S.at 481). Following Jones, plaintifs bringing cases under§ 36(b) ofthe ICA have, primarily, asserted one oftwo theories. SEAN M.MUPHY ET AL. Developments in Litigation Under , Section 36(b) ofthe 1940 Act I (2017). First, in "manager ofmanagers " cases, plaintifs challenge an investment adviser's ees as excessive, based on allegations that, even though the adviser has delegated the majority ofthe services necessary to operate a und to a subadviser, the adviser is receiving a ee much larger than the ee received by the subadviser or those same 29 services. I.; see, e.g., Kasilag v. Harford Inv. Fin. Servs., LLC, No. 11-1083, 2017 WL 773880 (D.N.J. Feb. 28, 2017); Sivolella v. AA Equitable Lfe ns. Co., No. 11-4194, 2016 WL 4487857 (D.N.J. Aug. 25, 2016); Zehrer v. Harbor Capital Avsors, Inc., No. 14-789, 2018 WL 1293230 (N.D. Ill. Mar. 13, 2018). Second, in "reverse manager of managers" cases, plaintifs allege that an investment adviser's ee is excessive because it is substantially higher than the subadvisory ee that the same adviser charges to perorm substantially the same services as a subadviser or an independent third-party und. MUPHY ET AL., supra, at 1; see, e.g., Goodman v. JP. organ nv. Mgmt., nc., No. 14-414, 2018 WL 1247459 (S.D. Ohio Mar. 9, 2018); Pirundini v. JP. Morgan Inv. Mgmt. nc., No. 17-3070, 2018 WL 1084140 (S.D.N.Y. Feb. 14, 2018); ennis v. Metro. . Asset Mgmt., LLC, No. 15-8162, 2017 WL 8784796 (C.D. Cal. Sept. 22, 2017); oidis v. T Rowe Price Assocs., Inc., No. 16-2786, 2017 WL 1196585 (D. Md. Mar. 31, 2017); In re Davis ew ork enture Fund ee Litig., No. 14-4318, 2015 WL 7301077 (S.D.N.Y. Nov. 18, 2015). This is a reverse manager of managers case. C. Deerence to Board Approval The evaluation of an investment adviser's iduciary duty "must take into account both procedure and substance," and thus, the irst phase of this Court's review requires it to "calibrat[ e] the degree of deerence" that is due the Board's decision to approve BA's Advisory Fee. Jones, 559 U.S. at 351-52; see Gallus, 675 F.3d at 1178 ("Although§ 36(b) is 'sharply ocused' on whether the ees are excessive, we evaluate the ee-negotiation process to determine the degree of deerence that is due a board's decision to approve the adviser's ees."). Unless the Board's process was deicient or BlacRock withheld material inormation rom the Board, the Board's decision to approve BRA's Advisory Fee is entitled to considerable weight. ones, 559 U.S. at 351. Because Plaintifs have ailed to raise a triable issue of act regarding the Board's 30 process or negotiating and reviewing BRA's Advisory Fee, the Court will accord the Board's decision to approve BRA's Advisory Fee substantial deerence. To begin, the undisputed acts demonstrate that the Board's process or reviewing BA's Advisory Fee was robust. In that regard, it is undisputed that, in addition to quarterly meetings, the Board, which was comprised of a supermajority of well-qualiied individuals who met the statutory requirements or independence under 15 U.S.C. § 80a-10(a), held a Fee Approval Meeting each April to consider whether to approve BRA's Advisory Fee. See SOF r 87. Planning or the Fee Approval Meetings occurred months in advance, and involved BlackRock, the Board's Counsel, and Lipper. d. at r 88. Both beore and ater the relevant Fee Approval Meetings, the Board received extensive inormation, comprising more than 25,000 pages of material, relevant to BRA's Advisory Fee with the Funds, including comparative ee and perormance data rom Lipper and inormation on each of the Gartenberg actors. See id. at rr 95, 97. In that regard, when asked what the Board considered in deciding whether or not to approve BA's Advisory Fee, the Board Chairman testiied as ollows: "Short answer would be the Gartenberg actors and anything else we consider relevant." Hernandez Dep. at 35:3-11. The Board Chairman's testimony is corroborated by Global Allocation's October 31, 2015 Annual Report, which provides that: In approving the continuation of the [IMA], the Board considered: (a) the nature, extent and quality of the services provided by BlackRock; (b) the investment perormance of the Fund and BlackRock; (c) the advisory ee and the cost of the services and proits to be realized by BlackRock and its ailiates rom their relationship with the Fund; (d) the Fund's costs to investors compared to the costs of Expense Peers and perormance compared to the relevant perormance comparison as previously discussed; (e) the sharing of potential economies of scale; () all-out beneits to BlackRock and its ailiates as a result of its relationship with the Fund; and (g) other actors deemed relevant by the Board Members. 31 Muscato Cert., Ex. 2., Oct. 31, 2015 BlacRock Global Allocation Fund, Inc. Annual Report, BLK-CLANCY0098429, at 8493-95. Indeed, while, as discussed below, Plaintifs contest the level of detail and inormation reviewed by the Board and argue that the Board "primarily considered the Lipper Materials it received in February when approving the Funds' ees, not the Gartenberg actors," PRSOF i 97 (emphasis in original), Plaintifs do not dispute that the Gartenberg actors were, in act, considered. See SOF i 97; PRSOF i 97. Speciically, although Plaintifs contest the accuracy and reliability of many of the materials provided to the Board, it is undisputed that the Board reviewed the ollowing inormation in connection with each of the Gartenberg actors: • Naure and Quality ofBRA's Services. The Board reviewed data rom Lipper comparing the Funds' perormance to peer unds over one, three, ive, and ten-year periods, as well as Morningstar's analysis of the Funds.29 SOF ii 99-105. The Board also received presentations regarding BRA's advisory and non-advisory operations, including its corporate structure, investment personnel, and administrative personnel, as well as memoranda pertaining to BRA's oversight of service providers. I. at ii 107, 109. • Comparative Fees. The Board reviewed a memorandum (the "Fee Comparison Memorandum") each year apprising the Board of the services that BlackRock renders to investment vehicles other than the Funds, including the Subadvised Funds. 30 d. at ii 114-15. The Board also reviewed comparative ee data prepared by Lipper regarding the BRA's Advisory Fee or the Funds compared to the advisory ees received by other investment advisers rom comparable unds. 31 d. at ii 116-18. • Fund Proitability. The Board received annual reports prepared by BlackRock regarding BlacRock's proitability (the "15(c) Proit Report"), including estimates of its company wide proit margin and BA's proit margin or its management of the Funds. d. at ii 29 Plaintifs object to consideration of the data rom Lipper and Morningstar, and dispute the accuracy and reliability of that data. 30 Plaintifs dispute that the inormation depicted in the Fee Comparison Memoranda accurately explained the diferent nature of services provided to the Funds and the Subadvised Funds. See PRSOF (( 114-15. 31 Plaintifs object to consideration of Lipper data, dispute that the peer unds identiied by Lipper are comparable to the Funds, and contest the perormance methodology used to created Lipper's raings. See PRSOF ii 116-18. 32 124-125. The materials disclosed three diferent measures ofBRA's estimated proit32 margin or the proceeding year or managing the Funds. See id. at rr 126-27. In 2014, the Board retained PwC to review BlacRock's methodology or estimating its proitability rom managing the Funds. d. at r 130. Based on its review, PwC determined that the process, methodologies, and disclosure practices employed by BlackRock to estimate those proit margins were aligned with PwC's guiding principles and industry practice. Id. at r 131. • Economies of Scale. The Board received an annual memorandum prepared by BlackRock pertaining to whether BRA realized economies of scale, and the extent to which any realized beneits rom economies of scale were shared with shareholders. For example, the memoranda explained how BRA shared economies of scale with the Funds and shareholders through breakpoints in BRA's Advisory Fee schedules. 33 The Board also requested, and received, at least one presentation regarding economies of scale. d. at rr 132-38. • Fall-Out Beneits. The Board received a memorandum each year addressing "all-out beneits"; i.e., the collateral benefits that accrued to BlackRock or its ailiates based on their relationship with the Funds. d. at r 141. The record also demonstrates that, ater the relevant Fee Approval Meetings, the Board submitted ollow-up questions to, and requested additional inormation rom, BlackRock regarding the Board's review and approval of BRA's Advisory Fee, and that the Board received approximately 300 pages of materials in response to those inquiries. I. at r 143. Finally, prior to approving BRA's Advisory Fee, the Board negotiated to obtain at least one ee concession and additional breakpoints in BRA's ee schedule. I. at rr 75, 144-48. Despite these extensive procedures or reviewing BRA's Advisory Fee, based on statements in the overview section of a 2014 document that was provided to the Board in connection with the renewal ofBRA's IMA with the Funds (the "Contract Renewal 32 Plaintifs dispute that the igures reported are approximations, and contend that they represent BRA's actual proits. See PRSOF r 129. 33 The parties dispute whether and to what extent those memoranda accurately portrayed any economies of scale realized by BRA, and whether and to what extent BRA shares any savings rom economies of scale with shareholders of the Funds. See SOF rr 132-140; PRSOF rr 13240. 33 Presentation"), Plaintifs contend that the Board's process or reviewing fees was lawed. See PSSOF, 166 (citing Muscato Cert., Ex. 66, 2014 Contract Renewal Overview Presentation at BLK-CLNCY0000158). Speciically, Plaintifs ocus on a portion of the Contract Renewal Presentation titled, "Product Pricing Philosophy," which provides as ollows: Open-end Funds in the -quartiles of their peer groups34 are generally considered to be appropriately priced. Funds persistently in the-quartile are considered "outliers," and BlackRock will assess whether pricing sh adjusted, given the speciic circumstances of the und and competitive considerations. Id. Relying on those statements, Plaintifs argue that the Board's process was deicient, because it assumed that a und is appropriately priced if it alls within the uartile of its peer group, with no additional evaluation perormed unless a und is persistently in the_ quartile. See Plaintifs' Memorandum of Law in Opposition to Deendants' Motion or Summary Judgment ("Pls.' Opp."), at 33. In that connection, Plaintifs maintain that a "negotiating stance that seeks only to obtain a ee within the range of the Funds' peers-as opposed to a true arm's length negotiation to secure the lowest ee or the Funds' shareholdersis acquiescence, not a 'robust review process.'" I. Plaintifs' arguments regarding the Board's process or negotiating ees are unavailing, because the ICA does not impose a duty on the board of directors of a mutual und to negotiate the lowest possible advisory ee as compensation or an investment adviser's services, and thus, the Board's purported ailure to secure the lowest ees or the Funds' shareholders provides no basis or undermining the Board's decision to approve BRA's Advisory Fee. See Goodman, 34 BlackRock evaluates BA's Advisory Fees against peer unds identiied by Lipper. 34 2018 WL 1247459 at * 18 ("Section 36(b) does not create a duty that advisers and administrators receive the lowest possible ee amount as compensation or the services they provide."). Indeed, presented with acts closely resembling those at issue in this case, the court in Zehrer rejected the same argument, inding that the plaintif ailed to present a genuine dispute of act as to the adequacy of the board's approval process. Zehrer, 2018 WL 1293230 at *7. In Zehrer, it was undisputed that the board: (i) was comprised of well-qualiied, disinterested individuals; (ii) met numerous times throughout the year to review and approve the investment advisory agreements at issue; (iii) requested and reviewed materials relevant to all Gartenberg actors beore approving those agreements; and (iv) negotiated over the terms of the advisory ee agreement, obtaining additional breakpoints on at least one occasion. I. Despite these stipulated acts, the plaintifs there argued that the court should not give deference to the board's decisions, in relevant part, because the board ailed to negotiate each year or the lowest possible advisory ees. I. The Zehrer court rejected the plaintifs' critique of the board's process, inding that the board's "passive" stance towards negotiating urther ee reductions or breakpoints was insuicient to undermine the board's process. d. ("Even if the Board might have driven a harder bargain, the legal standard does not require that."). Similarly, here, the record shows that the Board considered each of the Gartenberg actors, and negotiated or ee concessions on behalf of the Funds. Under these circumstances, it is beyond dispute that the Board's process or reviewing and negotiating BA's Advisory Fee with the Funds was robust. However, my inding that the Board's process or reviewing BRA's Advisory Fee was robust does not end the inquiry. Rather, I must still determine whether BRA ailed to disclose material inormation to the Board, thereby hindering the Board's ability to unction as an independent check on management. See Jones, 559 U.S. at 351-52. In arguing that the Board's 35 approval is not entitled to deerence in this case, Plaintifs argue that deiciencies in the inormation that BlackRock provided to the Board rendered the Board insuficiently inormed and unable to efectively negotiate BRA's Advisory Fee. ee Pls.' Opp. at 31-32. Speciically, Plaintifs contend that: 1. The Fee Comparison Memoranda that BlackRock provided to the Board comparing the services that BlackRock provides to its diferent clients, including to the Subadvised Funds, included a chart that ailed to accurately portray the services provided by BRA to the Funds and by BRIM to the Subadvised Funds, see i. at 31; 2. BlackRock provided only selective inormation regarding the distribution-related costs of providing investment management services to mutual unds and other types of clients, leading the Board to incorrectly conclude that the costs of managing the Funds and the Subadvised Funds were not comparable, see id. at 32;and 3. The economies of scale analysis provided by BlackRock to the Board was deicient, because BlackRock ailed to provide the Board with a quantitative analysis of BlackRock's cost data, see id. at 32. Contrary to Plaintifs' arguments, the Court inds that these purported deiciencies are insuicient to create a triable issue of act as to the degree of deerence that this Court should aford the Board.35 First, the Court inds that Plaintifs' arguments regarding the relevant Fee Comparison Memoranda are without merit. Plaintifs point to a checklist (the "Services Checklist") in the Fee Comparison Memoranda, arguing that the Services Checklist did not accurately portray the In arguing that the Board's approval should not be given deerence, Plaintifs also contend that "Deendants ail to present indisputable evidence demonstrating that no issue of act exists as to the Board's review and negotiation process." Pls.' Opp. at 31. Plaintifs' argument "misstates the burden of proof in a§ 36(b) action," Zehrer, 2018 WL 1293230 at *7, which rests with the plainti. 15 U.S.C. § 80a-35(b)(l). Thus, once Deendants identiied evidence in the record that the Board perormed its watchdog duties, including reviewing the Gartenberg actors, it was Plaintifs' "burden to point to evidence that the review was not suficiently thorough, rather than [Deendants'] burden to provide evidence, conclusive or otherwise, that it was." Zehrer, 2018 WL 1293230 at *7. 36 35 services provided by BRA to the Funds or BRIM to the Subadvised Funds. The X-axis of the Services Checklist includes a column or seven types of investment products managed by BlackRock, including the Funds and the Subadvised Funds. See Muscato Cert., Ex. 83, Memorandum re: Internal Management Fee Comparison by Product Channel, dated Apr. 14, 2015, BLKRK-CLANCY0015797, at 5802. The Y-axis of the Services Checklist lists the ollowing services, with corresponding check marks or each service provided by BlackRock to the particular product type: • • • • • • • • • • • • • • • • • Investment & risk management; Board management & administration; Annual 15(c) management & administration; Product management; Leverage management; AMPS reinancing; Broker-dealer / inancial intermediary support; Subscription and redemption management; Review, approval, and negotiation of distribution, service & related agreements; Assisting with regulatory examinations; Maintenance of expense cap application and recoupments; Fair valuation (review & determination, disclosure & repoting); SEC prospectus, and/or investment guideline compliance monitoring; Annual/semi-annual shareholder repots; N-lA creation and updating; Filings: N-SAR, N-CSR, Non, NPX; • • • • • • • • • • • • • • • • • • 37 Tax reporting, planning and compliance (including distributions); Dividend policy oversight and review; Annual audit assistance; Expense budgeting assistance; Sarbanes-Oxley compliance; Oversight of the distributor unction; 22c-2 monitoring or market timing and late day trading; Blue Sky registration; AML monitoring and compliance; Oversight of service providers; Monitoring of compliance with loan agreements or credit acilities; Option Overwriting Committee; Stock exchange listing and compliance; Secondary market support; Monitoring of discounts (of market price relative to NAV); Sub-transer agency unction oversight; Capital markets (servicing or market makers and/or authorized participants); Tax eficiency ocus, along with inkind creations & redemptions; Annual proxy; • • • • • • • • Rating agency monitoring and testing or preerred shares; Daily NAV oversight; Relationship and meetings with portolio manager; Perormance repoting; Ability to place security restrictions on investments; Ability to manage tax constraints; Ofer wrap ee, with no trading costs to clients; Review/arrange or payment of und expenses; • • • • • Prepare reports not otherwise prepared by the und's custodian, counsel or auditors; Report on perormance of independent accountants; Report on perormance and ees of custodian and TA; Consults with service providers regarding accounting policies; Prepare reports required by banks rom which the unds borrow money; and Respond to und's oficers and TA regarding shareholder inquiries. I. Plaintifs argue that the Services Checklist did not accurately portray the services provided to the Funds and the Subadvised Funds, because it alls to include the ull range of services provided by BRIM to the Subadvised Funds, ails to account or the role of third parties in providing any of the listed services to the Funds, does not distinguish between services provided to the Funds by BRA in exchange or the Advisory Fee or in exchange or other compensation, and does not provide a quantiication of the costs associated with the listed services. See Pis.' Opp. at 31; PRSOF r 133. Plaintifs' arguments regarding the level of detail contained in the Services Checklist ail to raise a triable issue of act as to the level of deerence that the Board's decision should be given. Signiicantly, the record relects that the Board received ample inormation relating to the comparative ees actor of the Gartenberg analysis, including inormati)n pertaining to the services perormed by BRA or the Funds and BRIM or the Subadvised Funds. For example, in addition to the Services Checklist, the Fee Comparison Memorandum dated April 14, 2015, provides: 38 With regard to sub-advised mutual unds, BlackRock provides a diferent suite of services or sub-advised mutual unds as opposed to proprietary mutual und mandates. BlackRock must continually make signiicant investments to support the proprietary mutual und business, investments which generally are not required in sub-advised business. For example, the nature and scope ofthe services provided to the proprietary mutual unds incorporates dedicated teams at BlackRock who work to support various unctions, including but not limited to, legal, compliance, board governance, und accounting, distribution, shareholder servicing, product development, and und administration. Also, when BlackRock is acting as sub-adviser, we typically do not bear exposure to expense caps (as we do or our proprietary mutual und business). The exposure to total expense caps on our proprietary mutual und business exposes BlackRock to the risk ofhaving to potentially subsidize the expenses ofunds with small AUM levels. Naturally, the actors listed above, including the cost and the build out ofa dedicated team to service a proprietary mutual und business to provide a broad array ofservices to the mutual unds are signiicant actors in determining prices in that business. The nature ofthe limited services we provide institutional and sub-advised accounts and associated costs are relevant to setting appropriate pricing or an institutional or sub advised account. This is, however, only one ofmany actors. In addition, we consider, among other things, the capacity, size, and experience ofthe portolio management team, the strategy, the amount and the varying level ofrisk, both with respect to liability and reputational risks, the type ofaccount, the overall client relationship and the distribution level. Sub-advisory fees are typically lower than "standalone" advisory ees paid by propriety unds as they take into account the lower risks associated with sub-advising third-party mandates and the limited nature ofservices being provided to the third-party und amily. In summary when reviewing the management ee or diferent products managed by BlackRock the ollowing items should be considered: • • • • • Diversity ofservices provided Diversity ofdistribution channel Difering levels ofliability exposure and risks (e.g., liability rom errors, reputational risk) Market driven pricing Amount ofaggregate assets managed by the team I. at 5803-04, 5083-05. 39 The record also relects that, although not included in the Services Checklist, the Board was provided with separate presentations and documentation regarding the role of third-party service providers in perorming services or the Funds, the amounts that BRA receives as reimbursement or expenses rom the Funds, and any services provided by BRA pursuant to agreements other than the Funds' MAs. ee DRSOF rr 203-04. Additionally, BlackRock provided the estimated costs of providing the listed services in separate presentations to the Board. DRSOF r 205 (citing Muscato Cert, Ex. 87). Based on that inormation, the Board detennined that the services rendered to the Funds and the Subadvised Funds were not comparable. See Hernandez Dep. at 100: 10-101-17. In light of the undisputed evidence that the Board considered inormation pertaining to the services perormed by BRA and BRIM, Plaintifs' arguments regarding the Services Checklist are insuicient to create a triable issue of act as to the Board's review. Indeed, Plaintifs have ailed to demonstrate that, if presented, the supposedly withheld or misleading inormation would have altered the Board's review or negotiation process. ee asilag v. arford nv. Fin. Servs., LLC, No. 11-1083, 2016 WL 1394347, at *12 (D.N.J. Apr. 7, 2016) (rejecting the plaintifs' argument that a supposedly withheld document undemined the board's review process, where the plaintifs ailed to show how consideration of that document "would have impacted the Board's detemination in this case."). Although Plaintifs may disagree with the level of detail or ormat of the Services Checklist, "[s]uch caping, if suficient, would eviscerate the deerence that is to be paid to an inormed Board's process under ones." I. at *14. As the asilag court aptly explained: [A] plaintif should not be able to survive summary judgment through armchair quarterbacking and captious nit-picking. Such a standard would put deendants in the untenable posture of deending interminable, manuactured, and protracted litigation involving second-guessing a board's process. Here, [the plaintifs] seek to do just that. 40 They rely only upon their own experts' testimony and cherry-picked deposition excerpts suggesting [plaintifs] might have negotiated a diferent deal had they been in the directors' seats, but not showing that the [board] abandoned or ailed its watchdog unction.. ..As such, the Court detemines that the [board's] decision is entitled to "substantial weight." d. For the same reasons, Plaintifs' arguments regarding the Services Checklist ail to provide a basis or second-guessing the Board's decision to approve BRA's Advisory Fee. Moreover, Plaintifs' quibbles that the Board received only partial inormation regarding the costs and proitability of BRIM's subadvisory services, and was deprived of the requisite inormation to consider economies of scale - based on BlackRock's ailure to provide a quantitative analysis regarding costs - are insuicient to create a genuine issue of act regarding the Board's review. The record shows that, ater engaging with BlackRock regarding the proitability of BRIM's subadvisory services, the Board determined that such an analysis would not be "meaningul" with regard to evaluating BRA's Advisory Fees.DRSOF 1207 (citing Hernandez Dep.at 152:6-155:16). Similarly, while Plaintifs take issue with the act that the Board never received a quantitative analysis of BlackRock's cost data to determine economies of scale, Deendants presented the Board with estimates of BRA's proitability rom economies of scale, which were based on a cost allocation methodology developed by BlackRock. See DRSOF 11208-10. At most, Plaintifs' arguments raise a dispute regarding the proper methodology or calculating these igures; but that is not a basis to disregard the decision of the Board. Accordingly, because the Board's process was robust, including review of each of the Gartenberg actors, and because Plaintifs have ailed to adduce any evidence demonstrating that BRA witheld material inormation rom the Board, the Court inds that the Board's decision to approve BRA's Advisory Fee must be accorded substantial deerence. 41 Notwithstanding the considerable weight that I will accord the Board's decision to approve BRA's Advisory Fee in this case, I must still determine whether Plaintifs have adduced other evidence that the Advisory Fee charged by BRA is so disproportionately large that it bears no reasonable relationship to the services rendered and could not have been the product ofarm's length bargaining. ee ones, 559 U.S. at 351 ("[A] ee may be excessive even ifit was negotiated by a board in possession ofall relevant inormation, but such a determination must be based on evidence that the ee 'is so disproportionately large that it bears no reasonable relationship to the services rendered and could not have been the product ofarm's-length bargaining."') (citation omitted). To do so, the Court turns to the Gartenberg actors at dispute in this case.36 See Kasilag, 2016 WL 1394347 at *14. D. The Gartenberg Factors As the Court has already discussed, to determine whether an advisory ee is so disproportionately large that it bears no reasonable relationship to the services rendered and could not have been the product ofarm's-length bargaining, couts look to all pertinent acts, including the Gartenberg actors. See ones, 559 U.S. at 344-45. Here, Plaintifs argue that the ee was excessive under our ofthe Gartenberg actors: (1) comparative ees; (2) economies of scale; (3) proitability; and (4) the independence and conscientiousness ofthe Board.37 Given the inherently act-sensitive nature ofthe Gartenberg analysis, ofthose ew cases that have reached the summary judgment stage with regard to§ 36(b) claims, even ewer courts have 36 Indeed, many ofthe arguments that Plaintifs attempt to couch within the conines ofBoard deerence are better addressed within the Gartenberg actors. 37 The parties concede that all-out beneits are not at dispute in this case, see SOF i 141; PRSOF i 141, and it does not appear, rom Plaintifs' brieing, Rule 56.1 statement, or statements at oral argument, that Plaintifs are asserting any arguments as to the nature or quality ofthe services provided. 42 granted summary judgment. Kasilag, 2016 WL 1394347 at *14. Indeed, in two recent§ 36(b) cases in this District, summary judgment was denied on the grounds that a actual dispute existed regarding several of the Gartenberg actors. See Kasilag, 2016 WL 1394347 at *18 (denying summary judgment based on actual disputes over several Gartenberg actors, even though the court ound that substantial deerence was to be aforded to the board's approval of ees); Sivolella v. A Equitable Lfe Ins. Co., No.11-4194, Hr'g Tr.at 85:11-14 (D.N.J.Aug.5, 2015). Because material actual disputes exist in this case regarding comparative fees, economies of scale, and proitability, I ind that summary judgment is not warranted. 1. Comparative Fee Structures The crux of Plaintifs' excessive ee claim rests on a theory of comparative ees. To wit, Plaintifs argue that although BRIM provides substantially the same services or the Subadvised Funds that BRA provides to the Funds, BRA's Advisory Fee is more than double the rate of BRIM's Subadvisory Fee. Plaintifs urther contend that, since BRM's Subadvisory Fee was negotiated at am's-length with independent third parties, the Subadvisory Fee provides a benchmark or the true bargaining range of the services rendered by BRIM and BRA, and thus, is indicative of the excessive nature of BRA's Advisory Fee. In Jones, the Supreme Court provided guidance or courts conducting comparative ee analyses between the ees that an investment adviser charges a "captive mutual und" and the ees that it charges independent clients. See 559 U.S.at 349-51. At the outset, the Court rejected the notion that "there can be any categorical ule regarding the comparisons of the ees charged diferent types of clients." I. at 349. Instead, courts must give comparisons of the ees charged diferent types of clients "the weight that they merit in light of the similarities and diferences between the services that the clients in question require .... I. at 349-50. For example, the " 43 services provided by an investment adviser to diferent clients may vary, based upon, inter alia, the relative "regulatory and legal obligations " required or the investment vehicle at issue. I. at 350. It ollows that "courts must be wary of inapt comparisons," and,if the services provided "are suficiently diferent that a comparison is not probative,then couts must reject such a comparison." 38 Id. Signiicantly, the Jones Court allayed the advisers' concens that,where the services rendered by an investment adviser to a captive mutual und and an independent client are comparable,a comparison with ees charged to the client will necessarily '"doo[m] [a]ny []und to [t]rial,"' d. at 350 n. 8 (quoting Brief or Respondent 49),by explaining, irst,that "plaintifs bear the burden in showing that ees are beyond the range f arm's-length bargaining." I. (emphasis added). To that end,"[e]ven if the services provided and ees charged to an independent und are relevant ...the Act does not necessarily ensure ee parity between mutual unds and institutional clients ...." Id.; see Pasowiz v. Prospect Capital Mgmt. L.P., 232 F. Supp.3d 498,505 ( S.D.N.Y.2017) ("Charging a ee that is above the industry average does not violate Section 36(b)," if the ee is not outside the range of arm's-length bargaining). " Second,a showing of relevance requires courts to assess any disparity in ees in light of the diferent markets or advisory services." Jones, 559 U.S.at 350 n. 8. Futher,"[o]nly where plaintifs have shown a large disparity in ees that cannot be explained by the diferent services in addition to other evidence that the fee is ousie the arm's-length range will trial be propriate." I. (emphasis added). 38 By the same token,the Court warned against relying "too heavily on comparisons with ees charged to [captive] muual unds by other advisers," noting that such "comparisons are problematic because these ees,like those challenged, may not be the product of negotiations conducted at arm's length." Jones, 559 U.S.at 350-51. 44 The oregoing language establishes that, even where a dispute of act exists as to the comparative ees actor of the Gartenberg test, a plaintif must also provide additional evidence that a ee alls outside the range of arm's-length bargaining to prove a violation of§ 36(b). And, as Plaintifs conceded during oral argument, outside of the comparative ees actor, the only other evidence of excessive ees profered by Plaintifs in this case relates to economies of scale and proitability. See Transcript of Oral Argument ("Tr.") at 6:24-9:11, n re Blackrock Mut. uns Avisory ee Litig., No. 14-1165 (D.N.J. May 29, 2018) (ECF No. 144). Accordingly, even assuming that Plaintifs have met their burden on the comparative ees actor, to withstand summary judgment, they must also have raised a dispute of act as to either economies of scale or proitability. With that ramework in mind, I turn to the parties' arguments on the comparative ees actor. Deendants contend that a comparison of BRA's Advisory Fee to BRIM's Subadvisory Fee is inapt, because the scope and scale of the services that BRA provides the Funds are vastly diferent rom the services that BRIM provides the Subadvised Funds. Speciically, Deendants argue that, in addition to portolio management services, BRA provides the Support Services to the Funds. Deendants' Brief in Support of their Motion or Summary Judgment ("Defs.' Br."), at 10. Deendants maintain that although BRIM takes a limited role in perorming some of those Support Services or the Subadvised Funds, BRIM's involvement pales in comparison to BRA's role in providing Support Services to the Funds, because BRA is responsible or perorming, or supervising the perormance of, all services essential to the operation of the Funds, including the Suppot Services, and bears a diferent amount of risk than BRIM. Tr. at 14:9-15:8. Thus, in light of the diferent services provided by BRA and BRIM, Deendants argue that a comparison of the Advisory Fee and the Subadvisory Fee is inapposite. 45 In opposition, Plaintifs argue that genuine issues of material act exist, precluding this Court rom determining that any comparison between the Advisory Fee and Subadvisory Fee is inapt as a matter of law. First, Plaintifs note that BlackRock concedes that: (i) BRA and BRIM perorm substantially the same portolio management services or the Funds and the Subadvised Funds; (ii) the same portolio managers are responsible or managing the assets of both the Funds and the Subadvised Funds; and (iii) BA and BRIM employ substantially the same investment strategies, research and analysis, systems, technology, and other resources in providing investment advisory services to the Funds and the Subadvised Funds. Defs.' Br. at 12; SOF rr 261-63. Plaintifs argue that because portolio management is the main service that investment advisers perorm or mutual unds, Deendants' concession that BRA and BRIM perorm substantially similar portolio management services, standing alone, is suicient to ind that the comparison between the Advisory Fee and the Subadvisory Fee is apt. Second, Plaintifs contend that the Support Services cannot serve as a justiication or the disparity between the Advisory Fee and the Subadvisory Fee, because: (i) BRIM perorms many of the same Support Services or the Subadvised Funds that BRA perorms or the Funds, including providing similar compliance, recordkeeping, reporting, and operational services to the Subadvised Funds; (ii) most of the Support Services or the Funds are perormed by third-party service providers under separate agreements and in exchange or separate ees, rather than by BRA in exchange or the Advisory Fee; (iii) to the extent that BRA has an oversight role in providing the Support Services, including monitoring and overseeing the work of third-party service providers, BRA is separately compensated or that role outside of the Advisory Fee; and (iv) BA's contention that it provides a broader array of services to the Funds than BRIM provides to the Subadvised Funds is undermined by cost data analyzed by Plaintifs' expert, Ian 46 Ayres, Ph.D., which shows that BRIM's costs or providing services to the Subadvised Funds were comparable to, and sometimes greater than, the costs incurred by BRA in perorming services or the Funds. Finally, Plaintifs argue that BRA cannot point to its risk and responsibility as a distinguishing actor, because: (i) there is no evidence in the record as to what that risk is; (ii) BA's agreements with service providers include indemniication and limitation on liability provisions that limit BRA's risks; and (iii) BRIM has risks with respect to the Subadvised Funds. Tr. at 30:2-25. Based on the record beore me, I cannot ind, on this Motion, that Plaintifs' comparison between the Advisory Fee and the Subadvisory Fee is inapt as a matter oflaw. Signiicantly, this is not a case where Plaintifs have ailed to profer any evidence that would tend to show that BRIM provided the Subadvisory Funds "with the same sort ofservices that [BRA] provided to the [Funds], or that [BlackRock] incurred the same costs when serving diferent tpes ofclients." Jones v. Harris Assocs. L.P., 611 F. App'x 359, 361 (7th Cir. 2015). To the contrary, the record relects that BRIM provides substantially the same portolio management services or the Subadvised Funds that BRA provides to the Funds, using overlapping personnel and pursuing the same or substantially the same investment strategies, research and analysis, technology, systems, and resources. See SOF 261-23. Under these circumstances, Plaintifs have made a threshold showing of comparability between the investment advisory services rendered by BRA and BRIM. Additionally, Plaintifs' submissions also raise a actual dispute regarding the extent to which BRIM perorms the Support Services or the Subadvised Funds. See PSSOF 88-126. In that connection, Plaintifs have profered documentary evidence, including BRM's 47 subadvisory agreements with the Subadvised Funds, due diligence questionnaires, client presentations, and certiications, setting orth BRIM's role in peroming the ollowing services or the Subadvised Funds: • Compliance. Plaintifs assert that BRIM provides a wide range of compliance services or the Subadvised Funds, including: reviewing the adequacy of the Subadvised Funds' policies and procedures established under Rule 206(4)-7, which is designed to prevent violations of the Investment Advisers Act of 1940 ("IAA") and ederal securities laws; employing its proprietary Alladin platorm or the Subadvised Funds, which platorm assists with the monitoring of investment guidelines and restrictions; conducting pre-trade and post-trade monitoring or all trades in the Subadvised Funds; and producing compliance reports and cetiications attesting that the Subadvised Funds are in compliance with investment guidelines, diversiication requirements, transactions under Rules lOf-3, 12d3-l, 17a-7, 17d-1, 17e-1, and CFTC Rule 4.5; section 12(d)(l)(A) repoting; illiquid and 144A securities; derivatives and segregation of assets, repurchase agreement transactions, brokerage commission reports, and sot dollars. See id. at 102-109. • Board Reporting. Plaintifs contend that BRIM provides the ollowing board reporting services or the Subadvised Funds: responding to Rule 15(c) questionnaires rom the Subadvised Funds; communicating with the boards, advisers, and sales orces of the Subadvised Funds regarding investment strategy and und perormance; and providing the Subadvised Funds with portolio and perormance review. See id. at 110-14. • Regulatory and Financial Reporting. Plaintifs assert that BRIM provides the ollowing regulatory and inancial repoting services or the Subadvised Funds: reviewing and providing inomation regarding certain of the Subadvised Funds' SEC filings, including their prospectuses and statements of additional inormation; and preparing and reviewing portions of the Subadvised Funds' shareholder reports and other disclosures. ee id. at 115-17. • Valuation of Securities and Determination ofNAV. Plaintifs claim that BRIM is involved in the air valuation of securities held by the Subadvised Funds, providing inormation to the Subadvised Funds regarding dificult-to-price securities, and notiying the Subadvised Funds of securities it believes should be air valued. See id. at 118-21. • Recordkeeping. Plaintifs contend that, pursuant to Rule 3la-3 of the ICA, BRIM is required to maintain all records relating to investments made by BRIM or the Subadvised Funds. See id. at 122. 48 • Proxy Voting. Plaintifs contend that BRIM votes proxies or the Subadvised Funds. ee id. at r 123. • Assistance to the Subadvised Funds' Service Providers. Plaintifs contend that BRIM provides the ollowing assistance to the Subadvised Funds' service providers: coordinating the onboarding process to ensure connectivity between BRIM's systems and the service providers' systems; providing daily transaction reports to the custodians of the Subadvised Funds and coordinating with those custodians to ensure matching records; and providing monthly reports to the custodians and administrators of the Subadvised Funds listing all illiquid and restricted securities in the Subadvised Funds' portolios. See id. at rr 124-26. While Deendants dispute the extent to which BRIM perorms many of those services or the Subadvised Funds, see DRSOF rr 88-126, during oral argument on this Motion, Deendants admitted that "there is some overlap" between the Support Services that BRA perorms or the Funds and the services that BRIM perorms or the Subadvised Funds. Tr. at 20: 15-16. Futhermore, Plaintifs have profered the comparative cost analysis of Dr. Ayres, who calculated that BRM's costs or providing services to the Subadvised Funds were comparable to, and sometimes exceeded, BRA's costs or providing services to the Funds. ee PSSOF rr 173-79 (citing Lakind Deel., Ex. 8, Expert Report of Ian Ares amended May 3, 2017 ("Ayres Rpt."), rr 64-66, 177)). Thus, assuming, on this Motion, that Dr. Ayres' cost analysis is accurate, to the extent that BRA actually perormed a broader array of services or the Funds than BRIM perormed or the Subadvised Funds, questions exist as to how the negligible diferences in costs justiy the disparity in ees charged by BRA and BRIM. These are precisely the sort of actual disputes that must be resolved at trial. Additionally, relying on Sivolella, Deendants also argue that Plaintifs err in comparing the "generalized description of services" in the IMAs between the Funds and BRA with the services listed in the subadvisory agreements between the Subadvised Funds and BRIM, contending that those contracts do not "ully or accurately capure the ull suite of services that 49 BRA actually renders to the Funds." Defs.' Br. at 23. To that end, Deendants argue that the scope of the Support Services that BRIM perorms or the Subadvised Funds is "de minimis relative to those provided by BRA to the Funds." Deendants' Reply Brief in Further Support of their Motion or Summary Judgment ("Des.' Reply"), at 9. A closer look at the Sivolella decision, however, reveals that Deendants' reliance is misplaced. In Sivolella, a manager of managers case, the plaintifs, relying on similarities in the contractual language of the primary investment management agreement and various subadvisory agreements, argued that the adviser's ees were excessive because the adviser had delegated substantially all of its duties to subadvisers. See 2016 WL 4487857 at * l , 33. Ater a tweny ive-day bench rial, the district court rejected the plaintifs' complete reliance on the contractual language, inding that the comparative "analysis must consider all duties, whether enumerated in a contract or undertaken in a maner to carry out the contractual duties." I. at *34. Speciically, the court reasoned: Plaintifs' assertion that essentially all investment management duties are delegated to sub-advisers is correct, when examining only the contract language. However, in reviewing the administrative contracts, it is clear that FMG retains many of these obligations. Moreover, the rial testimony demonstrated that both FMG and AXA perorm a number of services beyond those expressly outlined in the agreements. Thereore, the Court is unpersuaded by Plaintifs' insistence that the contract language itself controls. In disputing the services that FMG and AXA perorm, Plaintifs simply point to contract provisions rom the various agreements. However, to adopt Plaintifs' position would ignore voluminous testimony of credible witnesses, which explained the duties that FMG undertakes related to the Funds. I. (emphasis added). As the oregoing except demonstrates, although Deendants' argument that the IMAs ail to adequately describe the ull suite of services perormed by BRA or the Funds - thereby demonstrating that a comparison to BRIM's services to the Sbadvised Funds is inapt - may prove to be true, this Court cannot resolve that actual dispute without the beneit of a trial, where I will be able to make credibility determinations and weigh the evidence. See Kennis v. Metro. W Asset mt., LLC, No. 15-8162, 2017 WL 8784795, at *7 (C.D. Cal. Sept. 11, 2017) ("While the declaration testimony Deendant provides may prove to be more persuasive than text of the agreements, the agreements are admissible evidence probative as to the nture and scope of the services Deendant perorms in exchange or the Advisory Fee."); see also Kasilag, 2016 WL 1394347 at *15 (examining the contractual language of an investment management agreement in determining that a actual dispute existed on the nature and quality of services provided). Moreover, the parties have presented conlicting evidence as to whether BRA provides additional Support Services to the Funds under the IMAs in exchange or the Advisory Fee, as opposed to under separate agreements in exchange or separate ees. In that regard, Plaintifs rely on the tems of BRA's agreements with various third-party service providers, including State Street, BNY, and BBH, in arguing that these service providers perorm many of the Support Services that Deendants seek to use as a distinguishing actor rom the services provided by BRIM to the Subadvised Funds. 39 PSSOF ii 28-61. Plaintifs contend that, or the iscal years 2013 to 2016, Global Allocation paid more than $229 million annually in additional For example, Plaintifs contend that under the State Street Adm. Agreement, State Street provides a multitude of administrative and accounting services to the Funds, including, inter alia: (i) overseeing the custodian or the Funds in the maintenance of books and records as required under Rule 31a-l(b); (ii) calculating and aranging or the payment of the Funds' expenses; (iii) preparing the Funds' inancial inormation or the shareholder reports, proxy statements, and other shareholder communications; (iv) preparing and iling the Funds' periodic inancial reports required to be iled with the SEC; (v) consulting with the oicers, independent accountants, legal counsel, custodian, and transer agent of the Funds on establishing accounting policies or the Funds; (vi) providing compliance monitoring services to assist BlackRock in complying with the IRC, ICA, and the guidelines and limitations set oth in the Funds' prospectuses; (vii) providing tax compliance services; (viii) assisting the Funds in handling regulatory matters; and (ix) assisting the Funds in preparing reports or the Board. See PSSOF i 30. 51 39 ees and expenses or services other than BRA's advisory services, with Equity Dividend paying more than $85 million annually in additional ees and expenses over the same period. Pls.' Opp. at 5 (citing PSSOF rr 77-78). And, although Deendants argue that BRA monitors and oversees the work of these third-party service providers, Plaintifs point to provisions in the IMAs, State Street Adm.Agreement, and the SAS Agreement that raise a dispute of act as to whether the Funds pay BRA ees and expenses separate rom the Advisory Fee or that role. See PSSOF rr 67, 68, 71. Finally, Deendants' argument that BRA's sevices and BRIM's subadvisory services are not comparable, because of the diferent entrepreneurial, reputational, legal, and regulatory risks assumed by BRA, is too act intensive to be decided on summary judgment. As a preliminary matter, Plaintifs cite to portions of the prospectuses or the Subadvised Funds that detail the risks aced by the Subadvised Funds, and argue that, based on BRIM's role in providing services to the Subadvised Funds, it shares in those risks. See Pls.' Opp.at 22 (citing PSSOF r 89). Moreover, Plaintifs have identiied contractual language that puportedly limits BRA's risks in a wide range of circumstances. See PSSOF r 26. Thus, a dispute of material act exists regarding the degree of risks assumed by BRA and BRIM in perorming services or the Funds and the Subadvised Funds, respectively, and whether any diferences in risk justify the disparity in ees. In any event, Jones provides that courts should give comparisons between the ees an adviser charges a captive muual und "the weight that they merit in light of the similarities and diferences between the services that the clients in question require ... ." 559 U.S.at 350. Accordingly, the services rendered to diferent clients need not be identical to orm an apt comparison. See Kennis, 2017 WL 8784795 at *9 n.13 ("[T]he Jones holding contemplates ee comparisons between captive, and non-captive unds....Presumably the Supreme Court did so 52 with an awareness that legal and business risks may difer between a captive und and independent und."). In sum, I reject Deendants' argument that a comparison between BRA's services or the Funds and BRIM's services or the Subadvised Funds is inapt as a matter oflaw. Under Jones, services need not be identical or a comparison to be apt. See 559 U.S. at 350; Kennis, 2017 WL 8784795 at *9. Here, actual disputes exist regarding the similarities and diferences between the services provided by BRA and BRIM, including: (i) the extent to which BRA, as opposed to third-party service providers, perorm the Support Services or the Funds; (ii) the extent to which BRIM perorms comparable Support Services or the Subadvised Funds; (iii) whether BA perorms the Support Services or the Funds or compensation separate rom the Advisory Fee; and (iv) whether any diferences in risk assumed by BRA and BRIM justiy the disparity in ees. Accordingly, and when viewing the acts in the light most avorable to Plaintifs, summary judgment on the comparative ees actor is inappropriate. Cf Kasilag, 2016 WL 1394347 at * 16 ("Because the true nature of the services perormed remains relatively nebulous and wrangled over, viewing the acts in the light most avorable to Plaintifs suggests that summary judgment on [the nature and quality of services Gartenberg actor] is inappropriate."). That said, I would be remiss to conclude my comparative ees analysis without ofering two observations or the parties. First, although I have ound that a actual dispute exists regarding the comparability of the services that BRA renders to the Funds and BRIM renders to the Subadvised Funds, I note that, ollowing Jones, those courts that have rendered a comparison of advisory services to subadvisory services beyond the pleadings stage have rejected the notion that these services are comparable. See, e.g., Kasilag, 2017 WL 773880 at *7, 22 n. 40 (observing the diferent entrepreneurial, reputational, legal, and regulatory risks borne by 53 advisers); Sivolella, 2016 WL 4487857 at *46 (inding that the duties of an investment adviser were "ar more extensive" than those delegated to subadvisors); Goodman, 2018 WL 1247459 at *7-10 (inding a comparison of advisory ees and subadvisory ees was inapt, based on the diferent responsibilities, risks, and scale and scope of services involved between advisory and subadvisory services); see also Hofman v. UBS-AG, 591 F. Supp. 2d 522, 540 (S.D.N.Y. 2008) ("[!]investment advisers and sub-advisers perorm distinct services."). While I agree with Plaintifs that the scope and extent of the services rendered by BA and BRIM is a act-speciic inquiry, and Plaintifs will have the opporunity to show that BRA's advisory services and BRIM's subadvisory services are comparable in this case, the legal authority discussed above indicates that Plaintifs may ace an uphill battle in doing so. Second, I note that my analysis on the comparative ees actor does not account or Deendants' evidence regarding the comparative ee data that the Board received rom Lipper. See SOF 11 102-105; 116-18. In that regard, each year during the Relevant Period, the Board received a presentation based on Lipper reports comparing BRA's Advisory Fee to the advisory fees paid by mutual unds identiied by Lipper as comparable to the Funds.40 Among the peer unds selected by Lipper, BRA's Advisory Fee ranked in the peer group, an quartiles of one within the other peer group. d. at 11117. However, Plaintifs argue that this Court must reject the Lipper comparisons profered by Deendants, because: (i) the parameters and reliability of the data used by Lipper to select peer unds is dubious, since According to Deendants, in providing comparative ee data, "Lipper created two custom peer groups or the Funds: (i) one group, the 'Expense Universe,' consisted of open-end mutual unds identiied to have a similar investment classiication or objective as the Funds; (ii) the other group, the 'Expense Group,' consisted of nine to ten unds within the Funds' Expense Universe that Lipper determined were the most comparable to the Funds based on, among other things, und type, investment objectives, sales and distribution ees, size and operating stucture." SOF 40 1116. 54 Lipper does not account or the nature and quality of the services provided by investment advisers in selecting peer unds, and Lipper used comparability parameters that were requested by BlackRock; and (ii) this Court would have to weigh evidence to ind that the ees paid by the peer unds identiied by Lipper, as opposed to the Subadvisory Fee paid by the Subadvised Funds, constiutes the arm's-length range or BRA's Advisory Fee. I reiterate that the iduciary duty imposed under § 36(b) does not require investment advisers to charge the lowest ee in the industry, or to operate on a cost-plus basis. Paskowitz, 232 F. Supp. 3d at 505. Rather, the critical inquiry is whether a ee is so disproportionally large in comparison to the services rendered that it could not have been the result of arm's-length bargaining. See Jones, 559 U.S. at 346. Ultimately, "the goal is to identify the outer bounds of arm's length bargaining and not engage in rate regulation." Jones, 611 F. App'x at 360. The ees paid by comparable mutual unds are highly probative of the bargaining range. See i. at 361 (inding that the adviser's "ee was comparable to that produced by bargaining at other mutual-und complexes, which tells us the bargaining range."). Accordingly, the potential relevance of Lipper in this case is that the investment advisory fees paid by the peer unds identiied by Lipper may be indicative of the relevant bargaining range or BRA's Advisory Fee. Nonetheless, consideration of Lipper data in connection with the bargaining range would amount to impermissible weighing of the evidence in this case, because Plaintifs have raised a genuine dispute of material act regarding the comparability of BRA and BRM's services to the Funds and the Subadvised Funds, respectively. To that end, those couts that have relied on Lipper, both beore and ater trial, have only done so where there was no other comparative ee data in the record, or where the comparison profered by the plaintifs was inapt. See, e.g., Kasilag, 2017 WL 773880, at* 12 (considering Lipper data in post-trial decision, where, at trial, 55 the court determined that the Lipper data profered by the deendants was the only comparative ee data beore the court); Sivolella, 2016 WL 4487857 at*65 (relying on Lipper's peer-und data, ater trial, as indicative of the arm's-length bargaining range); Goodman, 2018 WL 1247459 at* 17 (relying on Lipper data showing that the unds "perormed better than, and the ees were in line with, other mutual unds of similar scope" in granting summary judgment on the plaintifs' §36(b) claim, where the plaintifs' proposed ee comparison was rejected as inapt); Zehrer, 2018 WL 1293230 at* 13 (granting summary judgment in avor of the adviser, based in part on Lipper data showing that the adviser "charged ees that all within ...or ...below ... the range of ees paid by similar unds," where the plaintifs ailed to profer any other apt ee comparisons). Here, however, because a dispute of act exists regarding the comparability of BRA and BRIM's services, and because Plaintifs have profered evidence regarding BRIM's Subadvisory Fee, drawing all inerences in avor of Plaintifs on this Motion, the potential exists or a inding at trial that the comparison between BRA and BRIM is apt, and thereore, that the Subadvisory Fee received by BRIM constitutes the relevant arm's-length range. While Lipper provides a competing set of data regarding the appropriate bargaining range, the Court cannot weigh those two comparisons at the summary judgment stage. Accordingly, whether the peer unds identiied by Lipper set the true arm's-length range or BRA's Advisory Fee is a dispute that must be resolved at trial. Finally, as noted, supra, under Jones, a inding that a dispute of act exists regarding the comparative ees actor, without additional evidence, does not "doom" Deendants to trial. See 559 U.S. at 350 n. 8. Rather, to withstand summary judgment, Plaintifs must also raise a triable issue of act regarding one of the other Gartenberg actors at issue in this case - economies of scale or proitability. Accordingly, I turn to analyzing those actors. 56 2. The Economies of Scale shareholders. Gartenbeg actor of scale economies second realized An economy by BRA at issue in this case concerns through of scale is deined the Funds were passed the extent to which on to the Funds any and their as a "'decline in a product's per-unit production cost resulting rom increased output, [oten] due to increased production acilities; savings resulting rom the greater eficiency of large-scale processes."' Hofman, 591 F. Supp. 2d at 540 (quoting BLACK'S LAW DICTIONARY (8th ed. 2004)); Kasilag, 2016 WL 1394347 at *18. Within the context of§ 36(b), "[t]he concept of 'economies of scale' assumes that as a mutual und increases in size, its operational costs decrease proportionally. If a und realizes economies of scale, its willingness to let the shareholders participate in the resulting beneits becomes a actor in evaluating the reasonableness of the adviser-manager's ees." Kalish v. Franklin Avisers, Inc., 742 F. Supp. 1222, 1237 (S.D.N.Y. 1990), a'd, 928 F.2d 590 (2d Cir. 1991). In § 36(b) cases, the plaintifs burden in demonstrating economies of scale is twoold. First, the plaintif must demonstrate that economies of scale were, in act, realized. I. at 1238. Second, if the threshold showing is made, the plaintif must then demonstrate that "the savings realized rom economies of scale were not suiciently shared with the Fund and its shareholders." Pirundini, 2018 WL 1084140 at *7. In seeking to establish economies of scale in this case, Plaintifs rely exclusively on the report of their expert, Dr. Ayres. At the outset, Dr. Ayres states that economies of scale "result when a provider of goods or services can increase its output without a proportionate increase in its costs of production." Ayres Rpt. r 94. According to Dr. Ares, in such circumstances, "the provider's per-unit costs of production decrease as output increases," and the resultant savings 57 can either "be captured by the producer in the orm ofhigher proits, or they can be passed through to the consumer in the orm oflower prices or ees." I. With respect to the mutual und industry, Dr. Ayres opines that, absent economies of scale, "mutual unds would have no reason to exist, because they would ofer no competitive advantage relative to other orms ofinvestment." I. at r 99. In that regard, Dr. Ayres explains that in a mutual und, investors can pool their money together to pursue an investment strategy based on a diverse portolio ofsecurities, while spreading the ixed costs ofmaintaining such a portolio among investors. ee i. at rr 99-100. For example, Dr. Ayres states that mutual unds incur transaction costs "whenever shares are purchased or sold in order to re-balance the mutual und's portolio in a manner commensurate with its investment objectives (or to adjust the portolio in light ofchanging market conditions)." Id. at r 100. According to Dr. Ayres, while these transaction costs would be prohibitively expensive or an individual investor, by pooling the assets ofa large number ofinvestors, "mutual unds spread transaction costs among all und shareholders." I. In tum, "[p]ooling allows mutual unds to exploit scale economies with respect to the major costs involved with maintaining a diversiied pool ofstocks." I. at r 99. Additionally, Dr. Ayres opines that mutual unds reap the beneits ofeconomies ofscale through "increased eficiency in the operations ofund advisors and administrators." I. at r 101. To show that BRA realized economies ofscale rom the Funds, Dr. Ayres analyzed BRA's inancial statements or the Funds rom 2007 to 2015, ocusing on AUM, operating expenses, revenue, operating proits, operating margins, and the ratio ofoperating expenses to AUM over that period. ee id. at rr 104-09. Speciically, Dr. Ayres noted that, rom 2007 to 2015, BRA's income statements or the Funds relect the ollowing: 58 • AUM. Global Allocation's AUM grew rom approximately $20.1 billion to $52.4 billion (a 159.9% increase, or 12.7% increase annually), and Equity Dividend's AUM grew rom approximately $1.5 billion to $24.7 billion (a 1,501.4% increase, or 41.4% increase annually). I. at Figure 32-33. • Expenses. Global Allocation's operating expenses rose rom and Equity Dividend's • • operating proits grew rom . I. • • Operating Margin. Global Allocation's operating margin increased rom -and Equity Dividend's operating margin increased rom - Id. Ratio of Operating Expenses to AUM. Global Allocation's ratio of operating expenses and Equity Dividend's ratio of operating to AUM decreased rom I. Relying on this inancial inormation, Dr. Ayres asserts that economies of scale were realized rom 2007 to 2015, because the increase in operating expenses41 or the Fundsannually or Global Allocation and annually or Equity Dividend) were "signiicantly less" than the increases in either AUM (12.7% annually or Global Allocation and 41.4% annually or Equity Dividend) or revenue-nnually or Global Allocation and annually or Equity Dividend). I. at rr 106-07. Next, because BRA's proits rom the Funds increased at a higher rate than both AUM and costs Allocation, an 41 or Global or Equity Dividend), Dr. Ayres concludes that BRA Dr. Ayres reers to "operating expenses" and "costs" interchangeably. 59 retained the beneits of economies of scale, rather than passing them along to the Funds' shareholders in the orm of lower ees. See i. at i 107. Stated another way, ater deining economies of scale as increased output without a proportional increase in production costs, Dr. Ayres ound that the BRA realized economies of scale rom the Funds between 2007 and 2015, because the Funds' AUM (output) and revenue increased without a proportional increase in operating expenses (production costs). nd, because BRA's proits rom the Funds increased at a higher rate than either AUM or operating expenses over that period, Dr. Ayres submits that BRA retained the beneits of economies of scale, rather than passing them on to the Funds or their shareholders. Additionally, to show the extent to which BRA beneited rom economies of scale, Dr. Ayres conducted an alternative analysis based on a comparison of BA's actual proits and the proits that BRA would have enjoyed rom the Funds, had proits increased at the same rate as the Funds' AUM. See i. at i 109. Based on his analysis, Dr. Ayres concluded that, rom 2007 to 2015, BRA realize in additional proits than it would have received had BRA's proit margin rom Global Allocation increased at the same rate as the Fund's AUM (i.e., . I. During the same period, Dr. Ayres calculated that BRA realized in additional proits rom Equity Dividend than it would have if proits had increased at the same rate as the Fund's AUM (i.e., at . I. Indeed, Dr. Ayres determined that, in the Relevant Period alone, BRA realized - in additional proits rom the Funds than it would have had proits increased in proportion to the Funds' AUM. ee PSSOF i\ 193, 195 (citing Ayres Rpt. f 109). Notwithstanding Dr. Ayres' report and deposition testimony, Deendants argue that Plaintifs have ailed to meet their burden on either prong of the economies of scale test. 60 Speciically, Deendants argue that Dr. Ayres' analysis is lawed, because: (i) it takes into account "additional proits" beginning in 2007, despite the act that the recoverable damages period or Plaintifs'§ 36(b) claim began in February 2013; (ii) it ails to acnowledge that the economies of scale actor does not require that an adviser share all realized economies of scale with shareholders; and (iii) it ails to account or non-pecuniary beneits, such as BlackRock's investments in personnel, technology, and inrastructure. See Defs.' Br. at 28. Deendants also argue that Dr. Ayres' analysis is insuficient, as a matter oflaw, to establish that BRA realized economies of scale, because Dr. Ayres ailed to show that BRA's per-unit transaction costs decreased as the Funds' assets increased. Defs.' Reply at 11. The Court will address each of these arguments as they apply to the relevant prongs of the economies of scale test. Prior to analyzing whether Plaintifs have met their summary judgment burden under each prong of the economies of scale test, however, I must irst resolve the parties' dispute regarding the applicable timerame in analyzing economies of scale. Deendants argue that Dr. Ares' economies of scale analysis is lawed, because Dr. Ayres calculates economies ofscale beginning in 2007, when the relevant timerame on Plaintifs'§ 36(b) claim began in February 2013, one year beore the commencement of this action. See Defs.' Br. at 28. Conversely, Plaintifs contend that in analyzing economies of scale, courts routinely have looked to growth beyond the one-year period preceding the iling of a§ 36(b) claim. See Pls.' Opp. at 27. Indeed, Plaintifs note that Dr. Ayres explained during his deposition and in his rebuttal report that looking to a broader period is particularly appropriate in this case, because it better corresponds to increases in the Funds' AUM. See id. (citing Deposition Transcript of Ian Ayres ("Ayres Dep."), at 8:12-10:11 and Lakind Deel., Ex. 190, Rebuttal Report oflan Ayres ("Ayres Rebuttal Rpt."), ii 57-59). Specifically, in his rebuttal report, Dr. Ayres explained that he examined 61 economies ofscale rom 2007 to 2015, rather than just in the Relevant Period, because: (i) "[w]hile ailures to share proits rom economies ofscale over the shorter period would be an independent grounds or an opinion, seeing such a ailure over a longer time period is also a reasonable basis or an opinion that BlackRock had a continuing policy ofnot sharing proits rom economies ofscale, particularly where the longer time period corresponds with signiicant increases in AUM"; and (ii) "[a]nalyzing multiple time periods also limits the efects ofoutlier years." Ayres Rebuttal Rpt. 157. Finally, Plaintifs argue that, even iflimited to the Relevant Period, Dr. Ayres' analysis shows that BRA realized and inequitably retained more than. -in economies ofscale rom the Funds. See Pis.' Opp. at 27. Section 36(b) expressly limits the recovery ofdamages to the one-year period prior to the commencement ofthe litigation. 15 U.S.C.§ 80a-35(b) ("No award of damages shall be recoverable or any period prior to one year beore the action was instiuted."). However, recognizing that statistical trends outside the one-year period may, in some instances, demonstrate excessive ees within the relevant time period, n re AllianceBernstein Mut. Fund Excessive Fee Litig., No. 04-4885, 2006 WL 74439, at *2 (S.D.N.Y. Jan. 11, 2006), various courts have permitted plaintifs to present evidence ofeconomies ofscale beyond the one-year period preceding the commencement ofa§ 36(b) action. See, e.., Redus-archis v. ew York Lfe Inv. Mgmt. LLC, No. 14-7991, 2015 WL 6525894, at *9 (D.N.J. Oct. 28, 2015) (collecting cases, and inding that, although "Plaintifs may only recover ees paid by the Funds in the one year statutory period, they may point to historic growth to support their assertion that [the adviser] ejoyed economies ofscale in 2014 without adequately sharing them with the Funds."); The ynn M Kennis v. First Egle Inv. Mgmt., LLC, No. 14-585, 2015 WL 5886178, at *7 (D. Del. Oct. 8, 2015), report and recommendation adopted sub nom. ynn M Kennis Tr. U/ DD A 62 10/02/2002 v. First Eagle nv. Mgmt., LLC, No. 14-585,2015 WL 8489956 (D. Del. Dec. 9, 2015) (inding that the complaint suiciently alleged that the adviser ailed to share economies of scale with the unds,based on the und's growth since 2009,despite the act that the complaint was iled in 2014); n re Federated Mut. Funds xcessive Fee Litig., No. 04-352,2009 WL 5821045,at *7 (W.D. Pa. Sept. 30, 2009) (analyzing asset growth rom 2001 to 2007 in connection with the economies of scale actor); Sins v. Janus Capital Mgmt., LLC, No. 0401647,2006 WL 3746130,at *3 (D. Colo. Dec. 15,2006) (inding that the plaintif met its burden on the economies of scale actor by alleging that the growth in the unds' assets was not matched by a proportional growth in ees between 1993 and 2002,where complaint was iled in 2005); Srigliabotti v. ranklin Res., Inc., No. 04-00883,2005 WL 645529,at *3 (N.D. Cal. Mar. 7,2005) (inding that the complaint suficiently alleged economies of scale based on the growth in the unds over a twenty-year period). I ind the reasoning of these cases persuasive, and thus,although Plaintifs may only recover ees paid by the Funds in the Relevant Period,on this Motion, I will consider Plaintifs' evidence regarding growth in the Funds' AUM since 2007 in connection with the economies of scale actor. See Redus-Tarchis, 2015 WL 6525894 at *9. Turning to the two-part test or economies of scale,I note,first,that although the Third Circuit has not yet addressed a plaintiffs burden of proof in showing that economies of scale were realized,courts within both the Second and Ninth Circuits have ound that economies of scale cannot be inerred solely rom the act that operating expenses declined at a time when the at-issue und's assets grew. Kalish, 742 F. Supp. at 1238; see, e.g., Krinsk v. Fund Asset Mgmt., nc., 875 F.2d 404,411 (2d Cir. 1989) (airming the district court's inding that economies of scale could not be inerred merely rom the act that the ratio of expenses to revenues declined at a time when the at-issue und grew in size); n re Am. ut. unds Fee Litig., No. 04-5593,2009 63 WL 5215755, at *28-29, 51-52 (C.D. Cal. Dec. 28, 2009), a'd sub nom. Jelinek v. Capital Research & Mgmt. Co., 448 F. App'x 716 (9th Cir. 2011) (rejecting the expert's assertion that economies of scale could be inerred rom the act that the ratio of expenses to assets did not increase proportionally, where the expert did not conduct a per-unit transaction cost analysis). Such an inerence, those courts reason, would disregard that act that "costs can change or many reasons other than economies of scale," such as technological changes, alling input prices, or a change in the level of service provided by an adviser. In re Am. Mut. Funds Fee Litig., 2009 WL 5215755 at *28. As a result, this line of cases requires a plaintif to make a showing regarding the actual transaction costs at issue and to prove that "the costs per investor increased or decreased as the assets under management grew." Hofman, 591 F. Supp. 2d at 540; see Krinsk, 875 F.2d at 411 ("[T]o show economies of scale, plaintif bore the burden of proving that the per unit cost of perorming Fund transactions decreased as the number of transactions increased."); see also Amron v. Morgan tanley Inv. Avisors Inc., 464 F.3d 338, 345 (2d Cir. 2006) (afirming dismissal of§ 36(b) claim, based, in part, on act that the complaints made "no allegations regarding the costs of perorming und transactions or the relationship between such costs and the number of transactions perormed" in connection with the economies of scale actor); Pasowitz, 232 F. Supp. 3d at 507 (same). Absent such inormation, those courts reason, "there is no way to determine whether any economy of scale even existed that could have been passed on to investors or whether there is another explanation or the statistics" identiied by the plainti. Hofman, 591 F. Supp. 2d at 540. Three-post trial decisions, Krinsk, alish, and In re Am. Mut. Funs Fee Litig., are illustrative of this point. First, in Krinsk, the court observed that "economies of scale 'relate to the costs incurred in doing a unit of something,"' and dismissed the plaintiffs exhibits on 64 economies of scale as unpersuasive, because they "ail[ed] to demonstrate that the per unit cost of Fund transactions ...decrease[d] as the number of units increase[d]." Krinsk v. Fund Asset Mgmt., Inc., 71 5 F.Supp.472, 496 (S.D.N.Y.1988), afd, 875 F.2d 404 ( 2d Cir. 1989) (citation omitted). Speciically, the court rejected the plaintiffs argument that economies of scale could be inerred rom the act that the adviser's expenses, in terms of a percentage of ee-based revenues, declined at a time when the und grew in size, inding that "merely because the ratio of fee based expenses to ee based revenues declined at a time when the Fund size grew ... does not establish that such a decline was necessarily due to economies of scale." Id. Rather, the court accepted the trial testimony of a deense witness that "one must 'try and create a detailed analysis of each element of a transaction ...over an extended period of time, over diferent levels of activity, to determine whether or not there are economies of scale.' d. (citation omitted). And, because the plaintif ailed to produce any evidence regarding the per unit cost of und transactions, the court ound that the plaintif ailed to sustain its burden of proof on the economies of scale actor. See i. On appeal, the Court of Appeals or the Second Circuit airmed the district court's inding, observing that "to show economies of scale, plaintif bore the burden of proving that the per unit cost of perorming Fund transactions decreased as the number of transactions increased." Krinsk, 875 F.2d at 411. In so inding, the court cited to the district cout's opinion in Gartenberg, which explained: That processing costs do not significantly diminish as Fund assets increase accords with logic and common sense. While it may be almost as easy to invest a block of $100 million as a block of $10 million, it requires substantially more time, money and personnel to process 1 million shareholder orders than 100,000 orders.The ease and speed with which Fund shares can be bought or redeemed is crucial to the success of any money market und, especially since the investor loses money or every minute his unds lie unemployed.Merrill Lynch added more than 3,000 non-sales personnel to handle the additional transaction volume caused by the Fund. 65 Gartenberg v. Merrill Lynch Asset Mgmt., Inc., 528 F. Supp. 1038, 1055 (S.D.N.Y. 1981), a'd, 694 F.2d 923 (2d Cir. 1982). Thus, because transaction costs do not necessarily decline as a muual und's assets increase, the Krinsk court placed the burden on the plaintif to show that per unit transaction costs actually decreased as the at-issue und grew in size. ee 875 F.2d at 411. Similarly, in Kalish, the district cout ound that the plaintifs ailed to meet their burden of proving that the adviser realized economies of scale rom the at-issue und. See 742 F. Supp. at 1239-40. At the outset, the court recounted the indings in Krinsk, and explained that a plaintif bears the ollowing burden of proof on the realization prong of the economies of scale test: [T]o demonstrate breach of iduciary duty in respect of economies of scale, an investor must irst prove that in act the und realized economies of scale. This requires proof of decreasing costs on a per-unit basis, as the und increases in size. In Krinsk Judge Walker accepted the testimony of a deense witness that one must "try to create a detailed analysis of each element of a transaction . . ., over an extended period of time, over diferent levels of activity, to determine whether or not there are economies of scale." 715 F. Supp. at 496. While this was a deense witness, Judge Walker accepted his view, and the Second Circuit clearly bestowed its imprimatur of approval in the language I have quoted rom its opinion airming Krinsk. To place that burden of proof upon a plaintif accords with logic and common sense, as Judge Pollack observed in Gartenberg . Economies of scale o not exist in a vacuum. The concept is meaninful only f increased sze of a fund (more shareholders, more assets under management) directly reduces the manager's costs of processing each ransaction and servicing each shareholder. A plaintif must prove that the und actually realized such economies of scale. I. at 1238-39 (emphasis added). Having set orth the applicable standard, the Kalish court turned to whether the plaintifs satisied their burden of showing that economies of scale were realized. Signiicantly, the court noted that, as acnowledged by the plaintifs' expert at trial, the "plaintifs did not attempt a study to determine if the per-unit cost of each transaction or the Fund decreased as the number of transactions increased." I. at 1238-39. Rather, to show economies of scale, the expet 66 pointed to the act that expenses had increased at a slower rate than revenues at a time when the und's assets grew, and drew an inerence rom these circumstances that the adviser's per-unit cost of perorming und transactions declined as the und grew in size. See i. at 1239-40. However, the court ound that these statistics were insuficient "to carry plaintifs' burden of proving the realization of economies of scale." I. at 1240. With respect to the declining ratio of expenses to revenues at a time of increasing size, the court explained that "Judge Walker squarely held in rinsk that economies of scale could not necessarily be inerred rom those circumstances, and the Second Circuit afirmed him on the point, adding its own analysis of what a plaintif had to prove." I. Thus, because the plaintifs did not show that the und's per-unit transaction costs declined as its assets grew, the court held that the plaintifs ailed to sustain their burden on the economies of scale actor. See i. at 1239-40. Finally, In re Am. ut. Funs Fee Litig., the court ound that the plaintifs ailed to sustain their burden of proving that economies of scale were realized, where their expert did not conduct a per-unit cost analysis. 2009 WL 5215755 at *51. There, the plaintifs sought to establish the existence of economies of scale by relying on the analyses and trial testimony of their expert, who opined that economies of scale could be inerred rom the act that the ratio of expenses to assets or the at-issue und did not increase proportionally rom one year to the next. See i. at *29. The court rjected the expert's analysis - and ound that the plaintifs ailed to sustain their burden on the economies of scale actor - or several reasons. ee i. at *29-30, 5152. Principally, the court characterized the expert's ailure to perorm "the requisite per-unit cost analysis" as a "undamental law," which "prevented him rom inding that economies of scale existed." I. at *51. Moreover, the court ound that the expert's "analyses of whether economies of scale were realized [were] also deective because he improperly assumed that any changes in 67 Deendants' costs were the result of economies of scale,when in act those cost changes may have been caused by other actors urelated to scale," i., such as technological changes,changes in input pricing,or changes in the level of service provided by an adviser. I. at *28. On appeal, the Court of Appeals or the Ninth Circuit afirmed the district court's inding that the plaintifs ailed to meet their burden on the economies of scale actor. See elinek v. Capital Research & Mgmt. Co., 448 F. App'x 716,719 (9th Cir. 2011). Here,at irst read, it appears that Dr. Ayres' analysis or establishing economies of scale is substantially similar to the analyses that were rejected in the oregoing cases. That is,Dr. Ayres has opined that economies of scale existed based on disproportionality between the growth in the Funds' AUM and the increase in operational costs between 2007 and 2015. Signiicantly, however,it is unclear,rom the record beore me,whether Dr. Ayres perormed the additional step that the courts in rinsk, Kalish, and n re Am. Mut. Funs Fee Litig. ound was necessary to demonstrate the realization of economies of scale; i.e., conducting a per-unit transaction cost analysis. In that regard,my ability to consider this puported deiciency in Dr. Ayres' analysis is limited by the act that Deendants raised the issue of Dr. Ayres' ailure to conduct a per-unit transaction cost analysis or the irst time in their reply brief,42 and ailed to question Dr. Ayres on that issue while taking his deposition. Moreover,unlike the post-trial decisions in rinsk, Kalish, and n re Am. Mut. Funds Fee Litig., here,the Court is without the beneit of Dr. Ayres' 42 I note that "[a] moving party may not raise new issues and present new actual materials in a reply brief that it should have raised in its initial brie." Ballas v. Tedesco, 41 F. Supp. 2d 531, 533 (D.N.J. 1999); United States v. Concepcion, 679 F. App'x 230,232 n. I (3d Cir. 2017) (reusing to consider arguments raise or the irst time in a reply brie); Stern v. Halligan, 158 F.3d 729,731 n. 3 (3d Cir. 1998) ("A party cannot raise issues or the irst time in a reply brie."). Thus,courts ordinarily decline to consider arguments raised or the irst time in a reply brief,on the grounds that consideration of the same would prejudice the non-moving party. See nited States v. Boggi, 74 F.3d 470,478 (3d Cir. 1996) (declining to consider arguments raised in a reply brief to avoid prejudice to appellees). 68 trial testimony. Accordingly, based on the limited record regarding transaction costs, this Cout lacks a suicient basis to conclude that Dr. Ayres ailed to conduct a per-unit transaction cost analysis in determining the existence of economies of scale, or otherwise ailed to exclude external actors that could have resulted in the disproportionate growth rates between BA's operating expenses and the Funds' AUM. 43 Moreover, when questioned on this point at the summary judgment hearing, Plaintifs argued that Dr. Ayres did, in act, perorm a per-unit transaction cost analysis. Speciically, Plaintifs responded to this Court's inquiries as ollows: THE COURT: In [Deendants'] reply brief they point to the ollowing standard that: "For economies of scale you must demonstrate that BRA's cost per transaction or the unds decreased as its AUM increased." So my question or you -- and certainly there are a couple of Circuits that have used that and many cases that have used that -- irst, do you agree that that's the proper standard? PLANTIFFS: No, your Honor, I do not. It depends on what "cost per transaction" means. Because, your Honor, what we have done here is we have shown that, as these [Funds] have increased in size, [BRA's] cost of providing services to those [Funds] has decreased as a percentage of assets under management. What that means is that or every new dollar that comes into one of these [Funds] [BRA's] cost of managing each dollar decreases. So insoar as cost per dollar is cost per transaction, then I agree and that's an appropriate standard. If cost per transaction is supposed to mean something diferent rom cost per dollar of assets under management, then I disagree. Assets under management or AUM is absolutely a standard measure of scale or size in the mutual und industry. It's regularly used by academics in analyzing scales. That's the measure that Dr. Ayres used - The last point I'll mention on the per transaction question is that Dr. Ayres looked at all The landscape on this issue may change if Deendants raise a Daubert challenge to exclude or limit the opinions of Dr. Ayres, which Deendants represented will be orthcoming, Tr. 51:19-25, and Dr. Ayres' opinions are limited in some relevant ashion. 69 43 of BlackRock's costs including whatever costs there are or supervising the transer agent, or supervising State Street. Any costs that they claim are included in there, any costs that they claim to have incurred are included in Dr. Ayres' analysis. So insoar as he's showing cost decreasing as assets increase, he's captured the cost of servicing shareholders or anything else that BlackRock claims to do. Tr. at 45:21-46:23, 51:3-13. As this excerpt shows, Plaintifs contend that Dr. Ares' analysis of BRA's costs or providing services to the Funds does in act show a decrease in expenses relative to assets on a per-unit (per-dollar) basis. While Deendants have raised the per-unit transaction cost issue on this Motion, they had the opportunity to question Dr. Ayres regarding his purported ailure to conduct such an analysis during his deposition, and ailed to do so. Without that inormation, I have no basis or rejecting Plaintifs' contention that Dr. Ayres perormed the requisite analysis, and thus, a dispute of act exists as to whether BRA realized economies of scale rom the Funds. 44 In short, the act remains that Plaintifs' expert witness, Dr. Ayres, opined that the disproportionality between the growth in the Funds' assets and operating expenses shows that BRA realized economies of scale rom the Funds, and a actual dispute exists regarding whether Dr. Ayres conducted the requisite per-unit analysis to demonstrate economies of scale. While the post-trial decisions in rinsk, Kalish, and In re Am. Mut. Funds Fee Litig. ultimately ound that the experts' ailures to conduct a per-unit transaction cost analysis precluded a inding that economies of scale were realized, at this stage, absent testimony on that issue, this Court cannot conclude that the disproportionality between the increase in operating expenses and AUM was not the result of economies of scale. Indeed, while I agree that it will be Plaintifs' burden at 44 Additionally, I note that, contrary to Deendants' arguments, Dr. Ayers' testimony raises a actual dispute as to whether non-pecuniary beneits rom economies of scale are accounted or in Dr. Ayres' analysis. See Ayres Dep. 238:6-14. 70 trial to prove that the decrease in operating expenses was the result of economies of scale, drawing all reasonable inerences in avor of Plaintifs on this Motion, the possibility remains that the lack of proportionality was due entirely to economies of scale, rather than other cost changes. Accordingly, although I ind that Plaintifs have sustained their burden of raising a triable issue on the economies of scale actor, as the post-trial decisions in Krinsk, Kalish, and In re Am. ut. Funds Fee Litig. illustrate, it will be Plaintifs' burden at trial to show that any disproportionality between the Funds' asset growth and operating expenses is attributable to economies of scale, rather than other cost savings unrelated to scale economies. Having ound that Plaintifs have raised a triable issue of act as to whether the Funds realized economies of scale, I turn, next, to the question of whether the Funds have adequately shared any economies of scale with investors. In that regard, once a plaintif demonstrates that economies of scale have been realized, it then must show that the savings realized rom economies of scale were not adequately shared with the at-issue und or its investors. Pirundini, 2018 WL 1084140 at *7; see Kalish, 742 F. Supp. at 1239 ("If a plaintif makes [the threshold] showing, then the question becomes whether the und has permitted shareholders to participate, at least in part, in the economies of scale it has realized."). "Economies of scale can be shared with und shareholders in a number of ways, including breakpoints, ee reductions and waivers, ofering low ees rom inception, or making additional investments to enhance shareholder services." In re Am. Mut. unds Fee Litig., 2009 WL 5215755 at *52 (internal citations omitted); see Kalish, 742 F. Supp. at 1239. Ultimately, the question posed by this prong of the economies of scale test is whether scale economies were "equitably shared." In re Am. Mut. Funds Fee Litig., 2009 WL 5215755 at *52. 71 Here, Deendants argue that Plaintifs have ailed to sustain their burden of proving that any realized economies of scale were not equitably shared, because BRA's ee concessions and the breakpoints in BRA's Advisory Fee schedule resulted in substantial savings to the Funds. To that end, Deendants contend that the ee concessions and breakpoints - which were negotiated and approved by Board - resulted in savings to the Funds of approximately $192.6 million during the Relevant Period. See Defs.' Br. at 28 (citing SOF r 135). Deendants argue that these savings, standing alone are dispositive on the economies of scale actor. In opposition, Plaintifs concede that BRA did share some beneits of economies of scale with the Funds and their investors through ee waivers and breakpoints, but argue that a actual dispute exists regarding the suiciency of any such sharing and whether additional beneits should have been shared with the Funds. See Pis.' Opp. at 26. In that regard, Plaintifs once again point to the report of Dr. Ayres, who determined that, even after any sharing, BA captured in economies of scale rom 2007 to 2015, and proits rom economies of scale during the Relevant Period alone. See Ayres Rpt. in additional r 109, Figures 38-39; PSSOF rr 191-95. Thus, Plaintifs contend, a actual dispute exists as to whether the ee breakpoints were ixed too high, precluding BRA rom sharing the beneits of economies of scale with the Funds and their shareholders. While Plaintifs' arguments may not ultimately be enough to carry their burden at trial, the oregoing actual disputes are suicient to withstand summary judgment. In that regard, while "appropriately ixed 'break-points"' may suice to demonstrate that economies of scale were shared with a und, Kalish, 742 F. Supp. at 1239, here, a actual dispute exists regarding whether the breakpoints in the BRA's ee scheules were "appropriately ixed," and thus, whether BRA adequately shared the beneits of economies of scale with the Funds and their 72 shareholders. See Kasilag, 2016 WL 1394347 at *18 (holding that summary judgment was not warranted on the economies of scale actor, because the court could not "ignore expert testimony highlighting a large actual dispute concerning the economies of scale that were passed on to the Funds."); Sivolella, Hr'g Tr. at 82:9-83:10 (denying summary judgment on the economies of scale actor based on a actual dispute, despite the deendants' argument that economies of scale were realized through breakpoints). Accordingly, the Court inds that Plaintifs have raised a actual dispute as to the economies of scale actor. 3. Proitabity Plaintifs also contend that BA's proits rom the Funds are indicative of the excessive naure of BRA's Advisory Fee. In analyzing the proitability actor of the Gartenberg analysis "the Cort is guided by the notion that it is not a permissible approach under Section 36(b) to argue that the adviser 'just plain made too much money."' Kasilag, 2017 WL 773880 at *22 (quoting alish, 742 F. Supp. at 1237); see In re Am. Mut. Funds Fee Litig., 2009 WL 5215755 at *50 ("Section 36(b) does not prohibit an investment adviser rom making a proit, nor does it regulate the level of proit."). In that regard, it is well-settled that § 36(b) does not require that investment advisers operate on a "cost-plus" basis. Kasilag, 2017 WL 773880 at *22; see Kalish., 742 F. Supp. at 1226 (observing that the legislative history of§ 36(b) reveals that the staute "does not orbid an adviser-manager rom earning a proit on services provided by it to a und; that a 'cost-plus' type of contract is not required; and that the court is not authorized 'to substitute its business judgment or that of a mutual und's board of directors in the area of management ees."') (citation omitted); S. EP. No. 91-184, at 5 (1970), reprinted in 1970 U.S.C.C.A.N. 4897, 4902 ("The investment adviser is entitled to make a proit. Nothing in this Bill is intended to imply othewise or to suggest that a 'cost-plus' tpe of contract would be 73 required."). Nonetheless, evidence that an adviser's proitability is disproportionate to the services rendered may be a sign that the adviser's ees are excessive. Chill v. Calamos Advisors LLC, 175 F. Supp. 3d 126, 144 (S.D.N.Y. 2016). In seeking to demonstrate that BRA's proitability rom the Funds shows the excessive nature of the Advisory Fee, Plaintifs rely on Dr. Ayres' calculation of what BRA's proitability would have been had BRA used the same ee schedules that BRM negotiated at arm's length with the Subadvised Funds. In quantifying proitability, Dr. Ayres relied on the annual 15(c) Proit Reports prepared in connection with the renewal of BRA's IMAs with the Funds. See PSSOF r 151. From 2013 to 2015, the relevant 15(c) Proit Reports disclosed three diferent methods of BRA's proit margin (or, according to Deendants, estimated proit margin) 45 or managing the Funds. See SOF rr 126-127. To that end, the relevant 15(c) Proit Reports indicated the ollowing proitability inormation: Global Allocation 2013 Equiy Dividend 2015 2013 2015 Margin (GAAP) Margin Excluding Distribution Costs 45 While Plaintifs contend that the 15(c) Proit Report includes the actual revenue, costs, and proitability or the Funds, Deendants argue that the 15(c) Proit Repot is merely an estimate of each Fund's proitability based on its revenue and an estimate of the costs allocable to BRA's management of each Fund. See PSSOF r 151; DRSOF r 151. 74 Margin Excluding Distribution, Servicing & Retention Costs Id. Citing to those proitability igures, Dr. Ayres compared BA's proits rom the Funds under the ee schedule pertaining to the Advisory Fee to what BRA's proits would have been under the ee schedules that BRIM negotiated at arm's length with the Subadvised Funds. See PSSOF rr 180-82. Dr. Ayres determined that between 2013 and 2015, BRA's proits rom Global Allocation ranged rom ranging between million per year, with proit margins . See id. at r 181. Using cost data provided by BlackRock, Dr. Ayres calculated that, had BRA charged Global Allocation the same ee rate that BRIM charges the Subadvised Funds, BRA's proits over the same period would have ranged rom million, including distribution expenses, with a proit margin of - See id. In the same way, Dr. Ayres states that BRA's proits rom Equity Dividend during the Relevant Period ranged rom million per year, with proit margins ranging betwee- See id. at r 182. Dr. Ayres determined that, had BRA employed the same ee schedule that BRIM negotiated with the Subadvised Funds, BA's proits during the same period would have ranged rom including distribution expenses, with a proit margin of 75 million each year, Ayres determined that, rom 2013 to 2015, BRA captured as much as in additional proits based on charging a higher Advisory Fee to the Funds than the ee that BRIM negotiated at arm's length with the Subadvised Funds. ee i. at rr 181-82 (citing Ayres Rpt. rr 90-93); Pls.' Opp. at 24-25. In response, Deendants argue that Plaintifs ail to cite any support or the proposition that proitability can be established based on a comparison of BRA and BRM's proit margins. Deendants urther maintain that the act that BRA's proit margins or managing the Funds are within the range upheld by other courts is dispositive on the proitability actor. First, I reject Deendants' contention that Plaintifs canot compare BRA's proitability rom the Funds to BRIM's proitability rom the Subadvised Funds. In support of their argument, Deendants note that in Schuyt v. Rowe Price Prime Reserve Fund, nc., 663 F. Supp. 962 (S.D.N.Y.), a'd, 835 F.2d 45 (2d Cir. 1987), the district court rejected the plaintifs attempt to use the 15% proit margin of a service provider or the und as a measuring stick or the arm's-length bargaining range, inding such a comparison inappropriate in light of the diferences in services rendered by the investment adviser and the service provider. Id. at 976 n. 43. Unlike in Schuyt, however, here, Plaintifs have raised a dispute of act regarding the comparability of the services rendered by BRA to the Funds and BRIM to the Subadvised Funds. Should trial reveal that the services provided by BRA and BRIM are in act comparable, Plaintifs may present their theory as proof that BA's proitability rom the Funds is disproportionate to the services that BA provides to the Funds. Indeed, in light of the substantial disputes regarding the services that BRA actually perorms or the Funds, it necessarily ollows that a dispute exists regarding the ultimate question on proitability in this case - whether BA's proitability rom the Funds is disproportionate to the services rendered. 76 Moreover, Deendants have not cited to any authority holding, as a matter of law, that a comparison of proit margins across diferent clients cannot actor into the proitability analysis.46 Accordingly, I ind that Plaintifs have raised a genuine dispute of material act as to whether BRA's proitability rom the Funds is disproportionate to the services provided.47 Notwithstanding Plaintifs' comparative proitability arguments, Deendants argue that Plaintifs cannot demonstrate excessive proitability, because BRA's proit margins or managing the unds are within the range that other courts have upheld as appropriate. See, e.g., Kasilag, 2017 WL 773880 at *22 (inding that the plaintifs "ailed to meet their burden of establishing that the Funds were so proitable that their ee could not have been negotiated at arm's-length," where the adviser's pre-tax proit margins ranged between 45.6% and 80.3%, excluding distribution ees); In re Am. ut. Funds Fee Litig., 2009 WL 5215755 at *50 (inding that the profitability actor did not weigh in avor of inding a§ 36(b) violation, where the advisers' pre-tax proit margins, excluding distribution expenses, ranged rom 30% to 52%); Schuyt, 663 F. Supp. at 979 (inding that a pre-tax proit margin of 77.3% did not support a inding of excessive ees). Conversely, Plaintifs contend that those cases are not dispositive on the proitability actor, because: (i)§ 36(b) cases vary according to the speciic acts presented in each case; (ii) the decisions relied on by Deendants were each rendered ater trial; and (iii) none of the cases cited by Deendants involved high proit margins in combination with evidence that the Indeed, n re Am. Mut. Funds Fee Litig., a case cited by Deendants, suggests that a comparison to the proit margins of other advisers may actor into the proitability actor. ee 2009 WL 5215755 at *50 (observing, in analyzing the proitability actor, that the advisers' proitability rom the unds "was also comparable to or less than other similarly stuctured investment advisers . . .."). 47 However, as discussed below, Plaintifs' comparative proitability theory is the sole triable issue on the proitability actor. 46 77 investment adviser provided substantially the same services to independent clients or signiicantly reduced proits. With respect to the non-dispositive nature of the cases cited by Deendants, Plaintifs emphasize that in Schuyt, the court clariied that it was: ...not holding that a proit margin of up to 77. 3% can never be excessive. In fact, under other circumstances, such a proit margin could very well be excessive. For example, if advisory services being challenged were not of the highest quality and if the directors were not so obviously qualiied, ully inormed, and conscientious, a similar ee structure could violate section 36(b).This Court is simply holding that on the acts presented here, the ee schedules at issue represent charges within the range of what would have been negotiated at arms-length in the light of all of the surrounding circumstances. I. at 989 n.77 (emphasis added). As a preliminary matter, Deendants' arguments regarding the proit margins upheld by other courts are unavailing, because: (i) a actual dispute exists regarding the diferences between BRA and BRM's proit margins; and (ii)§ 36(b) requires a totality of the circumstances approach, and thus, a proit margin that is not excessive upon cetain acts may be excessive under another. Indeed, the act-intensive nature of the proitability inquiry is highlighted by the act that each of the decisions relied upon by Deendants was rendered ater trial. See asilag, 2017 WL 773880 at *24 (entering judgment in avor of the deendants ater a bench trial); In re Am. Mut. Funds Fee Litig., 2009 WL 5215755 at *56 (entering judgment in avor of the deendants ater trial); Schuyt, 663 F. Supp.at 989 (entering judgment or the deendants ater a two-week trial). Nonetheless, I note that the examples cited by the Schuyt court as potentially requiring a diferent result on proitability - the quality of the advisory services and independence and conscientiousness of the board - are not issue in this case, and thus, cannot be asserted at trial as a basis or distinguishing this case rom those decisions upholding cetain proitability margins on similar acts. Rather, in seeking to overcome the weight of authority holding that the proit margins realized by BRA ail to indicate excessive 78 ees, as well as the considerable deerence aforded the Board on this actor, Plaintifs will be limited to presenting their comparative theory of proitability. 4. Independence and Conscientiousness f the Board The inal disputed actor, pertaining to the independence and the conscientiousness of the Board, "dovetails with the procedural aspect ofJones." asilag, 2016 WL 1394347 at *19. In light of this Court's inding that the Board's approval ofBRA's Advisory Fee is entitled to substantial deerence, this actor does not weigh in avor of inding that the Advisory Fee is outside the range of arm's-Iength bargaining. See i. E. Gartenherg Outcome In sum, the Cout inds that genuine disputes of material act exist regarding the comparative ees, economies of scale, and proitability actors of the Gartenberg test, and thus, as to whether the Advisory Fee alls outside the range of arm's-length bargaining, rendering summary judgment inappropriate. However, in light of this Court's inding that the Board's decision to approve BRA's Advisory Fee is entitled to substantial deerence, the Court expects that trial will be limited to the other relevant Gartenberg actors. V. MOTION TO PRECLUDE Plaintifs move, pursuant to Federal Rule of Civil Procedure 37, to preclude Deendants rom relying on evidence and arguments regarding the ollowing three topics based on Deendants' ailure to provide complete discovery on those matters: (i) the legal services that BA perorms or the Funds; (ii) the distribution-related services that BRA perorms or the Funds48 ; and (iii) the analysis conducted by E&Y and provided to the Board regarding BA's 48 Plaintifs also argue that Deendants should be precluded rom relying on evidence of distribution or the independent reason that distribution-related services and expenses cannot be a justiication or BRA's Advisory Fee. 79 Advisory Fee. Specifically, Plaintifs contend that preclusion is warranted, because Deendants objected to discovery concerning legal services on the grounds of attorney-client privilege, reused to respond to document requests regarding distribution, and ailed to produce the E&Y analysis even though it was responsive to Plaintifs' requests. Additionally, Plaintifs seek to strike certain portions of the Certiication of John Perlowski in Support of Deendants' Motion or Summary Judgment ("Perlowski Cert.") regarding materials provided to the Board (rr 14, 16) and pupoted savings rom breakpoints (rr 35-36) as violative of Federal Rule of Evidence 1006. Conversely, Deendants maintain that Plaintifs' Motion to Preclude is both procedurally and substantively deective. The Court need not resolve Plaintifs' Motion at this time, because, even though the Court generally reerred to the E&Y analysis and BRA's legal and distribution-related services, the Court did not rely on those acts in deciding Deendants' Motion or Summary Judgment. Stated diferently, the E&Y analysis and legal and distribution services did not orm the basis or this Court's consideration of any of the actors at dispute in this case. Moreover, the Court did not reer to the paragraphs of the Perlowski Certiication that Plaintifs argue must be precluded. Thereore, the Court will deny Plaintifs' Motion to Preclude without prejudice. To the extent Plaintifs seek to renew these arguments prior to trial, they may ile motions in limine to that efect, in accordance with the othcoming trial scheduling order that will be issued by this Court. VI. CONCLUSION For the oregoing reasons, Deendants' Motion or Summary Judgment is granted, insoar as Deendants seek a ruling that the decision of the Board to approve BRA's Advisory Fee is 80 entitled to substantial deerence, and denied, insoar as Deendants seek the dismissal of Plaintifs' claims. Plaintifs' Motion to Preclude is denied without prejudice. Dated: June 13, 2018 /s/ Freda L. Wolson Hon. Freda L. Wolfson United States District Judge 81 APPENDIX Glossary of Abbreviations and Deined Terms "15(c) Proit Report" BlacRock's Anual Reports to the Board regarding Proitability "Accounting Agreement" The Funds' Accounting Support Services Agreement with BRA "Act" The Investment Company Act of 1940 or ICA "Advisory Fee" The Annual Fee that BRA Receives or serving as the Investment Adviser or the Funds "Allianz GA Fund" The AZL BlackRock Global Allocation Fund "AUM" Assets Under Management "Ayres Dep." Deposition Transcript of Ian Ayres (Sept. 22, 2017) "Ayres Rebuttal Rpt." Rebuttal Report oflan Ayres (July 28, 2017) "Ayres Rpt." Expert Report of Ian Ayres (May 3, 2017) "BBH" Brown Brothers Harriman & Co. "BBH Custodian Agreement" Global Allocation's Custodial Agreement with BBH "BlackRock" BRA, BRIM, and BRIL "BlackRock Investments" BlackRock Investments, Inc. "BNY" BNY Mellon Investment Servicing (US) Inc. "BNY Agreement" The Transer Agency and Shareholders Services Agreement Between BNY and the Funds "Board" Global Allocation's Board ofDirectors and Equity Dividend's Board of Tustees "Board Chairman" Robet Hernandez, the Chairman of the Board "Board's Counsel" The Law Firm ofDebevoise & Plimpton LLP 82 "BRA" BlackRock Advisors, LLC "BRIL" BlackRock Intenational Limited "BRIM" BlackRock Investment Management, LLC "CCO" Chief Compliance Oicer "Commission" The United States Securities and Exchange Commission or SEC "Complaint" or "Comp!." Plaintifs' Consolidated Complaint (ECF No. 27) "Contract Renewal Presentation" 2014 Document Provided to the Board in Connection with the Renewal of the IMAs "Deendants" BlackRock "Defs.' Br." Deendants' Brief in Support of their Motion or Summary Judgment (ECF No. 101) "Defs.' Reply" Deendants' Reply Brief in Further Support of their Motion or Summary Judgment (ECF No. 117) "DRSOF" Deendants' Response to Plaintifs' Supplemental Local Civil Rule 56.1 Statement (ECF. No. 117-1) "Distribution Agreement" The Funds' Distribution Agreement with BlackRock Investments "ETFs" Exchange-Traded Funds "E&Y" Ernst & Young LLP "Equity Dividend" The BlackRock Equity Dividend Fund "Fee Approval Meeting" The Board's Annual April Meeting to Consider the Renewal of the IMAs "Fee Comparison Memorandum" Annual Memorandum Provided to the Board Regarding BA's Advisory Fee "Funds" Equity Dividend and Global Allocation "Funds' Counsel" The Law Firm of Willkie Farr & Gallagher LLP 83 "Global Allocation" The BlackRock Global Allocation Fund, Inc. "Henandez Dep." The Deposition Transcript of Robert Hernandez (Jan. 6, 2017) "ICA" The Investment Company Act of 1940 or the Act "IAA" The Investment Advisers Act of 1940 "RC" The Intenal Revenue Code "IMAs" The Funds' Investment Management Agreements with BRA "Independent Advisers" The Investment Advisers or the Subadvised Funds "Independent Tustees" The Ten Members of the Board that Meet the Statutory Requirements or Independence under the ICA "Jackson GA Fund" The JNL/BlackRock Global Allocation Fund "Lakind Deel." Declaration of Robert. L. Lakind in Opposition to Defendants' Motion or Summary Judgment (ECF No. 110-3) "Lincoln ED Fund" The LVIP BlackRock Equity Dividend RPM Fund "Lipper" Lipper, Inc. "MassMutual ED Fund" The MassMutual Income and Growth Fund "MassMutual GA Fund" The MassMutual Select Global Allocation Fund "Moningstar" Morningstar, Inc. "Muscato Cert." Certiication of Andrew Muscato in Support of Deendants' Motion or Summary Judgment (ECF No. 101-6) "NAV" Net Asset Value 84 "Perlowski Cert." Certiication of John Perlowski in Support of Deendants' Motion or Summary Judgment (ECF No. 101-2) "Plaintifs" Owen Clancy, Cindy Tarchis, and Brendan Foote "Pls.' Opp." Plaintifs' Memorandum of Law in Opposition to Deendants' Motion or Summary Judgment (ECF No. 110) "PRSOF" Plaintifs' Response to Deendants' Local Civil Rule 56.1 Statement of Material Facts (ECF No. 110-2) "PSSOF" Plaintifs' Supplemental Statement of Disputed Material Facts (ECF No. 110-1) "PwC" PricewaterhouseCoopers "Relevant Period" February 21, 2013 through November 2015 "SAS Agreement" The Shareholders Administrative Services Agreement Between the Funds and BRA "Services Checklist" A Checklist in the Fee Comparison Memorandum that Compares the Services that BlackRock Ofers its Diferent Clients "SEC" The United States Securities and Exchange Commission or Commission "SOF" Deendants' Local Civil Rule 56.1 Statement of Material Facts Not in Dispute (ECF No. 101-1) "Standing Committees" The Board's Audit Committee, Govenance and Nominating Committee, Compliance Committee, Perormance Oversight Committee, and Executive Committee "State Street" State Street Bank and Trust Company "State Street Adm. Agreement" The Administrative Services Agreement Between the Funds and State Street "State Street Custodian Agreement" Equity Dividend's Custodial Agreement with State Street 85 "Subadvised Funds" The Allianz GA Fund, Transamerica GA Fund, Jackson GA Fund, MassMutual GA Fund, VALIC ED Fund, Lincoln ED Fund, and the MassMutual ED Fund "Subadvisory Fee" The Annual Fee Received by BRIM or Serving as a Subadviser to the Subadvised Funds "Support Services" The Non-Investment Advisory Services Required to Operate a Mutual Fund "Transamerica GA Fund" The Transamerica Global Allocation Fund "VALIC ED Fund" The VALIC Dividend Value Fund 86

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