A series of new decisions in Tussey v. ABB Inc. handed down by the 8th U.S. Circuit Court of Appeals on March 19 brought good news about allegations of excessive fees for all parties—the suing retirement plan participants, the employer plan sponsor and especially the administrator, Fidelity.
The ruling did not provide a clear judicial statement against deviation from a plan’s investment policy by its fiduciary, as earlier rulings in this case have.
Background of the Case
In the latest version of Tussey, No. 12-2056 (8th Cir., March 19, 2014), Fidelity and ABB appealed a series of consolidated lawsuits by current and former plan participants that accused power and automation technology company ABB of paying excessive recordkeeping fees. The case, first filed in 2006, also accused the company of selecting share classes for participants’ retirement fund investments that were overly expensive. In addition, the case alleged Fidelity, the ABB plan’s recordkeeper and investment manager, kept a share of transaction expenses as “float income,” in violation of ERISA provisions.
The new ruling follows a decision two years earlier by the same court in Tussey v. ABB Inc., 2012 U.S. Dist. LEXIS 45240 (W.D. Mo., March 31, 2012), which highlighted the importance of adhering to the terms of a plan’s investment policy statement.
Latest Ruling
These things happened in the 8th Circuit decision on March 19.
- The plaintiffs won the issue of excessive recordkeeping fees against ABB.
- ABB got a procedural win on the issue of share-class choice. The district court will have to decide the issue again, following the guidance provided by the 8th Circuit.
- Fidelity was victorious this time on the issue of float interest. It has now defeated all claims against it, barring any further appeals by the plaintiffs.
The 8th Circuit rejected ABB’s argument that all breaches found by the district court in an earlier hearing were only breaches of the plans’ IPS, rather than freestanding violations of ERISA’s fiduciary duties. As a result, the 8th Circuit declined to rule on whether an IPS is a “plan document.”
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