technical terms, the law firm of Schlichter, Bogard & Denton has petitioned
the U.S. Supreme Court for a “writ of certiorari” in Tussey v. ABB, Inc. As the firm’s founder and managing partner,
Jerry Schlichter, tells PLANSPONSOR, a writ of certiorari is an appeals request
submitted to a superior court, asking the superior court to use its discretion
to review all or part of a decision handed down by a lower court.
this case, the firm is asking the U.S. Supreme court to review a recent
decision from the 8th U.S. Circuit Court of Appeals, which vacated a portion of
a previous district court judgment that found for the plaintiffs against
defendants ABB and Fidelity (see “Fidelity Wins Some in Appeal of Tussey Case”). The case has a complicated
procedural background, but the primary matters at hand involve accusations that
ABB fiduciaries breached their duties to the company’s 401(k) plan by failing
to diligently investigate the plan’s recordkeeper (i.e., Fidelity) or the
plan’s investment fees and recordkeeping costs.
says ABB Inc., a power and automation technology company, did not reasonably
negotiate for rebates from the investment companies whose funds were offered in
the plan. Schlichter claims (in this case and others) that when plans pay too
much for investment services and plan administration, participants often end up
subsidizing other corporate services received from the recordkeeping provider,
such as payroll processing or health plan administration. It’s an argument
applied widely across 401(k) fee litigation cases, and one that causes
significant stress among mega plan sponsors and providers alike due to the
potential class action status of plaintiffs and the large dollar figures at
stake (see “Fee Suit Litigator Discusses Best Practices”).
Indeed, the lower
court in Tussey v. ABB
awarded $13.4 million to the ABB plan participants, but the decision was
quickly appealed to the 8th Circuit. This current petition to the Supreme Court
comes after the 8th Circuit vacated key parts of the original pro-ABB
decision—essentially tempering the damages assessed against ABB and Fidelity.