Appellate Court Backs Deere Case Dismissal

February 12, 2009 (PLANSPONSOR.com) - Chock up another win for a plan sponsor in the litany of revenue-sharing suits filed in 2006.

class="NoSpacing"> The most recent case - a federal appeals court who has now upheld a district court's dismissal of a lawsuit filed against Deere & Co., Fidelity Management Trust Company, and Fidelity Management and Research Company alleging breach of fiduciary duties in regards to retirement plan fee disclosures at two 401(k) plans sponsored by the company (see " Deere and Fidelity Fee Lawsuit Thrown Out ").

class="NoSpacing"> The original lawsuit was brought by several employees against Deere, Fidelity Management Trust Company, the directed trustee and recordkeeper for the two Deere plans (which also managed two investments available to plan participants under the plan), and Fidelity Management & Research Company, the investment advisor for the mutual funds offered as investment options under Deere's plans (see " Deere Workers Hit Fidelity with Excessive 401(k) Fee Suit" ).   And, as in that case, Judge Diane P. Wood of the 7th U.S. Circuit Court of Appeals concluded "that the district court correctly found that plaintiffs failed to state a claim against any of the defendants, and we therefore affirm the district court's judgment."

class="NoSpacing"> The court also affirmed the district court awards of $54,396.57 to Deere and $163,814.43 to Fidelity.

class="NoSpacing"> Main Issues

class="NoSpacing"> Two of the main issues addressed by Judge Wood were whether the district court answered correctly the following questions:

class="NoSpacing"> 1. Were the Fidelity defendants "functional" fiduciaries of the plans with respect to the selection of investment options, the structure of the fees, or the provision of information regarding the fee structure?

class="NoSpacing"> 2. Did Deere breach its fiduciary duty by not informing the plan participants that Fidelity Trust received money from the fees collected by Fidelity Research and did it imprudently limit the investment options to Fidelity research funds, only then offering investment options with excessively high fees?