Compliance May 27, 2011
Appellate Court Denies Rehearing of Kraft Fee Suit
May 27, 2011 (PLANSPONSOR.com) – The 7th U.S. Circuit Court of Appeals has denied a petition to rehear a case alleging Kraft Foods breached its fiduciary duties under the Employee Retirement Income Security Act (ERISA) in relation to recordkeeping fees paid and its decision to unitize its company stock fund.
Reported by Rebecca Moore
In April, the appellate court reversed a district court’s grant of summary judgment to Kraft, finding “that the record reveals a genuine issue of material fact as to whether defendants breached the prudent man standard of care by failing to make a reasoned decision under circumstances in which a prudent fiduciary would have done so.” The case was sent back to the district court for further proceedings (see Appellate Court Sends Back Kraft Fee Case).
Last week, industry groups, in a friend of the court brief, urged the 7th Circuit to rehear the case (see Groups Urge Court to Review Kraft Fee Case Ruling). They argued that the unitization and recordkeeping fee rulings conflict with decisions of the Supreme Court and the 7th Circuit, and subvert basic objectives of the fiduciary duty provisions under ERISA.