Hecker Fee Case Prompts Exelon Suit Dismissal
December 14, 2009 (PLANSPONSOR.com) – With one eye cast toward the recent closely watched excessive fee case Hecker v. Deere & Co., a federal judge in Illinois has thrown out a similar participant suit involving the Exelon Corp.
U.S. District Judge John W. Darrah of the U.S. District Court for the Northern District of Illinois said the recent Hecker ruling from the 7th U.S. Circuit Court of Appeals (see Appellate Court Backs Deere Case Dismissal) dictated his holding in Loomis v. Exelon Corp. In Loomis, Exelon employees argued that the company breached its fiduciary duties to its 401(k) by providing investment options requiring the payment of excessive fees. (see Court Tosses 401(k) Participants’ Request for Investment Losses Relief).
Darrah compared allegations in the two cases and found they were nearly identical, claiming a fiduciary breach under the Employee Retirement Income Security Act (ERISA) by providing investment options requiring the high fees.
Hecker already resolved the issues in favor of the plan and its fiduciaries, according to Darrah. Quoting Hecker, Darrah said, “nothing in ERISA requires every fiduciary to scour the market to find and offer the cheapest possible fund. ”
Finally, Darrah ruled that asset-based fee schedules were permissible under Hecker. The caseexpressly approved of a plan that calculated fees as a percent of assets the investor placed in it, the court said (see Case Sensitive:Limit “Ed”?).
The court rejected plaintiffs’ arguments that the case against Exelon was materially different than in Hecker so the appellate case should not control.
The Exelon suit was one of a handful filed in September 2006 by St. Louis attorney Jerome Schlichter alleging that 401(k) plans fees were excessive.
Darrah’s Exelon ruling is here.
A list of court documents filed in the Hecker case is available here.