The law firm of Schlichter, Bogard & Denton petitioned the U.S. Supreme Court for a “writ of certiorari” in Tussey v. ABB, Inc.
The 8th U.S. Circuit Court of Appeals agreed with a district court finding that the ABB fiduciaries breached their duties to the plan by failing to diligently investigate Fidelity and monitor plan recordkeeping costs, but it agreed with Fidelity and ABB that the district court relied on hindsight in its ruling that the switch from the Vanguard Wellington fund to Fidelity Freedom funds violated their fiduciary duties under the Employee Retirement Income Security Act (ERISA). Fidelity was also found not liable for breaches concerning its use of “float” income.
Schlichter recently told PLANSPONSOR, his appeal to the Supreme Court contends it is inappropriate to give such discretion to plan fiduciaries that have already been proven by the same appeals court (and as part of the same case, no less) to have breached their fiduciary duty. The plan fiduciaries have already been shown to have made decisions that were not in the participants’ best interest, he says, so why should their motives for switching to the Fidelity funds be interpreted charitably by the court?
The Supreme Court did not give a reason why it will not review the Tussey case. Last month, it agreed to review another case involving fees and monitoring of a retirement plan, Tibble v. Edison. The issue in that appeal is whether the Employee Retirement Income Security Act (ERISA) statute of limitations applies to the duty to monitor investment funds of the plan.