In his opinion, U.S. District Judge Berle M. Schiller of the U.S. District Court for the Eastern District of Pennsylvania found that Fidelity Management Trust Company and other Fidelity defendants were not functional fiduciaries with respect to investment selection for the plan, so no claim could be made against them.
Schiller found that Unisys met the requisite standard of care in its investment offerings to participants. According to the opinion, the plan offered participants 70 investment options with varying fees, risks, and potential rewards – including commingled pools, index funds, bond funds, funds representing various parts of the global economy, and a money market fund – and the fees charged by these funds were disclosed to investors who could choose from among the investment options to create a portfolio tailored to meet their investment objectives.
Referencing the 7th U.S. Circuit Court of Appeals’ decision in Hecker v. Deere & Co., Schiller said the Employee Retirement Income Security Act does not require fiduciaries to get the best deal imaginable for the plan; it requires them to act carefully, skillfully, prudently, diligently, and solely in the interest of participants and beneficiaries. “While this is not a light duty, it does not support a lawsuit that simply claims the fiduciaries could have done better had they worked harder to leverage their market power,” Schiller wrote.
He also said he failed to see the importance of any alleged system of revenue sharing. “Plan participants were made aware of the fees they would pay for allocating their Plan contributions to particular funds. To whom that money ultimately flowed would seem irrelevant to a participant once it left his wallet,” Schiller wrote. He ruled that Unisys defendants’ failure to disclose information about revenue sharing among the Fidelity defendants cannot form the basis of an ERISA breach of fiduciary duty claim.
Participants accused Fidelity defendants and Unisys defendants of breaching ERISA fiduciary duties by causing plan participants and beneficiaries to pay excessive administrative and investment management fees. In particular, they alleged that the defendants did not take advantage of the plan’s large size to negotiate lower fees or increased services for plan participants and beneficiaries.
The opinion in Renfro v. Unisys Corporation, et.al., is here.