Fidelity is Targeted Again and This Time Regarding Its Own In House Plan

Fidelity Investments has been targeted…again.

First, Fidelity, and its related entities, were named as defendants in three sister cases regarding Fidelity’s handling of float in the defined contribution plans they administer. See Kelley v. Fidelity Management and Trust Co.Boudreau v. Fidelity Management and Trust Co.; and Columbia Air Services, Inc. v. Fidelity Management and Trust Co. As has been written about before, these cases are based upon the successful theory that the plaintiffs in the Tussey v. ABB, Inc. case won at trial against Fidelity. See Tussey v. ABB, Inc. Trial Order.

Now, Fidelity has been named as a defendant in a suit brought by a participant in its own in-house 401(k) plan. See Bilewicz v. FMR LLC (Fidelity Investments). The chief allegation is that it was disloyal and a prohibited transaction to only offer Fidelity proprietary funds. Here is a copy of the complaint. As far as we are aware, this lawsuit has received no attention in the retirement community. Fidelity has yet to file a motion to dismiss, but if the plaintiff can get into the discovery stages, it has the potential to be quite explosive. To note, the plaintiffs in this case are represented by most of the law firms that represent the plaintiffs in the Kelley case.

These lawsuits against Fidelity come after they were previously made defendants in Tussey v. ABB, Inc. (as mentioned above), Hecker v. Deere & Co., Loomis v. Exelon Corp., and Renfro v. Unisys Corp., of which Fidelity secured favorable outcomes for itself in the latter three cases.

To note, this is not the first time Columbia Air Services has sued Fidelity. They did so in 2007 and their case was dismissed in 2008. The lawsuit was over the alleged improper retention of revenue sharing by Fidelity. The court dismissed the case finding that Columbia Air Services failed to properly allege that Fidelity was an ERISA fiduciary. Here is a post from 2008 by attorney Stephen Rosenberg. Here is a copy of the order.

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If you know of other cases that you would like tracked here, please email Tom at tclark@fraplantools.com.

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