Plaintiffs File 8th Circuit Brief in Tussey v. ABB, Inc.

On Monday, May 13, the Plaintiffs in Tussey v. ABB, Inc. filed their response brief in the 8th Circuit Court of Appeals in support of the judgment entered for them on March 31, 2012. After clearing the clerk’s office, it became available online today. Here are links to all of the briefs filed so far before the 8th Circuit:

Of interest, the Department of Labor has also requested to file an amicus brief in the case in support of the Plaintiffs. That brief is due June 17, 2013. We will have it here when it becomes available.

The following summary is taken directly from the Plaintiffs’ brief:

I. The district court properly found ABB breached its duties by allowing Fidelity to receive excessive recordkeeping compensation through revenue sharing in the amount of $13.4 million. The evidence clearly shows ABB’s blatant conflict of interest in allowing Fidelity to receive these fees to benefit itself and altogether failing to monitor Fidelity’s compensation. This excessive compensation violated the IPS and ERISA’s strict fiduciary duties. The court’s calculation of Plan losses was reasonable and based on substantial evidence, including Defendants’ own evidence.

II. The district court properly found ABB breached its duties by moving all participant investments from the stellar-performing Wellington Fund into the untested Fidelity Freedom Funds for no prudent and loyal reason and in violation of the IPS. Instead, this move was part of ABB’s conflict in benefitting Fidelity and itself through corporate services provided by Fidelity to ABB at a loss. This claim is not time-barred because the last action constituting a part of this breach—the transfer of participant investments—occurred within the limitations period. The court reasonably calculated Plan losses by comparing the Plans’ performance in Fidelity’s Freedom Funds to how they would have performed in the Wellington Fund.

III. The district court properly found ABB breached its duties by selecting higher-cost share classes of Plan mutual funds for the purpose of benefitting Fidelity, violating the IPS and ERISA’s duties of loyalty and prudence.

IV. The district court properly found Fidelity breached its fiduciary duties by earning income from Plan assets as they floated between accounts. Fidelity’s argument under other legal theories that float was not a Plan asset fails in light of ERISA’s and DOL’s clear delineation of the plan asset status of funds from the point they leave the employer’s account to the point they enter an investment fund’s account or a distributee-participant’s personal account. This claim was not time-barred because these breaches occurred within the limitations period. The court reasonably calculated Plan losses by relying on the testimony of Plaintiffs’ expert witness and Fidelity’s own witness.

V. The district court properly awarded Plaintiffs’ attorneys fees that totaled only a small fraction of Defendants’ attorneys’ fees. The court awarded a blended
hourly rate that was supported by substantial evidence and was reasonable. The court properly held Fidelity jointly liable for these fees because Fidelity breached
its fiduciary duties and jointly defended this entire case with ABB and argued against the merits of the claims on which Plaintiffs succeeded.


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