any institutional alternatives also by failing to obtain any additional services toffs at the retail level then let me ask you this should we employ the same analytical approach as as hecker and braden we look at the menu of options here out that's what about ten basis points yes you're on yet the defendant selected the more expensive share class of that investment option by mutual fund so let's in the complaint no your honor that's not alleged in the complaint because the broader issue in the complaint is not just share classes of mutual funds but the entire market generally because that for the same reason that it is imprudent to select the more expensive share class of a single mutual fund it's imprudent to select the more an expensive investment vehicle for the investment type a multibillion dollar investor has access to an investment market that's far wider than individuals with a few thousand dollars to invest in the retail market you're not arguing about that they don't have enough choices in terms of the about they could have gotten a better deal on costs yes in terms of the investment vehicle so if they decide to have say seven different classes of investments why only look at retail mutual funds why not look also at commingled accounts which are available each of these different characters in the thing is that when you have a billion dollars to put into an investment you can negotiate a fee rate that declines much more rapidly and is on a much more favorable declining schedule then you  have to look at other factors beyond what you feel is going to have to compare performance of the funds to i mean absolutely i completely great but would you agree that you have to at least look at  allegations in this case are that the bit funds didn't look at that they have sixty four mutual funds here the question is if they engage in a prudent process in every single one of the sixty four options and decide that the retail mutual fund was the best investment vehicle for that option indeed in each of the seventy one investment options in this plan all of them they selected the investment option of a single company can we believe that the defense went through a prudent process for every single investment option decided one company's offering was the best in each of those categories but what normally happens here is you if you're an employer you're looking for someone like a fidelity like a vanguard like  a leg mason they give you a lot of options for delany has about as many options as is anyone what i keep coming back it sounds like what you're saying is eunice's should have negotiated before hand more of an institutional rate rather than a retail rate for these particular funds and i don't get you arguing that these funds are bad choices in terms of the investment  spends a lot of money on advertising to make sure that it's well now the thing is is that for the thousand dollar investor all you have is retail mutual funds for a billion dollar investor you have a lot better than that you can find specific investment advisors who will provide the same investment management but on much better terms edition even with retail mutual funds other plans of pain rebates from fidelity to get back for the plan the excessive portion of the retail mutual added plans of paying remits but my recollection is only one exit saver plan well that's a specific example that we brought up but we know that in the prospectus they state some amount undisclosed amount is reserved for recordkeeping compensation we know that the defendants here negotiated for record keeping at one hundred fifty thousand dollars a year and we can surmise from what that record keeping compensation rate is that the relative got six million dollars when the contract for one hundred fifty thousand dollars now does that prove our case not necessarily but it is a lease shows that it is plausible that the defense did not act diligently in this case that they were not out looking for the most reasonable expenses billion dollars to get reasonable rates for this one but if someone objected here they could in effect have a mini opt out by participating in an index fund or one of the of other types of the there's an index fund for just about every type of investment option open possibly if you have that variety done that may solve the problem possibly have a brokerage window that may solve the problem but that's not here and you know that questions no so thank you very much that's participants may choose from among those options so essentially what i understand you're saying let's say all the options were were bad you can't hide under for zero four is not directly that's correct so i exercise of control under the secretary's interpretation of section four of the or and that's what i'm trying to get when is it that you cross the line that you know fact you have denied participants control the question there's a sufficient range of investment options under the plan under the four zero four c regulations essentially establishes that fiduciaries are entitled to the safe harbor only for losses that result from participants exercise of control over those options look here we have seventy some plans but let's assume that it's proven that for some reason fifty of them are not good i mean that there just as a real problem but about twenty one of them or twenty of them or thereabouts are are  ok are you able to under your world foresee analysis are you allowed to shield them then and that in that instance no fiduciaries are liable for their imprudent selection not have the work force the defense that's right because the loss in that case does not result from the participants exercise of control and this is because of your regulation not because of the rating of the statue it's because of both the secretar regulation logically interprets the statute as immunizing few sherries from liability only to the extent that they've that control over that liability has shifted from so protection we would have to reverse ourselves and unis and and disregard the the two opinions and the hacker case from the seventh circuit on us in order to reach your position as secretary this court would need to change its interpretation hundred ninety six unisys decision did recognize that the statutory text is ambiguous that the text of four of four c neither defines nor clarifies the control of pension plan me from it the beneficiary or participant to exercise acknowledging that the statutory text is ambiguous the court actually acknowledged the very ambiguity that provides the basis for deference to the secretary's position under chevron under the supreme court's decision in brand  court's interpretation of statutory language will only control over a subsequent agency interpretation of the same language if the court's construction was mandated by the unambiguous text of the statute and this course court express interpretation does control the analysis here let's go back to judge and ask the question that seventy one options one of them is bad seventy of them are good and you're telling me that you cannot shield yourself under four o say yes that's what i'm saying what if you don't use that with no one is bad that would be a question of whether you know of a participant for example who didn't use one of the bad investments could sue for losses caused by imprudence and selecting other investments that question is so the person would have were invested in the bat in the bad fund to recover losses i would think so to cover recover losses associated with that bad find that participant would have to be invested in that bad fund but it's a separate question when it's only as to that bad fund and that the person that the that there is not shielded from liability but if the if the investors invested in the ption for a four c piece of the argument the grant of summary judgment to unisys now both the plaintiffs and the department of labor effectively concede that there are no genuine issues of material fact arising and for a foresee their argument is limited to the one legal question that the panel was explored and one of the questions i have is at the outset why wasn't there negotiations to get the either the investor or the advantaged classes which would be while the argument pertains to some extent of the spartan fund and again nothing in the complaint or nothing even there's the argument in that brief is not supported by any thore or the i thought there argument was that you could have negotiated  cheaper rates for the people you got two billion dollars of investments here and you could have negotiated cheaper rates as a general proposition or what the complaint says that retail mutual funds are improved offered in this context and that unisys could have sought these institutional heitman vestments but again as the panel's already noted and it's conceded in the district court before judge schiller at least ten of the investment options were of the sort that plaintiffs say should exclude simply populate the lineup so again there can never be a finding in the first instance that the entirety of the lineup is imprudent for that reason and by the way the department of labor when it issued the new four zero four c regulations last is that a reception for of for a prudent statue compels a very broad inquiry into what's called like character and like it's set out specifically in statute and what that means is that it reviewing court looks at what similarly situated plan sponsors are doing in this market place you look at the large plans and by the way the point is conceded with a large plans and clearly vanguard is cheap well but again you you have to avoi sort of or you have to be careful you can have apples to oranges comparisons and again what we did are invent garton for the improv or you have to work well but but again vanguard with its insistence really on index fund investing and by the way the department of labor would never say nor did  somehow active investment management is imprudent as we point out in page forty four of our brief the department of labor in fact has said in circumstances that they say posits the possibility of the severe conflict with the deal alice said retail mutual funds are fine which gets you back to a reception for a for a which looks at this what are the other large plans doing and what we put into the record it's publicly available in the in these foreign fifty five hundreds these are filings with the department of labor and any plaintiff's lawyer can go look this up you will not find an alley nation that the unisys line a material deviates from what other large plants of sponsors are doing here for the simple reason that it's impossible and by the way we also put that same information into the record we we offered up a compilation of what other plans sponsors are doing in this space so can be looking drilling down on the precise  honor i know again the case of the start and fund it was three one hundred percent difference even though they're only even there for an index fund so that's three basis points so it seemed like for a retail fund for example the one that was one hundred twenty one basis points the institutional rate probably would be under one for under one hundred basis points right don't know your honor but again active management cost more and the deal well says time and time again that there's no particular problem with offering that and many many  large plans sponsors offer these precisely the same types of investments that eunice's does and again under the specific statutory command that's the sort of thing that's missing from the complaint is eunice a some sort of outlier here the answer has to be no consistent with rule eleven they can't make the allegation that we're doing something differently and on top of that again and i think the panel noted in its discussion with plaintiffs counsel in the district court there are at least ten acceptable alternatives according to the plaintiffs themselves they said as much in the brief in opposition of i want to be for example in it or in an international fund actually probably if you wanted to be for example in an international mutual fund those are usually the higher clarifies the central element the quote control close quote a pension plan may permit a participant or beneficiary director size accordingly we look to legislative history and the legislative history which is cited there in what was actually directly supports but that doesn't mean that it is explicit and plain they have to go look elsewhere to try to figure out what the statute it means and then since then the department of labor has come in and they've given their regular regulation with the preamble is there's another subsection nestled in between that grant excuse me of authority to the department of labor then you have a subsection dropped in there and then you have discussion of the legal consequences of the exercise of control but pages twenty one and twenty two of the deals brief what they've done they've taken ellipses and they jettison that intermediate provision conflated two different statutory subsections and then argue that the department of labor grant of regulatory authority extends both to the threshold question of control and by the way in one thousand nine hundred two out in the regulations there's no dispute here that unisys satisfied the dia wells regulatory regime as it relates to that threshold question of control but what remains is the legal consequences issue which if you look at the statute carefully sits in a slightly different subsection there the intermediate language that the department of labor chose to remove from caused by their own produce very misconduct consequently for of course it is not your producer as a defense to liability for their own imprudence in the selection or monitoring of investment options available under the plan well again your honor and i  sounds that you're not focusing on the statutory language what i was remark is the regulation is the quote but yes that the regulation and again that regulation finally issued it was part of the preamble to the old regulations last year and what we're saying again judge mansmann carefully studied person it was precisely the same argument the same plan the same statute but we've had something happen since then we've had the department finally get around they say to moving there their view from the preamble to the reg into the text of the reg but under brand x chevron the statutory language has been determined to be abundantly clear that ship has sailed in this circuit perhaps accord on bach might reconsider that issue but this is paragraphs after looking by the way in this is important for all foresee simply gives legs to congress's idea that certain responsibility has to be assumed by participants and if the court said we have this wide range of  expenses people vote with their feet on this that's the whole idea very very different from the defined benefit world where if the trust assets at the end of that they are insufficient to pay the benefits the employer is on the hook congress wanted to go in a new direction by the way we're not talking about an array of bernie made off funds or bob's pick them auto parts or were saying or were offering these people is a chance to pick as among these varying price alternatives i heard plenty of council concede there's nothing otherwise wrong with the investment so we're not sort of confronted with the parade of horribles that might what you're saying is you could have negotiated a better deal but for a four c says if you give options and again they  offer a contrary interpretation for a foresee after eunice's savings plan and again given the fact that the underlying investment there are the acceptable alternatives which is what judge mansmann looked for back in unisys one we have at least ten well let's parse this labor saying retail mutual let's just let's just think it through logically if chevron says you looked at the statute and you see if the statute is explicit on the point if it is you don't go to step two correct correct and then you does this one says that it's uncertain i just quoted language on page four forty five the says it's uncertain so therefore we go to step two and we go if we apply chevron and we point what's congress trying to do actually they're trying to shift some responsibility to the participants for their own investments if this court were to agree to that but the department of labor as the court in dear said in the court the fifth circuit in lang becker would be nothing left what's the point of that language in the statute again congress wanted to create an entirely different mill you for employers but my point by point to you is if we just look at it under chevron and if  in unison said that this for all foresee isn't completely clear in needs to be clarified and they looked at legislative history because there was nothing from the department of labor at that time then in that context don't you allow the is unreasonable well and again your honor it extends beyond frankly their authority expressly granted in the statute they can't avoid the fact that the question is judge mansmann sees it was not for the department of labor that's in the statute and certainly the specific governs the general they were given authority to speak to control they invoked it in one thousand nine hundred two it's curious or something worse that in one thousand nine hundred two they threw into the preamble to the rag this notion there just isn't there a middle ok i'll take it but at the end of the day i think the court needs to keep in mind you know what unisys did here is we know this it's in the record consistent with what all large plants are sponsors did in this space the courts inquiry has to look at what's going on there plaintiffs concede that there's at least ten acceptable alternatives the department of labor tells us that retail mutual funds are perfectly fine and page forty four in our brief at the end of the day these individual participants can move their money around they vote with their feet by the way in that same federal register the commentary to the new for all foresee regs and the met seventy five federal register six four nine three t the department of labor concedes the point they say you give them information and then the participants will move their money around accordingly and by the way over time the plan sponsor who wants at the end of the day to to on have a k with the basic will understand to be the basics or premise being what would it be more prudent to go with the cheaper option when that's available if the district judge were to find that's available and i think there's the answer is no and i'd like to  categories of things to consider in reference to that point first of all this is not a case that's about an individual fund where there isn't a particular option that was cheaper the concession  invest and i don't think that one in the but let's pick pick up on any what evidence is there an institutional rate for that bond well there is we know of one the spartan fine that was referenced this morning where there was the so called institutional rate which is point  whether mutual funds an appropriate investment given you heard the arguments more given the size of the planets that are so that negotiate not just a better rate but a completely different kind of investment and that's what's so important understand is that it's it's this is a very different kind of investment which goes to my second sort of general point in response to the proposition that couldn't isn't always prudent to choose the better option the law is quite clear i don't think is the case to the contrary there is no duty on the part of the producer to scour the market and look for the cheapest option available to always in terms of the amount it was bringing to the table it could have negotiated a cheaper or i call it an institutional rate it is that true do you have institutional rates for funds there are so there are some that i'm aware of again this is outside the record it's not the kind of case that we're trying to please that's what's important or stand this is a case about the shouldn't be mutual funds and plans there should be used only use commingled pools those kinds of non will fund options you don't see in the complaint a detailed attack on a particular fund that says here's the fine here's an institutional rate was available here's the reason you should and to be clear even if there were that kind of allegation as to a specific funder still problems that there still has to be more than allegation that the fund was cheaper because jeep or isn't always better even within the same fund because you're talking about a line up a i knew a big package of options and if the if if unisys had for example insisted on the so called institutional rate within a fund that would have changed the economics of the deal and it could have led to a plan costs overall higher for the whole plan even if cheaper for that particular fund because it might be more costly for for fidelity to administer that given fund so there's a negotiation at every point which goes to i think a fundamental underlying insi of the hacker case which is that when you have a broad diverse lineup with sufficient mix of options you can't bring a generalized claim that says well you could have found something cheaper out there do you have if you compare this to hacker do you have the the range of funds are sufficient as long as there are different types of on syria of seventy one and again you heard this morning no allegation that there was a problem like we take the approach of breaking into the problem and braydon is that what was going on there was a kickback allegation i circumstance of those only ten funds i think critical was the allegation of the kickback because the point was especially with just ten funds the idea that there was an unofficial to come in now that's going on here by the way there's no allegation of revenue sharing in the complaint an affiliated investment provider was said to be basically bribing buying off the entity in the position of felt the delegate included in the lineup and especially given that there's only ten funds that was potentially a real concern there's no similar concern here with respect to revenue sharing with seventy find it because we're not in the position of the entities involved in for example the braden case this is a single corporate complex with proprietary funds so there isn't there wouldn't be revenue sharing there's just income to the investment  management company f m r co that's just income to the fidelity enterprise and that's all there is to what the deal well in the recent interim final regulation says that it would be artificial to divide up and decide court wrong on the statute of limitations the dischord was wrong the statute of limitations we submit because two reasons first of all it's already been recognised in the street that there's no continuing violation theory under the for benefits type claim this is the fiduciary claim in the court as an extended that principle to fiduciary claims but we don't see any basis for distinguishing between the two and what what the district court said is well you have an ongoing duty as a fiduciary to monitor performance better and we don't disagree with that but even if you have or to the extent you have an ongoing duty what a plaintiff has to allege is that something has changed that warranted chains and conduct outside the six year period this complaint is based on the inclusion  party discussed of mutual funds in a diverse lineup in one thousand nine hundred three there's no allegation that says in two thousand and two one of the funds or any time one of the funds became while being prudent was completely fell apart totally with a wildly expensive and therefore should have been pulled that separate accounts provide the same investments at one fourth the cost of a retail mutual funds right so that's the difference the starting point is just one example where we know defendants weren't acting prudently or loyalty because there's no justification whatsoever for picking the more expensive version of the exact same mutual fund now let me ask you one question is the stuff in the back and on the revenue sharing part it was stated by counsel for fidelity that you didn't make th allegation in europe complaint that's incorrect or on or what they're pointing to is that we didn't use the words revenue sharing but what we do talk about is the fact that and we state it repeatedly that they set aside a certain amount of their mutual fund or paying record keeping compensation that they give rebates to plans on that record keeping portion of the mutual fund fees if asked that of dependents didn't ask for those are asset based fees for record keeping services that don't vary by the size of the assets and therefore subject to ballooning when recordkeeping services don't increase at all all those allegations are in the complaint in  honor that amount of the mutual fund fee that each participant is paying out of their investments every year provides zero value to that for to spend there's no point in the participant paying that amount if they're to spend it we're in charge isn't they're going to be cheaper but provide the same investment services if you go to fidelity and say can we get a rebate on that because we're two billion dollars plan and we've actually negotiated one hundred fifty thousand dollars fee the deli will say ok here you go and it goes back into the if the fiduciaries acting loyally to the participants in their best interest then they recover all of that money which in this case is six million dollars each year and the participants end up paying not a retail mutual fund fee so the question is and we alleged enough to get to the point where we can see how they make their decision and when you say that fidelity has also has a fiduciary status that's one of your arguments right yes if you notice this has at least three that they're maintaining and taking telephone calls really what fidelity is trying to preserve is that they're going to get money out of the mutual funds out of the mutual fund fees of the participants or by now that's our allegation i mean we don't we have a case because we're only at the believe that's why that's in there and that may be why we have seventy one investment options that are all from fidelity when it seems difficult to believe that if you prove but you sure you look at every single somebody's one different option and actually applied a prudent process to determine which is the best for the protests pence they would say each of the seventy one times that ella he's got the best one into did they know well enough about what was wrong to make that decision and court focus on the fact that it's only a four foresee issue if the participants action causes the breach so the example in the legislative both actions or occur at the same time that's different from the selection of investment options where the to do sherry's have acted before any participant as active as soon as they pick an important fun it's imprudent in a breach of a risk they are liable to have that removed to have themselves from before any protests when action comes into play so that's where in this particular case the control issue comes in and that's why the fourth and seventh circuits are piled that four foresee does not apply to that kind of selection