chooses an interest rate every six months pursuant to the contract principle is surely exercising some control respecting its management principle has to respond st principle argue supplants have final say over whether to accept the proposed rate but that argument is foreclosed by the undisputed facts in this case it's undisputed and you can look at the contract percent surrender penalty ok within the twelve month period could there be a change in the right by a principal so judge ben my understanding is that principal announces every six months here is the rate if you're the plan when does the right take effect the rate takes effect some number of days thereafter i don't i don't matter of days not a matter of six months later no matter days so i don't remember if it's seven days twenty percent a matter of days and if the plan says we don't like it right they're locked in for twelve months at that rate unless they pay five dollars then every six months or rates being changed during that twelve month period can say they changed the rate again a principal can announce a new rate  month period for sure but even after notice is given but i want to write in the middle but my understanding is it won't have affected that plan because that plan will have well the exit at that point that planned well it said exiting but we're stuck for twelve months it's an exit from the product so the new interest rate in six months doesn't apply if they've invoked a twelve year get out provision the new provision every six months will apply as long as the plan is an exiting if the plan is exiting then it basically is stuck with the with the rate for that was announced for twelve months i actually i don't know if it changed it gets changed again well that's very important to me and i sure couldn't tell from any of the briefs in this case i think it's very simple little question of if you give the exit twelve months can they change it in the middle of the time i think you probably won't find that answer in the record because from our perspective if the answer is yes that makes it worse in other words even on a council council supposed to me that's the most important issue in the case and i suppose i don't agree with everything else is there any may tell you i know better than i but from from the perspective of and i appreciate that you may believe that's the most important fact in the case what i would say is whatever you think the bad answer to that is for us  final defense case in district court circuit courts you can survey this and look everyone throughout history has involved a situation where there was no inforced restriction of any tie and i would encourage you to agreed upon arm's length deal if you're following that it's ok suppose this had they had a formula based on some federal reserve secret meeting percentages etc etc principal would not be a we would not we would not dispute that and the reason why i think that is critical is in mccaffrey we are talking about a defined fixed management fee and operating expenses and in fact if we if you look at page one why fundamentally in every self directed retirement plan and that's what this is put as appends can choose to avoid any particular investment but nobody would argue that the person who qualitatively different from the ability to select investments this is no different ben and this happens a lot if a plan hires a service provider to select what mutual funds are going to be in the menu of the plan and the plan says we want five mutual funds we want them to have these attributes we want to value fund we run our growth fund we want international fund but it's not as you adhere to those attributes you decide which funds you put in a plan is no different than choosing what interest rate is going to apply to a guaranteed product there is no more corp term to this contract than what the interest rate is and so at the end of the day is fundamentally a fact question which is whether or not this is a reasonable contract under reasonable terms and their compensation is just where the law is properly stated in the teats case if i read all your briefs i think all of you had that saying well but when the plan cannot reject the service providers action or terminate the contract without interference or penalty the service provider is a functional fiduciary we think it's quite clear that principle is the player because that makes sense when you're trying to figure out who's exercising control over the management of a contract it's either the insurance company or it's the player it's certainly not participant so i would say  slightly modified version look at the plan and didn't analyze it from the perspective of the plan it ducked the question well i think the district court here got it wrong but it has some language in the opinion but waiting period on the plans withdraw all your argument here i say it is different because here they did to enforce it absolutely here not only does the contract require at that's at age forty four morning or honors rob pachmann for principle life i'd like to start actually with emphasizing a fact that sort of went unnoticed in the argument this is a case brought by participants on behalf of a class of participants and like my friend here got up and started talking about plan authority and as he pointed out our principal argument our main argument is that participant choice is decisive on the fiduciary duty claims and and we believe that so for a very simple reason twelve month notice then can you change the six months during that twelve month period changeover my understanding and i don't think that i don't think the record actually specifically a contract i specifically addresses this question but my only when the plan closes and tries to get the money out by five the plan sponsor itself and says just force remember this isn't participants choosing that's the plan sponsor choosing participants can get their money out no penalty no any participants funds and this is summer judgment you know we've gone out of the way through and there's no evidence none the stampede provision has never been triggered that's really critical because just like the fact that there's a contract provision up there that may under certain circumstances lead to some action against a plant sponsor has no impact on participants disk freedom complete freedom and complete discretion  participant put a penny in in any of those what's wrong with that yet so this goes this goes to the other aspect of mccaffrey that i think is really critical there's two aspects of mccaffrey that are controlled here in my opinion your honor st as we've been discussing and has discussed heavily in the briefs is this question of final say right and participants are always have final say and i'll get to plant sponsors even have final say even though the surrender charge and the twelve month waiting period exists we don't have say but the nd part concerns the nexus the relationship between the kind of fiduciary duty that's asserted and the claim that's asserted and think about this when you're talking about when you're talking about the menu being made available to investors to participants then sure but discipline choice doesn't matter because participants can't exercise any choice about what's put on the menu and presented to them they don't have the opportunity there but there are the  fiduciary not no no no i mean act at the point of the menus being built participants don't don't actually have anything to do with that they only after the menu's belt then they get tax or side their choice but the fiduciary duty that applies at the menu that's not the argument so there's a lack of nexus from mccaffrey is really critical here instead of white mccaffrey says go buy the contract you're ok this contract didn't say anything at all right about setting this right every six months process is not alleged for any six month period in the class period of this case to have presented me plan participants with an imprudent investment option the outcome is always the same it should have been it wasn't good enough for participants and that's why it participant choice is so critical because the one thing we know participants are in a position to do unlike presenting the menu participants get to decide for themselves whether the offer we've made to them is good enough that nexus is missing but isn't that the next stage isn't that a question of whether it was a prudent offer no no but the question about whether they have ever have had any opportunity they wanted to allege that the p f i owe as well at that awakes that we proposed was not it approved investment option they never did it and that's a pretty good reason as the record makes clear here for the kind of safe investment that you get here we were way ahead of a lot of other alternative investments in terms of the rate guarantee that we provided to participants but they didn't raise an imprudent investment option argument and they can't raise an important investment maybe than i would have let's assume want to take some of that spread and give it to the participants they want the president to be given more funds than was promised to them quite honestly but the participants themselves said we know how much you're going to get us that's good enough for us vera claim is that we bridge the british  by not making it better that's it it's not that it's imprudent it's very very important to understand that because that's what makes the ponzi scheme a complete non sequitur you don't have to touch those issues you don't have to touch that kate those cases we are perfectly comfortable with them we do not think any player fiduciary who's building a menu has the right or can without breaching finish their duties presenting imprudent investment options the question about pruden doesn't have final say over imposing terms changes in terms on plan asset it for about a seven circuits case and many a day or whatever it is so adamant yes so add many out which was talked about that that's true that was a case where a change was made but the participants and plant neither of them had the option to withdraw to get out nobody could reject it it was a unilateral imposition every case they cite is the say and that doesn't every case they cite doesn't teach look at both the participants participants can reject the offer were not a fiduciary so in teach could the participants reject the are essentially that in the same manner as in why should they look at whether the plan could and where there was a penalty for the plan you know again we think that we think that they shouldn't have but they pay went on to consider that and i think the way i understand the argument is they're saying well it doesn't really you should look beyond the fact that participants control where their assets go because the contract itself the agreement is quote unquote a plan asset and we're adjusting a term that's that's that's as i understand it their argument and i'm happy to turn to why it is that the the twelve month runs the plan for do sherry has the right to say no thank you once any anyone we're offering plans or participants can take their business elsewhere then we're not a fiduciary that's that's that's what over the twelve month period you're not  has the choice whether to wait twelve months or whether to pay the five percent surrender charge if paying up front for the right to leave doesn't make us if it is share they're better off under an agreement where we say you know what actually you can pay us at the time that you want to leave it's just the same it's their choice not our choice there's no dispute about that the question is whether they want to exercise that choice and here's the here's the rub if we make them pay up front they're a much worse position than under this agreement they don't know they don't know how much money is in the fund at the time they want to be predicted to be guessing how much money might be in the fund they don't know what the economic circumstances are going to be that might lead them to linux they don't know what the demographics of their purchasing participant pool is going to be all of these things that inform very choice about whether to pull the money out of the fund immediately or very choice to wait twelve months  all of that information is present to them under this arrangement and the point is as i keeps emphasizing it's pro choice it's not ours and if they make the choice to to wait twelve months that's fine there might be very good reasons to do that because the participants have a lot of money and there may be there are people approaching retirement maybe there are people who don't want to have their money yanked out of a very safe as much like this but the point is it can't be when they have the choice and the manner in which they choose to exercise their choice greed we have the choice and we could have paid upfront but we'll pay no good it's all the same so long as they have the choice about whether to pay to get out or not it's we're not a fiduciary we can't  and so but i think the point is at most what he says is if it's a penalty quote unquote a true penalty and what they didn't do is they didn't drill down to figure out whether it would be a true penalty to have an arrangement like this and i'm not saying it's impossible to imagine charges that might under some circumstances amount to a penalty i'm not saying that what i'm saying is that this arrangement quite clearly is not a penalty they have no evidence that anyone was deterred at the time so it's how much it's going to be in any given case which is exactly why it makes sense to move it forward and to give them the opportunity to assess that it's up to them there's there's evidence in the record that at least there's  reason to believe in the record that at least some people are willing to pay it and again it's a judgment for them the point is that they're making a judgment based on the circumstances so i want to pay the twelve months and get out now or is what do i want to pay five percent months a perfectly reasonable thing to do especially in an investment specifically designed for the rates to move exceedingly slowly to lag to smooth out change their choice your honor again their choice and there is no evidence in judgment mis principal agrees with that you're not a fiduciary all or nothing you're a fiduciary with regard to a specific act let's not lose sight of what the act is in this case that we're complaining about that act is choosing the interest rate so the answer the question is very simple we look at the text of the statute was principal exercising any control respecting management of the contract when it's at the interest rate presumptively we obviously win because this is not like mccaffrey where the right of cases i discussed earlier where we're talking about a fixed or cannot use an accounting term a set non discretionary term so the starting point is their fiduciary the way they get out of that or they could get out of that is with what i keep calling a final say defense and i can see that there is a legitimate doctor in the developed called the plan and final say defects but we have to understand why it makes sense it makes sense because if a lessly reject something that we're calling an exercise of discretion it's not really an exercise of discretion if the plan can say we don't like your interest rate we're out then in fact the service provider doesn't have control and the question here is control what about it if the participant can do that so i'm at bats critical i might get to that i want to just say one last thing because i think their plan argument is a nonstarter it's hard for me to actually even hear my my colleagues are going about the five percent because let's not forget this is a guaranteed contract with the most you could make in any year is twelve dollars maybe three percent interest it's blink that reality but a plan would agree to pay five percent of the assets where they could pension potentially making one or two or three percent it just shows up at arguments a nonstarter ok so we get to participants here's the problem with participants so  colleague tries to make this distinction between a prudent claim and non persons claim i don't know where he's getting this from the way this works and this circuit is if you're a fiduciary you not only have duties but there is prohibited transaction provision  state that you can't self deal this circuit has said that for a wait see applies as a defense and you're fine if your compensation is reasonable so the whole issue in this case to go to trial is whether or not the compensation is reasonable that's no different there's no discretion on there were right but the problem is the subject is wrong that's why i started by saying what we're challenging is the setting of the interest rate participants can't choose what the interest rate will be for this product in the plan even if participants make choices the people who are otherwise for do sherry's only can take advantage of the safe harbor if they meet the requirements that would need to exist because you wouldn't be a fiduciary in the st place no