United States Court of Appeals 

For the First Circuit 

No. 17-1693 

JAMES ELLIS; WILLIAM PERRY, 

Plaintiffs, Appellants, 

v. 

FIDELITY MANAGEMENT TRUST COMPANY, 

Defendant, Appellee. 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF MASSACHUSETTS 

[Hon. William G. Young, U.S. District Judge] 

Before 

Kayatta, Circuit Judge, 

Souter, Associate Justice,*

and Selya, Circuit Judge. 

Garrett W. Wotkyns, with whom Schneider Wallace Cottrell 

Konecky Wotkyns LLP was on brief, for appellants. 

Jonathan D. Hacker, with whom Brian D. Boyle, Gregory F. 

Jacob, Meaghan VerGow, Bradley N. Garcia, O'Melveny & Myers LLP, 

John J. Falvey, Jr., Alison V. Douglass, and Goodwin Procter LLP 

were on brief, for appellee. 

 * Hon. David H. Souter, Associate Justice (Ret.) of the 

Supreme Court of the United States, sitting by designation. 
February 21, 2018 
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KAYATTA, Circuit Judge. Plaintiffs James Ellis and 

William Perry brought this certified class action under the 

Employee Retirement Income Security Act of 1974 ("ERISA"), 

alleging that Fidelity Management Trust Company, the fiduciary for 

a fund in which plaintiffs had invested, breached its duties of 

loyalty and prudence in managing the fund. Fidelity won summary 

judgment and plaintiffs appealed. Because the district court 

correctly concluded that plaintiffs failed to adduce evidence 

necessary to proceed to trial, we affirm. 

I. 

"On review of an order granting summary judgment, we 

recite the facts in the light most favorable to the nonmoving 

party" to the extent that they are supported by competent evidence. 

Walsh v. TelTech Sys., Inc., 821 F.3d 155, 157–58 (1st Cir. 2016) 

(quoting Commodity Futures Trading Comm'n v. JBW Capital, 812 F.3d 

98, 101 (1st Cir. 2016)); see Burns v. State Police Ass'n of Mass., 

230 F.3d 8, 9 (1st Cir. 2000) (noting that competent evidence is 

necessary to defeat summary judgment). We take these facts from 

the parties' summary judgment filings in the district court and 

from the record at large where appropriate. See Evergreen 

Partnering Grp. v. Pactiv Corp., 832 F.3d 1, 4 n.2 (1st Cir. 2016). 

A. 

Plaintiffs were participants in the Barnes & Noble 

401(k) plan, which allowed participants to allocate their savings 
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among an array of investment alternatives depending on their 

objectives. Department of Labor regulations encourage employers 

who create plans of this type to offer at least one relatively 

safe investment vehicle, described as an "income producing, low 

risk, liquid" investment. 29 C.F.R. § 2550.404c1(b)(2)(ii)(C)(2)(ii). A stable value fund is an example of such 

an investment vehicle. In this instance, Barnes & Noble chose to 

offer its employees a stable value fund run by Fidelity and known 

as the Managed Income Portfolio ("MIP").

Three typical features of stable value funds are salient 

here. First, a stable value fund generally consists of an 

underlying portfolio of high-quality, diversified, fixed-income 

securities. Second, a stable value fund generally utilizes a 

"crediting rate" that takes into account gains and losses over 

time and determines what amount of interest will be credited to 

investors, and at what intervals this will occur. Third, a stable 

value fund often utilizes "wrap insurance," a form of insurance 

providing that, subject to exclusions, when a stable value fund is 

depleted such that investors cannot all recover book value,1 the 

insurance provider will cover the difference. Because the entity 

providing the wrap insurance hopes it will not have to make good 

 1 "Book value" is the value of principal invested by each 

participant, plus the interest credited to the participant as 

determined by the crediting rate.
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on its promise, wrap contracts will often contain investment 

guidelines imposing limitations on the composition of a stable 

value fund's portfolio. For example, a wrap provider might demand 

that a certain portion of a portfolio's underlying securities be 

treasury bonds or similar investments that sacrifice higher 

returns in favor of increased safety in preserving capital. 

Fidelity described to putative investors the MIP's 

investment objective as follows: "The primary investment 

objective of the Portfolio is to seek the preservation of capital 

as well as to provide a competitive level of income over time 

consistent with the preservation of capital." As a benchmark, the 

MIP used the Barclay's Government/Credit 1-5 A- or better index 

("1-5 G/C index") throughout the relevant time period.2 On a 

quarterly basis, Fidelity made available to all plans that offered 

the MIP fact sheets disclosing investment allocations, current 

crediting rate, investment durations, and the MIP's returns. More 

than 2,500 employers, including several sophisticated Wall Street 

employers, made the MIP available to their employees throughout 

the class period.

In the wake of the 2007–2008 financial crisis and the 

ensuing economic decline, Fidelity fund managers expressed concern 

 2 According to plaintiffs' expert, this index consists of 

public government and corporate securities, rated A or better, 

with maturities between one and five years.
- 6 - 

about the availability of wrap insurance for Fidelity's various 

funds, including the MIP, going forward. For example, a 2009 

PowerPoint noted a "[d]earth of new wrap capacity." During this 

time period, several major wrap providers for the MIP, including 

AIG, Rabobank, and at a later point, JP Morgan, forecasted an 

intention to leave the wrap market. Further illustrating 

Fidelity's concern is a 2011 e-mail from an attorney for Fidelity, 

noting that JP Morgan had been "shed[ding]" wrap capacity, that 

there were a "dwindl[ing]" number of new entrants into the wrap 

market, and that Fidelity ran the risk of being "left out in the 

cold" if the number of insurers of stable value funds was limited, 

as he expected it to be. Ultimately, Fidelity secured sufficient 

wrap coverage; certain providers either remained in the market or 

transferred their wrap business to other entities and Fidelity 

also obtained wrap coverage from a new source.

B. 

During the years covered by this lawsuit, the MIP fully 

achieved its objective of preserving the investors' capital. The 

rate of return earned by investors, however, lagged behind that of 

many other stable value funds offered by competitors. The 

immediate cause of these lower returns is undisputed: Fidelity 

allocated MIP investments away from higher-return, but higher-risk 

sectors (e.g., corporate bonds, mortgage pass-throughs, and assetbacked securities) and toward treasuries and other cash-like or 
- 7 - 

shorter duration instruments. While these allocations made the 

MIP a safer bet and thus more attractive to wrap providers, they 

also positioned the MIP less favorably in the event that markets 

improved. Markets did improve, the added safety turned out not to 

be required, and competitors whose investments were more 

aggressive achieved both asset protection and higher returns. As 

a result, Fidelity saw its assets under management and its market 

share fall until 2014. It was not until 2015 that Fidelity managed 

to achieve the approximate average returns realized by 

competitors' stable value funds. 

Of course, such is what occurs in most markets, and 

certainly most investment markets. Fund managers make different 

predictions about future market performance, and the differences 

ultimately generate a distribution curve of returns as some funds 

do better than others. Every year, by definition, one quarter of 

funds fall into the bottom quartile and one quarter fall in the 

top quartile, even if all fund managers are loyal to their 

investors and prudent in their decisions. 

Plaintiffs, though, say that something else was at work 

here. They say that the MIP's relatively low returns as compared 

to those of many other stable value funds were the result of 

disloyalty and imprudence in violation of section 404(c)(1) of 

ERISA. 29 U.S.C. § 1104(a)(1). While plaintiffs' precise 

explanations for how this is so have moved throughout this 
- 8 - 

litigation like a toy mole in an arcade game, the constant and 

essential fact to which they point is Fidelity's conduct in 

procuring wrap coverage for the MIP. Specifically, plaintiffs 

claim that Fidelity agreed to overly conservative investment 

guidelines in a failed effort to lock up all wrap coverage so that 

its competitors would not be able to obtain such coverage, allowing 

Fidelity to corner the stable value market and generate business 

for its many other stable value funds even if the MIP suffered. 

Additionally, plaintiffs argue that Fidelity was 

imprudent in structuring and operating the MIP by being overly and 

unnecessarily conservative. Specifically, a prudent Fidelity 

would have (say plaintiffs) negotiated less restrictive wrap 

guidelines, picked a more aggressive benchmark, and invested in 

higher-risk, higher-return instruments. 

The district court denied a motion to dismiss and 

certified a class. After the parties completed an ample amount of 

discovery, the district court found plaintiffs' arguments to lack 

the evidentiary support needed to survive summary judgment. See 

Ellis v. Fidelity Mgmt. Tr. Co., 257 F. Supp. 3d 117, 119 (D. Mass. 

2017). This appeal followed. 

II. 

On appeal, plaintiffs claim two distinct errors. First, 

they contend that in evaluating their loyalty claim, the district 

court applied the wrong standard, thus committing an error of law. 
- 9 - 

Second, they submit that the district court impermissibly weighed 

evidence at the summary judgment stage, where such weighing is 

inappropriate. Had it credited their version of events, they say, 

it would have found triable issues and denied summary judgment. 

We consider each argument in turn. 

A. 

The choice of the standard by which to evaluate a claim 

is a question of law, which we review de novo. United States v. 

Maldonado-Rivera, 489 F.3d 60, 65 (1st Cir. 2007). Here, the 

district court stated that "ERISA . . . requires an ERISA fiduciary 

to honor the duty of loyalty by 'discharging his duties with 

respect to a plan solely in the interest of the participants.'" 

Ellis, 257 F. Supp. 3d at 126 (quoting 29 U.S.C. § 1104(a)(1) 

(brackets omitted)). The district court went on to cite our 

decision in Vander Luitgaren v. Sun Life Assurance Co. of Canada, 

765 F.3d 59 (1st Cir. 2014), for the proposition that "an 

accompanying benefit to the fiduciary is not impermissible -- it 

more simply 'require[s] . . . that the fiduciary not place its own 

interests ahead of those of the Plan beneficiary.'" Ellis, 257 F. 

Supp. 3d at 126 (alteration in original) (quoting Vander Luitgaren, 

765 F.3d at 65). 

Plaintiffs do not dispute that the district court 

accurately quoted the statutory language. Nor do they expressly 

contend that Vander Luitgaren does not set forth the controlling 
- 10 - 

law. Instead, in their opening brief, plaintiffs devote much 

attention to an opinion of the Second Circuit, Donovan v. 

Bierwirth, 680 F.2d 263 (2d Cir. 1982). That opinion says that an 

ERISA fiduciary's decisions "must be made with an eye single to 

the interests of the participants and beneficiaries." Id. at 271. 

Plaintiffs seem to read this phrase as meaning that a fiduciary 

can only be motivated by a beneficiary's interests, even if that 

interest aligns with the fiduciary's own interests. Plaintiffs 

submit that the district court should have applied that reading of 

Donovan and denied summary judgment because record evidence could 

have supported the conclusion that Fidelity's operative motive was 

to further its own interests. 

This is all a bit of a puzzler because plaintiffs never 

mentioned Donovan or the "eye single" language to the district 

court. Moreover, in their reply brief, plaintiffs concede that 

Donovan and Vander Luitgaren do not conflict. This of course 

raises the question: How did the district court apply the wrong 

standard by expressly relying on a recent opinion of this court 

that does not conflict with plaintiffs' preferred earlier decision 

of another court? 

We agree with plaintiffs' reply brief that there is 

actually no material difference relevant to this case between our 

standard as articulated in Vander Luitgaren and the "eye single" 

standard as actually applied in Donovan. This is not to say that 
- 11 - 

either case (and certainly not Vander Luitgaren) would deem a 

fiduciary liable for disloyalty merely because it took action aimed 

at furthering an objective it shared with the beneficiaries. 

Donovan involved plan trustees who committed themselves to use 

plan assets to buy company stock without carefully considering 

whether it was in the interest of plan participants to do so. 

Indeed, the Second Circuit found it foreseeable that the purchase 

would harm plan participants. The court found it "almost 

impossible to believe that the trustees['] . . . motive . . . was 

for any purpose other than blocking [a hostile tender offer]." 

Donovan, 680 F.2d at 275. In other words, the trustees in Donovan 

did precisely what Vander Luitgaren prohibits -- they placed 

"[their] own interests ahead of those of the Plan beneficiary." 

Vander Luitgaren, 765 F.3d at 65.3

In any event, for present purposes the question is 

whether the district court employed the correct legal test in its 

evaluation of the evidence. The foregoing should make it clear 

that by quoting the statute and relying on the language and holding 

of Vander Luitgaren, the district court did so. In so concluding, 

we acknowledge a theoretical question posed in plaintiffs' brief 

on appeal: What if a fiduciary whose interests are aligned with 

 3 For this reason, plaintiffs' claim that the Supreme Court's 

unelaborated reference to Donovan in Pegram v. Herdrich, 530 U.S. 

211, 235 (2000), provides no benediction for the interpretation 

plaintiffs would have us glean from the case. 
- 12 - 

the beneficiaries' interest takes action that a loyal but 

indifferent fiduciary might well take, but does so only "with an 

eye" toward the benefits that it will sustain? As a practical 

matter, in most such circumstances it would be difficult to divine 

such a parsing of motives given the aligned interests of the 

fiduciary and beneficiaries. One might also posit that most 

beneficiaries would prefer a trustee whose self-interests align 

with their own, rather than one who is personally indifferent to 

the beneficiaries' success. In any event, we need not venture 

further into this abstract discussion because plaintiffs never 

argued such a theory of loyalty below, contending only that 

Fidelity was motivated by conflicting interests (which is indeed 

the redoubt to which plaintiffs retreat in their reply brief). So 

we turn now to whether the evidence justified a trial based on 

that contention. 

B. 

"We review the district court's grant of summary 

judgment de novo." Cherkaoui v. City of Quincy, 877 F.3d 14, 23 

(1st Cir. 2017). A grant of summary judgment is proper only where 

"there is no genuine dispute as to any material fact and the movant 

is entitled to judgment as a matter of law." Fed. R. Civ. P. 

56(a). "A dispute is 'genuine' if the evidence about [the issues 

in dispute] is such that a reasonable jury could resolve the point 

in the favor of the non-moving party." Cherkaoui, 877 F.3d at 23–
- 13 - 

24 (quoting Sanchez v. Alvarado, 101 F.3d 223, 227 (1st Cir. 1996) 

(internal quotation marks omitted)). While this is not a high bar 

to clear, we have also held that "[t]he test for summary judgment 

is steeped in reality. . . . We have interpreted Rule 56 to mean 

that the evidence illustrating the factual controversy cannot be 

conjectural or problematic . . . . [S]ummary judgment may be 

appropriate if the nonmoving party rests merely upon conclusory 

allegations, improbable inferences, and unsupported speculation." 

Medina-Munoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir. 

1990) (internal quotation marks, citations, and brackets omitted). 

1. 

We begin with the theory underlying plaintiffs' loyalty 

claim. As best we can tell, it goes something like this: After 

the financial crisis of 2007–2008 and during the market decline 

thereafter, there was limited wrap capacity available on the 

market. Fidelity, which stood to earn more money the greater the 

total amount of its assets under management, swooped in to scoop 

up as much wrap capacity as possible, agreeing to excessively 

conservative guidelines in the process, in order to prevent 

competitors from obtaining wrap insurance and thereby preventing 

them from entering the stable value fund market. With fewer 

competitors in the stable value fund market, Fidelity would 

increase its assets under management and in turn increase the fees 

it collected. Central to plaintiffs' theory is the allegation 
- 14 - 

that Fidelity's "primary goal here was to prevent competitor access 

to wrap capacity to enable Fidelity to grow, for example, its 

separate account business [assets under management] at the expense 

of competitors, not to secure wrap capacity for the MIP." 

The most obvious problem for plaintiffs' argument is 

that we, like the district court, have examined plaintiffs' 

Statement of Disputed Facts and find no evidence that the MIP 

itself did not face a threat of insufficient wrap coverage between 

2009 and 2012. After a full round of discovery, plaintiffs adduced 

no evidence to this effect, nor did their expert so conclude. 

Plaintiffs point only to the fact that the MIP was "open to new 

funds" during the period. Plaintiffs see this fact as leading to 

the inference that Fidelity knew that the MIP was not going to 

lose its existing wrap coverage, on the assumption that if it 

risked the loss of such coverage, it would not leave the fund open 

to new investors until that risk was eliminated. This is quite a 

reach. A fund manager might easily perceive a need to find new 

wrap coverage yet leave the fund open to new investors based on an 

expectation that the manager will one way or another find new 

coverage. Even if plaintiffs' touted inference might be reasonable 

at the pleading stage and allow a case to survive a Rule 12(b)(6) 

motion to dismiss, it becomes unreasonable when confronted with a 

summary judgment motion after a full round of discovery producing 
- 15 - 

undisputed proof that existing wrap providers were threatening to 

exit the market in the wake of AIG's dance with failure. 

Plaintiffs' theory of how Fidelity behaved disloyally 

suffers from the added disability of making little sense. To 

believe that Fidelity's competitors could be driven out of the 

market due to Fidelity's capture of available wrap insurance, one 

must also believe that wrap insurance at the relevant times was a 

scarce and limited resource. Were that the case, though, it would 

make no sense to posit that Fidelity had no reason to try hard to 

secure new wrap coverage for the MIP if its existing suppliers 

hinted at possible exit announcements. Conversely, if Fidelity 

knew that the supply of wrap insurance was not finite, attempts to 

purchase excessive quantities of it so as to deny competitors 

access would be equally illogical; one cannot consume all of a 

good where its quantity is effectively unlimited. Viewed thusly, 

plaintiffs' theory of a loyalty breach based on aggressive pursuit 

of wrap coverage requires that we infer that Fidelity embarked on 

a course that was not only against both its interests and the 

interests of its investors, but was also plainly illogical. Such 

an inference, without more to support it, is too speculative to 

carry a claim forward. 

At oral argument, plaintiffs contended that there was a 

third state of the world; namely, that wrap coverage was indeed a 

finite good, but that Fidelity did not need to pursue it 
- 16 - 

aggressively because other insurance products, suitable for the 

MIP but not suitable for Fidelity's competitors, were available. 

Plaintiffs pointed to guaranteed investment contracts, or GICs, as 

an example. Thus, in plaintiffs' view, Fidelity's aggressive 

pursuit of wrap coverage was both unnecessary to protect MIP 

investors and consistent with attempts to freeze out Fidelity's 

competitors. There are multiple problems with this argument, the 

first being that plaintiffs did not raise it in their briefing 

before the district court. See McCoy v. Mass. Inst. of Tech., 950 

F.2d 13, 22 (1st Cir. 1991) ("It is hornbook law that theories not 

raised squarely in the district court cannot be surfaced for the 

first time on appeal.").4 Even if we were to consider the argument, 

however, it would not persuade us. To succeed with this argument, 

plaintiffs would need to convince a reasonable factfinder that 

(a) GICs or other insurance products were an available and 

appropriate option for the MIP and (b) the same insurance products 

were not equally available to or appropriate for Fidelity's 

 4 In a letter filed with the court pursuant to Federal Rule 

of Appellate Procedure 28(j), plaintiffs insist that they did, in 

fact, raise this theory before the district court. In support of 

their claim, however, plaintiffs point only to three separate 

paragraphs from their Local Rule 56.1 statement, not to any portion 

of their brief opposing summary judgment. It is not enough to 

have offered some facts which could support a particular theory of 

a case; a party must actually make an argument based on the facts. 

Actual mention of GICs and other insurance products in their brief 

or at oral argument before the district court was sparse to nonexistent. Thus, we cannot say that this argument was raised in 

the district court, let alone "squarely." 
- 17 - 

competitors. The only portion of the record that plaintiffs' 

counsel cited at oral argument in support of this new theory was 

an e-mail from a Fidelity lawyer, which discusses a single 

competitor, Galliard, and notes that Galliard is more willing to 

use alternative insurance products than Fidelity is. But this email says nothing about whether GICs or other insurance products 

would have been an appropriate substitute for wrap coverage for 

the MIP. It also undermines the second premise necessary for 

plaintiffs' theory to succeed -- that competitors would be unable 

to replace wrap coverage with GICs or other insurance products -- 

because the e-mail specifically states that the one competitor it 

mentions does employ those products. Thus, even if we were 

inclined to consider plaintiffs' new theory on appeal, it would 

fail due to the lack of any competent evidence supporting it. 

Perhaps recognizing the logical weakness of their 

position, plaintiffs posit that the district court erred in 

determining that though there was an "accompanying benefit" to 

Fidelity, this benefit was not the motivator for Fidelity's 

decision making. In plaintiffs' view, once the district court had 

found evidence of an accompanying benefit, it was required to leave 

to the trier of fact the decision as to whether this benefit was 

incidental to Fidelity or in fact motivated Fidelity's decisions. 

While we question the accuracy of plaintiffs' reading of the 

district court decision, the simple point is that this argument 
- 18 - 

merely repackages plaintiffs' position that their belatedly 

proffered reading of Donovan as applied to aligned interests of 

the fiduciary and beneficiaries should control. Having already 

found that theory unpreserved, we leave it at that. 

Plaintiffs offer one other claim that plausibly sounds 

in the duty of loyalty: that because the MIP's portfolio managers 

were compensated based on the degree to which performance exceeded 

the benchmark, they had an incentive to keep the benchmark unduly 

low. We can assume, for the sake of argument, that the bonus 

structure was in fact based on the amount by which the fund's 

returns exceeded the benchmark and that the benchmark was quite 

conservative. 

We nevertheless balk at the notion that a fiduciary 

violates ERISA's duty of loyalty simply by picking "too 

conservative" a benchmark for a stable value fund. Such funds are 

generally presented as one of the more conservative options for 

investors who prefer asset preservation to the risk of pursuing 

greater returns. A conservative benchmark for a fund that places 

principal preservation as its primary goal warns the investor not 

to expect robust returns, and aligns expectations and results in 

a manner that is unlikely to harm or disappoint any investor who 

selects the fund. 

Plaintiffs' theory also ignores basic and obvious market 

incentives. If Fidelity publishes a benchmark that implies no 
- 19 - 

greater safety but lower returns than those implied by the 

benchmarks published by competing funds, it risks losing out as 

plan sponsors choose what options to offer plan participants. And 

if Fidelity wants to increase compensation for its fund managers, 

there are presumably many ways to do so without setting a lower 

benchmark, a tactic that risks making a fund uncompetitive with 

those offered by other companies. 

The bottom line here is that Fidelity offered an 

investment vehicle for conservative investors in the wake of the 

2007-2008 market collapse, it published for its putative investors 

a cautious and unambitious benchmark, and then it consistently 

exceeded that benchmark. Unless we are to say that ERISA plans 

may not offer very conservative investment options (such as money 

market funds or treasury bond funds), then we cannot say that plans 

may not offer different types of stable value funds, including 

those that are intentionally and openly designed to be 

conservative. If informed plans or their participants do not want 

such funds, they will not select them over the innumerable options 

available. 

In the end, far from inappropriately weighing evidence 

against plaintiffs, the district court correctly held that 

plaintiffs had presented no competent evidence at all to support 

critical elements of their theory of the breach of the duty of 

loyalty. Instead, plaintiffs relied on repeated speculation that 
- 20 - 

sophisticated investment professionals behaved in a manner that 

makes no sense. As a result, summary judgment was appropriately 

granted on plaintiffs' loyalty claims. 

2. 

In addition to their loyalty claims, plaintiffs also 

pressed prudence claims in the district court. In large part, 

these prudence claims are the loyalty claims dressed in prudence's 

clothing, and thus suffer from the same overreliance on 

unreasonable and unsupported speculation. Nonetheless, because it 

is certainly possible for conduct to be loyal but imprudent, we 

address each of these claims in their own guise. 

ERISA requires a fiduciary to act "with the care, skill, 

prudence, and diligence under the circumstances . . . that a 

prudent [person] acting in a like capacity and familiar with such 

matters would use in the conduct of an enterprise of a like 

character and with like aims." 29 U.S.C. § 1104(a)(1)(B). "The 

test of prudence -- the Prudent [Person] Rule -- is one of conduct, 

and not a test of the result of performance of the investment. 

Whether a fiduciary's actions are prudent cannot be measured in 

hindsight." Bunch v. W.R. Grace & Co., 555 F.3d 1, 7 (1st Cir. 

2009) (brackets, internal quotation marks, and citations omitted). 

Plaintiffs advance three theories of a violation of the duty of 

prudence: (a) that it was imprudent to pursue wrap capacity as 

aggressively as Fidelity did and agree to the terms Fidelity agreed 
- 21 - 

to, (b) that Fidelity's use of the Barclays 1-5 G/C index as a 

benchmark was imprudent, and (c) that it was imprudent not to take 

corrective action in the face of returns that were lower than those 

of competitor funds. 

The first contention is easily dispensed with, largely 

for the same reasons that the loyalty claim failed. Simply put, 

there is no evidence: (a) that the array of prudent options 

available in the relevant time period did not include aggressively 

pursuing wrap insurance in the context of a potential decrease in 

wrap providers, (b) that Fidelity took on any excess wrap 

insurance, and (c) that Fidelity unreasonably passed over an 

available better deal for its supply of wrap insurance. Absent 

such evidence, plaintiffs' prudence claim fails to get out of the 

starting blocks. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 

(1986) (holding that "there can be no genuine issue as to any 

material fact" where there is "a complete failure of proof 

concerning an essential element of the nonmoving party's case" 

(internal quotation marks omitted)). While plaintiffs make much 

of internal Fidelity communications describing the terms it agreed 

to with JP Morgan as "overly stringent," this description cannot 

carry the weight plaintiffs assign to it. That one party to a 

transaction believes the terms to be "overly stringent" proves too 

little unless there exists an alternative, more favorable option. 
- 22 - 

Plaintiffs' second theory fares no better. They offer 

no authority, and we are aware of none, holding that a plan 

fiduciary's choice of benchmark, where such a benchmark is fully 

disclosed to participants, can be imprudent by virtue of being too 

conservative. It is undisputed that the MIP's returns exceeded 

those of money market funds throughout the class period. Were 

this case to proceed to trial, it is completely unclear by what 

standard a jury could find a disclosed choice of benchmark to be 

imprudent as "too conservative," particularly where plaintiffs 

make no argument that offering more conservative investments (such 

as money market funds) would constitute an ERISA violation. The 

fact that plaintiffs on appeal criticize Fidelity for shying away 

from asset-backed securities in the wake of the 2007–2008 market 

collapse well demonstrates that plaintiffs' standard of prudence 

relies on hindsight. 

Plaintiffs' third and final theory -- that Fidelity 

breached the duty of prudence by failing to take corrective action 

to improve the MIP's returns -- fails as well, most fundamentally 

for the second reason elucidated by the district court: that 

plaintiffs have not identified any particular act or omission in 

this regard that was imprudent. See Ellis, 257 F. Supp. 3d at 131 

("Further, as Fidelity notes, the Plaintiffs do not point to any 

specific decision violating the duty of prudence."). This failure 

is particularly important given that, as plaintiffs' own expert 
- 23 - 

admitted, the MIP's managers did consider and increase its risk 

allocation throughout the class period. Plaintiffs did not specify 

in the district court, and do not specify now, a minimum risk level 

below which stable value funds for some reason cannot go. 

Furthermore, as we have already noted, a prudence claim is 

evaluated from the perspective of what a fiduciary reasonably knows 

ex ante. See Bunch, 555 F.3d at 7. The district court was correct 

in finding that, at bottom, plaintiffs lacked any evidence that 

any of the decisions made by the MIP's managers were unreasonable 

under the circumstances, particularly given that Fidelity had 

introduced a wealth of undisputed evidence supporting the 

conclusion that it engaged in an evaluative process prior to making 

investment decisions.

We pause, finally, to address plaintiffs' repeatedly 

played trump card: the e-mail, discussed supra, from one of 

Fidelity's in-house attorneys, written in March 2010. The e-mail 

states, in relevant part, as follows: 

It's not one thing with Galliard, it's 

several. They probably are more diversified 

than us. They're more willing to use every 

tool available to them -- traditional GICs, 

separate account GICs, Mutual of Omaha. 

They're certainly more flexible than we are. 

You'd think given our size and our resources 

that we could do anything, but with us 

everything has to be done our way. Galliard 

can also afford to put deposits into cash 

because their crediting rates don't suck. The 

biggest difference between us and Galliard 

though is that they care about this business 
- 24 - 

in a way that we don't. Stable value matters 

to them. We can talk all we want about how 

we're the best (and in some ways we are), but 

the fact is that while we were selling 

everything in the meltdown our competitors 

stuck to their guns. As a result, in many 

cases they are better off than we are. When 

capacity opens up (assuming it does), we might 

get the first call, but Galliard won't be far 

behind. 

This e-mail has, in one way or another, anchored most of 

plaintiffs' arguments throughout this case. Admittedly, it uses 

colorful language, and surely -- as plaintiffs argue -- most 

investors would not want to invest in a fund whose crediting rates 

"suck." But this e-mail tells us much too little about whether 

Fidelity breached its duties under ERISA. Rather, it shows a 

Fidelity employee looking back in hindsight and noting that 

Fidelity underperformed many competitors based on choices made in 

response to the financial crisis. One can only imagine the mirrorimage e-mails of regret Fidelity's competitors would have written 

had the markets collapsed instead of rebounding. And as we have 

made clear, hindsight regret cannot be the basis for an ERISA 

claim. See id. 

Because plaintiffs failed to adduce evidence sufficient 

to proceed to trial on any of their theories of prudence, the 

district court was correct to reject plaintiffs' prudence claims. 
- 25 - 

III. 

Though the record in this matter is voluminous, the 

essential issues are relatively straightforward. Plaintiffs 

failed to adduce evidence after ample discovery that would have 

provided reasonable, non-speculative support for their claims of 

disloyalty or imprudence. The record shows, instead, an alignment 

between the interests of Fidelity and the MIP participants, and an 

investment strategy that lacked not prudence, but rather, a crystal 

ball. The district court's grant of summary judgment is affirmed.