[Civ. No. 11-1083 Dkt. Nos. 143, 144, 148, 149]

[Civ. No. 14-1611 Dkt. Nos. 34, 37, 41, 42]

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF NEW JERSEY 

CAMDEN VICINAGE 

JENNIFER L. KASILAG, et al.,

Plaintiffs, Civil No. 11-1083 (RMB/KMW)

v.

HARTFORD INVESTMENT FINANCIAL 

SERVICES, LLC,

Defendant.

JENNIFER L. KASILAG, et al.,

Plaintiffs, Civil No. 14-1611 (RMB/KMW)

v. OPINION (Filed Under Seal)

HARTFORD FUNDS MANAGEMENT 

COMPANY, LLP,

Defendant.

APPEARANCES: 

Arnold Carl Lakind 

Szaferman, Lakind, Blumstein, 

Blader & Lehmann, PC 

Quakerbridge Executive Center 

101 Grovers Mill Road 

Suite 200 

Lawrenceville, NJ 08648 

Attorney for Plaintiffs 

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Anthony J. Sylvester 

Sherman Wells Sylvester & 

Stamelman LLP 

210 Park Avenue, 2nd Floor 

Florham Park, NJ 07932 

 Attorney for Defendants 

Sean M. Murphy 

Robert C. Hora

Milbank, Tweed, Hadley & 

McCloy LLP 

1 Chase Manhattan Plaza

New York, NY 10005 

 Attorneys for Defendants 

Christopher A Barbarisi 

Jeffrey B. Maletta

K&L Gates LLP 

One Newark Center, Tenth Floor 

Newark, NJ 07102 

 Attorneys for Proposed Interveners

BUMB, United States District Judge: 

 This matter comes before the Court upon the filing of eight 

motions in two related cases, Kasilag v. Hartford Investment 

Financial Services, LLC, Civ. No. 11-1083, and Kasilag v. 

Hartford Funds Management Company, LLC, Civ. No. 14-1611.1

 In Civil Action No. 11-1083, Hartford Investment Financial 

Service, LLC (“HIFSCO”) has filed a motion for summary judgment. 

[Civ. No. 11-1083 Dkt. No. 143.] Likewise, in Civil Action No. 

14-1611, Hartford Funds Management Company (“HFMC”) has filed a 

 

1 A third related case, Kasilag v. Hartford Funds Management 

Company, LLC, Civ. No. 15-1876, is also pending before this 

Court, but has been stayed pending the outcome of the instant 

two cases. [Civ. No. 15-1876 Dkt. No. 11.] 

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substantively identical motion for summary judgment.2 [Civ. No. 

14-1611 Dkt. No. 37.] In each case, the individual plaintiffs3

have also cross-moved for partial summary judgment with respect 

to liability regarding one of the seven funds — the Capital 

Appreciation Fund – along with moving for summary judgment 

respecting several other ancillary issues. [Civ. No. 11-1083 

Dkt. No. 144; Civ. No. 14-1611 Dkt. No. 34.] 

In addition to the motions for summary judgment, the 

Hartford Defendants have moved to seal non-public financial 

information in each action. [Civ. No. 11-1083 Dkt. No. 148; 

Civ. No. 14-1611 Dkt. No. 41.] Finally, Wellington Management 

Company, LLP and Wellington Management Group, LLP4 have moved to 

intervene in each case and seal their own non-public financial 

2 In January 2013, HFMC replaced HIFSCO as the sole adviser 

to the funds, at which point HIFSCO became the sole distributor 

for the funds. (Lakind Dec. at Ex. 4 HIF-00122432.) Due to 

their similar roles as advisers, HIFSCO and HFMC will be 

collectively referred to in this Opinion as the “Hartford 

Defendants.”

3 Plaintiffs in Civ. No. 11-1083 are Jennifer Kasilag, Louis 

Mellinger, Judith Menendez, and Jacqueline Robinson. Plaintiffs 

in Civ. No. 14-1611 are Jennifer Kasilag, Louis Mellinger, 

Judith Menendez, Jacqueline Robinson, Dennis Russell, and Darin 

Dudek. On March 2, 2016, the Court was notified that an 

additional plaintiff in both actions, Linda Russell, had passed 

away. [See, e.g., Civ. No. 11-1083 Dkt. No. 179.] The Court 

was also informed that the estate of Ms. Russell wishes to 

continue the action. The above-listed plaintiffs in both 

actions, including the proposed estate of Ms. Russell, will be 

collectively referred to in this Opinion as the “Plaintiffs.”

4 The two Wellington entities will be collectively referred to in 

this Opinion as “Wellington.”

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information. [Civ. No. 11-1083 Dkt. No. 149, Civ. No. 14-1611 

Dkt. No. 42.] 

I. FACTUAL BACKGROUND 

 The underlying claims in this case are derivative in nature 

and center on the fees charged by the Hartford Defendants to 

manage seven mutual funds (the “Funds”): the Hartford Healthcare 

Fund, the Hartford Conservative Allocation Fund, the Hartford 

Growth Opportunities Fund, the Hartford Balanced Fund, the 

Hartford Inflation Plus Fund, the Hartford Capital Appreciation 

Fund, and the Hartford Floating Rate Fund. [Civ. No. 11-1083 

Dkt. No. 173-5 (Pls.’ Resp. to Defs.’ Statement of Material 

Facts Not In Dispute at ¶ 1 (hereinafter “First SOF at ¶ 

___.”)); see also Civ. No. 14-1611 Dkt. No. 60-1 (same).]5

i. The Funds 

“A mutual fund is a pool of assets, consisting primarily of 

[a] portfolio [of] securities, and belonging to the individual 

investors holding shares in the fund.” Jones v. Harris Assocs. 

L.P., 559 U.S. 335 (2010) (quoting Burks v. Lasker, 441 U.S. 

471, 490 (1979).) Mutual funds generally have no employees. 

 

5 This case has yielded several statements of facts pursuant to 

Local Rule 56.1 in this District. As such, Defendants’ Response 

to Plaintiffs’ Supplemental Statement of Facts Not in Dispute, 

[Civ. No. 11-1083 Dkt. No. 173-4; Civ. No. 14-1611 Dkt. No. 66-

4], will be cited “Second SOF at ¶ ___.” Defendants’ Response 

to Plaintiffs’ Statement of Facts Not in Dispute, [Civ. No. 11-

1083 Dkt. No. 166-1; Civ. No. 14-1611 Dkt. No. 59-1], will be 

cited as “Third SOF at ¶ ___.”

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Id.; (Third SOF at ¶ 6.) Typically, a sponsor creates the 

mutual fund, selects the directors of the fund and selects an 

adviser — often itself — to provide other investment and 

administrative services to the fund thereafter. See Daily 

Income Fund, Inc. v. Fox, 464 U.S. 523, 534 (1984). This

creates the potential for conflicted bargaining between the 

sponsor-selected directors and the sponsor-turned-adviser of the 

mutual fund. Jones, 559 U.S. at 338–339 (Because of the 

relationship between the fund and the adviser, “the forces of 

arm’s-length bargaining do not work in the mutual fund industry 

in the same manner as they do in other sectors of the American 

economy.” (citation omitted)). As a result, Congress enacted 

the Investment Company Act of 1940, which creates protections 

from conflicts of interest for the shareholders of mutual funds, 

including requiring the adviser to act as a fiduciary. Id. at 

339. 

 In this case, each of the Funds is a series of either the 

Hartford Mutual Fund, Inc. (“HMF”) or the Hartford Mutual Funds 

II, Inc. (“HMF II”), registered investment companies under the 

Investment Company Act of 1940. (First SOF at ¶ 2.) In 

creating and operating the Funds, HMF and HMF II, by way of 

their board of directors (the “Board”), entered into Investment 

Management Agreements (“IMAs”) with the Hartford Defendants, 

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engaging them to serve as the Funds’ adviser. (Lakind Dec. Exs. 

1, 2, 5, 6; Third SOF at ¶ 2.) 

ii. The IMAs 

Pursuant to the IMAs, the Hartford Defendants undertook a 

number of obligations with regard to advising and managing the 

Funds. 

 For instance, one duty undertaken by the Hartford 

Defendants was to provide investment management services. (Id.

Ex. 1 (IMA between HIFSCO and HMF).) This entailed four key 

responsibilities. Pursuant to Section 2 of the IMAs,6 HIFSCO 

agreed to, by itself or by way of an affiliate:

(1) “[R]egularly provide investment advice and 

recommendations to each [applicable fund] with respect to 

its investments, investment policies and the purchase and 

sale of securities”;

(2) “[S]upervise continuously the investment program of each 

[applicable fund] and the composition and performance of 

its portfolio securities and determine what securities 

shall be purchased or sold by each [applicable fund]”;

(3) “[A]rrange . . . for the purchase of securities and other 

investments for each [applicable fund] and the sale of 

securities and other investments held in each [applicable 

fund.]”; and

(4) “[P]rovide . . . , such economic and statistical data 

relating to each [applicable fund] and such information 

concerning important economic, political and other 

developments as the Adviser shall deem appropriate or as 

shall be requested by the Company’s Board of Directors.”

 

6 The IMAs are substantively similar for both of the defendants 

and for both HMF and HMF II. (See generally Id. Exs. 1, 2, 5, 

6.)

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(Id. Ex. 1 at § 2.) 

 Pursuant to the IMAs, the Hartford Defendants also agreed 

to provide, or cause an affiliate to provide, administrative 

services. Specifically, the administrative services to be 

provided by the Hartford Defendants were to: 

(1) Assist in the supervision of all aspects of HMF’s 

operation, “including coordination of all matters 

relating to the functions of the custodian, transfer 

agent or other shareholder servicing agents (if any), 

attorneys and other parties performing services or 

operational functions for [HMF]”;

(2) Provide HMF with employees and officers capable of 

providing the administrative and clerical functions 

necessary to administer HMF; 

(3) “Provide [HMF] with adequate office space and related 

services necessary for its operations . . .”; and

(4) “Provide such other services as the parties hereto may 

agree upon from time to time”;

(Id. at § 3.) 

 The IMAs also contained a provision regarding the 

engagement of sub-advisers or sub-contractors to perform the 

Hartford Defendants’ duties. In its entirety, the pertinent 

clause reads: 

The Adviser, upon approval of the Board of Directors, 

may engage one or more investment advisers that are 

registered as such under the Investment Advisers Act of 

1940, as amended, to act as subadviser with respect to 

existing and future Portfolios of the Company. Such subadviser or sub-advisers shall assume such 

responsibilities and obligations of the Adviser pursuant 

to this Investment Management Agreement as shall be 

delegated to the sub-adviser or sub-advisers, and the 

Adviser will supervise and oversee the activities of any 

such sub-adviser or sub-advisers. In addition, the 

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Adviser may subcontract for any of the administrative 

services set forth in Section 3 above. 

(Id. at § 4.) 

iii. The Role of Sub-Advisers 

 In attempting to fulfill its role as the adviser to the 

Funds, the Hartford Defendants did indeed retain a sub-adviser: 

Wellington. While the parties debate who retains ultimate 

responsibility for the duties under the IMAs, at least some 

documents in the record indicate that Wellington “has 

responsibility for day-to-day management of the Fund.” (Id. Ex. 

16 at INDDIR0014582.) That said, the IMAs make clear, “[T]he 

Adviser will supervise and oversee the activities of any such 

sub-adviser or sub-advisers.” (See, e.g., Id. Ex. 1 at § 4.) 

 Wellington performs many functions in its role as subadviser for the Funds. Wellington has approximately 285 

employees directly involved in performing sub-advising services 

in connection with the Hartford Defendants. By contrast, 

Plaintiffs’ experts’ calculated that the Hartford Defendants 

utilized 21.5 full-time employees in fulfilling their 

obligations to the Funds.7 (Second SOF at ¶¶ 26, 28, 30.) 

Pursuant to the agreement between HIFSCO and Wellington, 

 

7 The Hartford Defendants contest the validity and usefulness of 

this calculation by Plaintiffs’ expert. (Second SOF at ¶¶ 28, 

30.) 

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Wellington agreed to perform the following duties with regard to 

the HMF series advised by the Hartford Defendants:

 Evaluate and implement an investment program, updating 

it from time to time as conditions change as 

determined by HIFSCO and Wellington; 

 In consultation with HIFSCO when appropriate, make all 

determinations “with respect to the investment of the 

assets of the Portfolios and the purchase or sale of 

portfolio securities”;

 Regularly furnish reports to the Board including 

economic outlook and investment strategy; 

 Manage each Portfolio in conformity with the 

applicable by-laws and regulations; 

 Select the brokers or dealers that will execute the 

purchases and sales of portfolio securities; 

(Lakind Ex. 14 at PL-HART-AGMT-0000109.)

 Despite these duties performed by Wellington, the Hartford 

Defendants retain some obligations under the IMAs. For 

instance, the Hartford Defendants assert that they must still:

 Be available “upon reasonable notice for consultation 

with any of the Directors and officers of [the 

Hartford Mutual Funds] with respect to any matters 

dealing with the business and affairs of [the same.]”;

 “[P]rovide [the Hartford Mutual Funds] with adequate 

office space and related services necessary for its 

operations . . .”;

 Provide economic and statistical data relating to each 

portfolio, including political and economic 

developments; 

 “Assist in the supervision of all aspects of [the 

Hartford Mutual Fund’s] operation, including the 

coordination of all matters relating to the functions 

of the custodian, transfer agent or other shareholder 

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grows in size, the costs of managing the funds do not grow at 

the same rate, and accordingly, the Funds should reap the 

benefit of that along with the Hartford Defendants. 

Nevertheless, the parties dispute whether the Hartford 

Defendants realized any of these economies of scale or the 

degree to which these breakpoints resulted in a meaningful 

savings to the Funds. (See, e.g., First SOF at ¶ 9.) 

 In a similar manner to the Hartford Defendants, Wellington 

is paid typically with a tiered structure, although some series, 

such as the Cap App Fund, are managed at a flat rate. (See, 

e.g., Lakind Dec. Ex. 14 at PL-HART-AGMT-0000114.) The rates at 

which Wellington was compensated for its services are less than 

the rate at which the Hartford Defendants collect fees. By way 

of comparison, for advising the Cap App Fund, the lowest rate by 

which the Hartford Defendants might be paid for any assets under 

management is .645%, while Wellington was paid a flat rate of 

.25% across the board for sub-advising the entirety of that 

fund. (See, e.g., id.)

 Moreover, while the parties vigorously disagree with any 

attempt by their opponents to describe the nature or magnitude 

of the advisory fees, the record indicates that, for example in 

2011, the Cap App Fund’s gross advisory fee amounted to over 

$113 million, based upon an average asset value of $17.3 

billion. (Id. Ex. 18 at HIF-00030267.) During that same time 

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and annually reviewed. Likewise, the sub-advisory agreements 

are also Board approved. (First SOF at ¶ 47.)8

 Between 2010 and 2014, twelve different individuals filled 

the nine seats on the Board. (Id. at ¶ 11.) As is often the 

case, the Board is comprised of business professionals with 

impressive resumes. Among other well-credentialed members, the

Board included the former President of Macalester College, a 

former partner of a private equity firm, the CEO of Homeworks 

Concierge, LLC, and a professor of finance at the University of 

Maryland. (Id.) From a statutory perspective, seven out of 

nine of these directors were entitled to the presumption of 

independence through September 2014, after which time eight 

members on the Board were statutorily independent. (Id. at ¶¶ 

12-13.)9 Plaintiffs do not contest that the number of directors 

falling below the 25% threshold was as described by the Hartford 

Defendants. Nonetheless, Plaintiffs do vehemently argue that 

these independent directors were not “autonomous, selfregulating, [or] uninfluenced.” (Id. at ¶¶ 12-13.)

 

8 Plaintiffs deny that the sub-advisory agreements were reviewed 

or understood prior, but do not appear to deny the plain fact 

that they were approved. (Id.)

9 The statutory definition of independence, 15 U.S.C. § 

80a2(a)(9), provides that board members who do not own 25 

percent of shares are independent. Amron v. Morgan Stanley Inc. 

Advisors Inc., 464 F.3d 338, 344 (2d Cir. 2006) (“the ’40 Act 

contains an express presumption that mutual fund trustees and 

natural persons who do not own 25% of the voting securities are 

disinterested.”).

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 Also during the relevant time period, the Board met 

regularly, holding quarterly meetings, annual educational 

meetings, and special meetings as needed. (Id. at ¶ 16; Hora 

Dec. Ex. 52 (agendas for all Board meetings in relevant time 

period); Id. Ex. 54 (agendas of “special” meetings).) The Board 

also met each June and August to review the IMAs for all of the 

funds overseen. (Id. Ex. 53 (agendas for all Board meetings to 

renew IMAs).) In total, the Board met between 14 and 25 days 

annually, for a total of 37 meetings over the relevant time 

period. (First SOF at ¶ 19.) In addition, the Board’s 

investment committee, nominating committee, audit committee, 

compliance committee, and contract committee also met throughout 

the relevant time period. (Id. at ¶ 20; Hora Dec. Ex. 52.)

 When evaluating the fees for the Funds, the independent 

directors of the Board also relied upon the advice of outside 

consultants and counselors. As noted in the 2010 Annual Report 

for the Cap App Fund (and the relevant Annual Reports 

thereafter), the independent directors were advised by 

independent legal counsel in the form of the law firm of Goodwin 

Proctor. (Hora Dec. Ex. 2 at 32.) Moreover, the Board also 

retained two service providers to advise them with regard to the 

fund: Lipper Inc. and Bobroff Consulting. Both consultants 

assisted the Board in evaluating and comparing the Funds’ fee 

structure in regard to other similar funds. (Id.) 

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According to Board members’ testimony, the fee-test 

outlined in Gartenberg v. Merrill Lynch Asset Management, Inc., 

694 F.2d 923 (2d Cir. 1982) played a significant role guiding 

their analysis of the fees. Robert Gavin — the chairman of the 

Board — testified that the Board received information on all of 

the Gartenberg factors for each fund and worked through that 

information. (Hora Ex. 105 at 89:7-90:16 (“Q: Is each fund 

separately evaluated on each Gartenberg factor by the board? A: 

Yes. We go fund by fund through the process.”).) While Gavin 

conceded that the Board did not explicitly discuss each 

Gartenberg factor for each of the dozens of series comprising 

HMF and HMF II if it was not warranted, he testified that the 

Board receives information on each factor. (Id. at 90:9-15 (“We 

certainly get information on all the factors and every director 

reviews the information, but whether or not someone thinks it's 

important to mention economies of scale on a particular fund, I 

can't say that that happens every time.”); Id. Ex. 38 at 106:12-

107:7 (testimony of Board Member Duane Hill also noting the 

board used the Gartenberg factors during the 15(c) process).) 

Meeting minutes from the time period also indicate the topics 

were discussed. (Hora Ex. 35 at HIF-00017129.) 

 As the Board reviewed the fees paid to the Hartford 

Defendants, it also requested additional information or 

concessions from them to assist their evaluation. (First SOF at 

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¶ 30.) These discussions were sometimes, but not always 

fruitful for the Board. For instance, the Board minutes from 

the June 2010 meeting indicate that “the independent directors 

[] identified several issues that warranted additional follow-up 

and discussion,” including requesting “Management to consider 

making a proposal to reduce fees on [the HMF Inflation Plus 

Fund.]” (Hora Ex. 35 at HIF-00017145.) In response, HIFSCO 

proposed “[p]ermanently reduc[ing] management fees by 5 bps at 

all breakpoints” and “[r]educ[ing] expense caps across all share 

classes by 5 bps.” (Id. Ex. 60 at HIF00008889-91.)

 Likewise at the June 2011 meeting, “the independent 

directors [] identified several issues that warranted additional 

follow-up and discussion,” including requesting “that Management 

provide the Board with a proposal for additional breakpoints to 

effect a further sharing of economies of scale . . . .” (Id. 

Ex. 39 at HIF-00024722.) The follow up memorandum from HIFSCO 

and HL Investment Advisors, LLC back to the Board explained the 

fund’s breakpoint level and stated that “Management believes 

that economies of scale are being appropriately shared with 

shareholders as fund assets grow and looks forward to continuing 

its assessment and discussion of this issue with the Board in 

the future.” (Id. Ex. 61 at HIF-00017763.)

 Finally, in a July 2012 memorandum to the Board, HIFSCO 

provided a detailed information concerning the Lipper peers of 

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the Cap App Fund. (Id. Ex. 62 at HIF-00027722.) In response to 

the Board’s request for a proposal for appropriate changes in 

portfolio management structure, HIFSCO stated its expectation to 

more fully discuss the issue with the Board at the July 2012 

Board meeting. (Id. Ex. 62 at HIG-000227723.) The June 2013 

and 2014 meetings show additional back-and-forth between the 

Board and the Hartford Defendants concerning advising and fee 

issues. (Id. Ex. 63, 64.) 

 As noted above, the result of these dialogues between the 

Board and the Hartford Defendants appears to be at least some 

headway into reducing or renegotiating fees. With regard to two

of the Funds — Inflation Plus and Conservative Allocation — the 

Board and the Hartford Defendants reached agreement on 

additional breakpoints. (First SOF at ¶ 32.) Other times, the 

Board’s overtures were rejected. (E.g., Hora Dec. Ex. 61.) The 

annual contract renewal process also resulted, occasionally, in 

reductions to the upper limits on fees, although these have had 

a debatable impact on the ultimate fees charged to the Funds. 

(Id.) 

II. PROCEDURAL BACKGROUND AND MOTIONS TO SEAL 

 Case No. 11-1083 was filed on February 25, 2011. The 

Second Amended Complaint in that case, filed November 14, 2011, 

brought claims under the Investment Companies Act of 1940 for 

excessive investment management fees and excessive distribution 

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fees. [Civ. No. 11-1083 Dkt. No. 35 at ¶¶ 245-258.] On 

December 17, 2012, this Court dismissed count two of the Second 

Amended Complaint (pertaining to distribution fees) and 

permitted the investment management fees claim to proceed. 

[Dkt. No. 44 (Mot. to Dismiss Op.) at 25.] Case No. 14-1611 was 

filed on March 12, 2014. This Complaint alleged only claims for 

excessive investment management fees with regard to the Funds.

 After extensive discovery in the ensuing years, the instant 

motions for summary judgment and cross-motions for partial 

summary judgment were filed on June 5, 2015. (Case No. 11-1083 

Dkt. Nos. 143-144; Case No. 14-1611 Dkt. Nos. 34, 37.) The 

associated motions to seal by the Hartford Defendants and 

motions to intervene for purposes of sealing by Wellington were 

filed thereafter on June 15, 2015. (Case No. 11-1083 Dkt. Nos. 

148-149; Case No. 14-1611 Dkt. Nos. 41-42.) The Court decides 

all eight currently pending motions below.

A. Motions to Seal 

 The Hartford Defendants and Wellington have moved to seal 

various portions of the record. In this District, Local Civil 

Rule 5.3 governs all motions to seal or otherwise restrict 

public access to both materials filed with the Court and 

judicial proceedings themselves. See Allyn Z. Lite, N.J. 

Federal Practice Rules, Comment 1 to L. Civ. R. 5.3 (Gann 2016). 

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Under L. Civ. R. 5.3(c)(2), a party seeking an Order to seal 

materials or judicial proceedings must describe: 

(a) The nature of the materials or proceedings at issue, 

(b) the legitimate private or public interests which 

warrant the relief sought, (c) the clearly defined and 

serious injury that would result if the relief sought is 

not granted and (d) why a less restrictive alternative 

to the relief sought is not available. 

Local Civ. R. 5.3(c)(2). 

B. The Hartford Defendants’ Motions to Seal

 With regard to the Hartford Defendants’ motions to seal, 

the Court finds that under the standard enunciated above, there 

is good cause to redact the documents as the Hartford Defendants 

suggest in their motions. Regarding the first requirement for 

sealing, the Hartford Defendants seek to redact from the record 

and briefing any mention of “competitively sensitive, non-public 

financial information regarding [the Hartford Defendants’] costs 

and profits.” (MacDonald Aff. at ¶ 5.) Putting a finer point on 

it, this information is financial data that reveals their profit 

margins or costs in specific amounts. The Court is unpersuaded 

by Plaintiffs’ request that the Hartford Defendants identify the 

reason for redaction at a more granular level than this. 

Defendants have sufficiently identified for the Court what they 

seek to redact. As such, the Court finds that these materials 

are sufficiently described. 

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 As noted in the affidavit, none of the information the 

Hartford Defendants seek to redact is publicly available and 

“competitors could develop strategies to undermine the 

competitive standing of The Hartford and The Hartford’s mutual 

funds.” (Id. at ¶ 16.) Companies possess a legitimate private 

interest in keeping “cost and profit information sealed from the 

public and their competitors, to ensure their competitiveness in 

the marketplace.” Bracco Diagnostics, Inc. v. Amersham Health, 

Inc., Civ. A. No. 03-6025(FLW), 2007 WL 2085350, at *5 (D.N.J. 

July 18, 2007). Although the Court is mindful of public policy 

favoring open courts and protecting the many investors who make 

use of mutual funds, sealing sensitive competitive information 

is commonplace, and for good reason. Id. As such, the private 

interests at stake outweigh the public interests. 

 The Hartford Defendants have also identified a clearly 

defined and serious injury that will result if the redactions 

are not permitted. Specifically, the competitive harm that 

could potentially befall the Hartford Defendants if their nonpublic cost data were released to their competitors is 

sufficient for purposes of the “good cause” analysis. See Grant 

Heilman Photog., Inc. v. Pearson Educ., Inc., Civ. A. No. 11-cv4649, 2012 WL 1521954, at *6 (E.D. Pa. Apr. 30, 2012) 

(explaining the harm that may befall a company if competitors 

are able to ascertain profitability data). Empowered with the 

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Hartford Defendants’ profitability data, a competitor could use 

that information to gain an advantage in pricing. Such a harm 

is sufficient for a “good cause” showing.

 Finally, the Hartford Defendants have sought to restrict 

access in a minimally restrictive way. Instead of requesting 

far-reaching sealing of all documents or the entirety of some 

documents, the Hartford Defendants have put forth targeted 

redactions of numerical data. The Court can ascertain no less 

restrictive means that would protect the information from 

disclosure. 

 Accordingly, because the Hartford Defendants have made the 

requisite showing for purposes of sealing, the Court will grant 

their motions to seal. 

C. Wellington’s Motions to Seal

 Wellington also moves to intervene in this action for 

purposes of sealing certain portions of the record. 

 Rule 24(b) of the Federal Rules of Procedure permits a 

court to allow a third party to intervene when that party is 

given a conditional right to intervene by statutes or “has a 

claim or defense that shares with the main action a common 

question of law or fact.” Fed. R. Civ. P. 24(b). In applying 

this rule, the Third Circuit has held that “the procedural 

device of permissive intervention is appropriately used to 

enable a litigant who was not an original party to an action to 

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challenge protective or confidentiality orders entered in that 

action.” Pansy v. Borough of Stroudsburg, 23 F.3d 772, 778 (3d 

Cir. 1994). Courts applying the holding of Pansy have ruled 

that parties may intervene under Rule 24(b) for purposes of 

“bringing to the Court’s attention its view with respect to what 

should be contained in [a] protective order.” U.S. v. Dentsply 

Intern., Inc., 187 F.R.D. 152, 157-58 (D. Del. 1999).10 As such, 

the Court grants Wellington’s motion to intervene.

Turning to Wellington’s motion to seal certain documents 

contained in the record, the Court is inclined to grant the 

motions for the same reasons the Hartford Defendants’ motions to 

seal were granted. Specifically, the information sought to be 

protected is internal, confidential financial information 

concerning costs and profits. Disclosure of that information 

would work a competitive harm to Wellington. And finally, 

Wellington has proposed the sealing of a very small number of 

documents, the information in which could not be protected with 

less restrictive means. 

Accordingly, Wellington’s motion to seal is also granted.11

 

10 It is also worth noting that Plaintiffs explicitly do not 

contest Wellington’s ability to intervene in the action for 

purposes of sealing. (Pls.’ MTS Opp. Br. at 3 [11-1083 Dkt. No. 

162].) 

11 Consistent with this ruling, the Court has also filed this 

Opinion under seal. The Hartford Defendants must file, within 

ten (10) days of the entry of this Opinion and the accompanying 

Order, proposed redacted versions for public use. 

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III. SUMMARY JUDGMENT 

 Summary judgment is proper if “the movant shows that 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 fact is “material” if it will “affect the outcome of 

the suit under the governing law . . . .” Anderson v. Liberty 

Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is “genuine” 

if it could lead a “reasonable jury [to] return a verdict for 

the nonmoving party.” Id.

When deciding the existence of a genuine dispute of 

material fact, a court’s role is not to weigh the evidence; all 

reasonable “inferences, doubts, and issues of credibility should 

be resolved against the moving party.” Meyer v. Riegel Prods. 

Corp., 720 F.2d 303, 307 n.2 (3d Cir. 1983). However, a mere 

“scintilla of evidence,” without more, will not give rise to a 

genuine dispute for trial. Anderson, 477 U.S. at 252. 

Nevertheless, a court does not have to adopt the version of 

facts asserted by the nonmoving party if those facts are 

“utterly discredited by the record [so] that no reasonable jury” 

could believe them. Scott v. Harris, 550 U.S. 373, 380 (2007). 

In the face of such evidence, summary judgment is still 

appropriate “where the record . . . could not lead a rational 

trier of fact to find for the nonmoving party . . . .” 

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Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 

587 (1986). 

The movant “always bears the initial responsibility of 

informing the district court of the basis for its motion, and 

identifying those portions of ‘the pleadings, depositions, 

answers to interrogatories, and admissions on file, together 

with the affidavits, if any,’ which it believes demonstrate the 

absence of a genuine issue of material fact.” Celotex Corp. v. 

Catrett, 477 U.S. 317, 323 (1986) (quoting Fed. R. Civ. P. 

56(c)). Then, “when a properly supported motion for summary 

judgment [has been] made, the adverse party ‘must set forth 

specific facts showing that there is a genuine issue for 

trial.’” Anderson, 477 U.S. at 250 (quoting Fed. R. Civ. P. 

56(e)). The non-movant’s burden is rigorous: it “must point to 

concrete evidence in the record;” mere allegations, conclusions, 

conjecture, and speculation will not defeat summary judgment. 

Orsatti v. N.J. State Police, 71 F.3d 480, 484 (3d Cir. 1995); 

Jackson v. Danberg, 594 F.3d 210, 227 (3d Cir. 2010) (citing 

Acumed LLC v. Advanced Surgical Servs., Inc., 561 F.3d 199, 228 

(3d Cir. 2009)) (“[S]peculation and conjecture may not defeat 

summary judgment.”).

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A. The Hartford Defendants’ Motions for Summary Judgment 

i. Standing 

 The Hartford Defendants argue that certain plaintiffs lack 

standing to bring claims with regard to two funds because they 

no longer own shares of these funds: the Small Company Fund and 

the Floating Rate fund. (Defs.’ Br. at 30.) Ownership is a 

requirement for Section 36(b) actions. See Santomenno v. John 

Hancock Life Ins., 677 F.3d 178, 182-85 (3d Cir. 2012) (“[A] 

continuous ownership requirement throughout the pendency of the 

litigation assures that the plaintiff will adequately represent 

the interests of the security holders in obtaining a recovery 

for the benefit of the company.”). Plaintiffs do not contest 

that no individual plaintiff owns a share of the Small Company 

Fund and consent to the dismissal of that claim, but argue that 

a plaintiff in Kasilag v. Hartford Funds Management Company, 

LLC, Civ. No. 15-1876, a related action, owns shares in the 

Floating Rate Fund and accordingly standing exists. While that 

plaintiff may have standing to assert a claim in the related 

action, and the ruling with regard to the instant action may be 

somewhat of a technicality, standing does not exist for the two 

actions presently before the Court and accordingly any claims 

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related to the Small Company Fund and Floating Rate Fund are 

dismissed.12

ii. Section 36(b) Standard 

As this Court has previously noted, Section 36(b) imposes a 

“fiduciary duty” on investment advisers with respect to the 

compensation they receive for providing services to mutual 

funds. 15 U.S.C. § 35(b); see also Kasilag v. Hartford Inv. 

Financial Services, LLC, Civ. No. 11-1083 (RMB/KMW), 2012 WL 

6568409, at *1 (D.N.J. Dec. 17, 2012). In Jones v. Harris 

Associates L.P., the Supreme Court, drawing from Gartenberg v. 

Merrill Lynch Asset Management, Inc., 694 F.2d 923 (2d Cir. 

1982), resolved a split among the Courts of Appeals over the 

proper standard under § 36(b). 559 U.S. 335 (2010). 

Specifically, the Jones Court held that to face liability under 

§ 36(b), the investment adviser’s fee must be so 

disproportionate that it does not bear a reasonable relationship 

to the service the defendant rendered and could not have been 

negotiated at arm’s length. Jones, 559 U.S. at 344. 

In applying this standard and the accompanying multi-factor 

Gartenberg test, courts consider “all relevant circumstances.” 

Id. at 347 (citing Gartenberg, 694 F.2d at 929. It is important 

 

12 While the claims for these two funds will not proceed, the 

Court nevertheless continues to use the label “the Funds.” It 

is intended that this usage does not hereafter include reference 

to these two funds. 

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to note, however, that “the standard for fiduciary breach under 

§ 36(b) does not call for judicial second-guessing of informed 

board decisions.” Jones, 130 S. Ct. at 1429. (citations 

omitted). The Gartenberg standard reflects Congress’s decision 

to “rely largely upon independent director ‘watchdogs’ to 

protect shareholders’ interests.” Id. (citations omitted). 

Indeed, if “the disinterested directors considered the relevant 

factors, their decision to approve a particular fee agreement is 

entitled to considerable weight, even if a court might weigh the 

factors differently.” Jones, 559 U.S. at 351. Nevertheless, 

even if the Board was “in possession of all relevant 

information,” a fee may still “be excessive even if it was 

negotiated by a board in possession of all relevant information, 

but such a determination must be based on evidence that the fee 

is so disproportionately large that it bears no reasonable 

relationship to the services rendered and could not have been 

the product of arm’s-length bargaining.” Jones, 559 U.S. at 351 

(quoting Gartenberg, 528 F. Supp. at 928.) 

iii. Deference Given to Board Approval 

As the Supreme Court noted in its holding in Jones, it is 

not the job of this Court to second-guess a disinterested Board 

that approved the fees at issue. Indeed, the intent of Congress 

was to rely upon independent directors, not courts which are 

“institutionally unsuited to gather the facts upon which 

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economic predictions can be made, and professionally untrained 

to make them.” Id. (quoting General Motors Corp v. Tracy, 519 

U.S. 278, 308 (1997)). As such, the first phase of the review 

under Gartenberg and Jones is to “calibrat[e] the degree of 

deference” that should be given to the Board’s decision to 

approve the fees. Id.

Plaintiffs’ arguments that the Board’s process was not 

fulsome or comprehensive and that the Hartford Defendants 

withheld meaningful information from the Board are legion. 

(Pls.’ Br. at 15-16, 33-37.) Plaintiffs argue: 

1. The Board did not understand the nature of the 

services provided by the Hartford Defendants, (Pls.’

MSJ Opp. Br. at 33); 

2. The Hartford Defendants used a misleading method of 

accounting for their profit margin, (id. at 33-34); 

3. The Hartford Defendants withheld a document concerning 

whether advisory and administrative fees should be 

separately evaluated, (id. at 34); 

4. HIFSCO did not allow the Board to take notes in its 

deliberations, (id. at 35-36);

5. The Board did not consider alternate advisors, (id. at 

36); 

6. The Board was unaware of regulatory violations by the 

Hartford Defendants, (id. at 36-37); 

7. The Board was misled to believe that HIFSCO had no 

role in selecting funds that were used in fee 

comparisons, (id. at 37); 

8. HIFSCO did not inform the Board that it earned a 

“float” on sub-advisory fees, (id. at 37.)

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As discussed infra, Plaintiffs’ quibbles with the Board’s 

process really amount to no more than nit-picking the Board’s 

process; they do not create a triable issue of fact with regard 

to the Board’s independent approval of the fees.

Director testimony. Plaintiffs point first to deposition 

testimony from two directors. In one deposition, Director Lemma 

Senbet stated that he did not care how tasks were allocated 

between HIFSCO and Wellington, and stated “I don’t know what the 

[advisory] fee pays for.” (Lakind Dec. Ex. 124 at 91:1.) In 

another deposition, Director Duane Hill stated that “HIFSCO is 

the transfer agent,” when HASCO (a different Hartford entity) is

actually the transfer agent. (Id. Ex. 38 at 170:9-11.) Any 

level of meaningful scrutiny applied to these two lonesome 

statements in hundreds of pages of deposition testimony of 

directors reveals they do not create a triable issue of fact. 

 The full excerpts of Mr. Senbet’s testimony reveal that the 

reason he “[did] not care” about who performed which services is 

that his primary concern was making sure that the shareholders 

“are getting the full range of services between Wellington, 

between Hartford and so on.” (Lakind Dec. Ex. 55 at 188:11-22.) 

The Court struggles to take issue with Mr. Senbet’s particular 

formulation of how he views the fulfillment of the services 

under the IMAs. With regard to his statement that he does not 

know what the advisory fee pays for, further discussion 

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thereafter reveals that Mr. Senbet focuses on the aggregate fee 

and does not parse it down between Wellington and the Hartford 

Defendants. (Lakind Dec. Ex. 55 at 90:20-91:6.) Again, merely 

because the Plaintiffs would have preferred Mr. Senbet view the 

facts as they see them does not mean he ignored facts or 

abrogated his duty to make uninformed decisions. Gallus v. 

Ameriprise Fin., Inc., 497 F. Supp. 2d 974, 983 (D. Minn. 2007) 

(merely because the “Board may have placed greater emphasis on 

[one portion of their analysis] than Plaintiffs would have 

liked, such evidence does not create a genuine issue of material 

fact that the process was not an arm’s-length one.”).13

 As to Mr. Hill’s testimony concerning the transfer agent, 

his misstatement about the identity of the transfer agent does 

not create an issue of fact. That statement came in the midst 

of a discussion about how the adviser monitors outside service 

 

13 The procedural history of Gallus warrants explanation. In 

that case, also dealing with a Gartenberg analysis at summary 

judgment, the Court granted summary judgment for the Defendant. 

On appeal, the Eight Circuit reversed the court and adopted the 

non-Gartenberg reasoning of the Seventh Circuit in Jones v. 

Harris Assocs., 537 F.3d 728 (7th Cir. 2008). Gallus v. 

Ameriprise Fin., Inc., 561 F.3d 816 (8th Cir. 2009). The 

Supreme Court, after reversing the Seventh Circuit in Jones, 

vacated the opinion of the Eight Circuit in Gallus. 559 U.S. 

1046 (2010). On remand from the Supreme Court, the original 

district court opinion was reinstated. Civ. No. 04-4498 

(DWF/SRN), 2010 WL 5137419. The original district court 

opinion, now reinstated, was again appealed to the Eight Circuit 

where it was affirmed in its entirety. Gallus v. Ameriprise 

Fin., Inc., 675 F.3d 1173 (8th Cir. 2012).

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providers versus handling matters in-house (i.e., by a Hartford 

affiliate or an outside service provider). (Lakind Dec. Ex. 38 

at 170:5-171:5.) Moreover, the record also establishes that on 

a yearly basis, Mr. Hill and the Board review the transfer 

agency contracts, indicating they are aware of who performs 

which services. (Hora Dec. Ex. 45 (Board Meeting minutes 

indicating the Board “reviewed the services provided under the 

Funds’ contract with [HASCO].”) Even if Mr. Hill’s phrasing was 

inadvertent or unartful, it does not rise above a scintilla of 

evidence that the Board misunderstood the services provided. 

Accounting methodology. Plaintiffs also argue that the 

accounting methodology by which the Hartford Defendants reported 

their profitability was misleading. Plaintiffs do not, however, 

contend that any actual amount of profit or information was 

withheld from the Board, only that the methodology by which 

profit margin was calculated in information presented to the 

Board was misleading. Plaintiffs’ argument that this evidence 

renders the Board uninformed fails. 

Plaintiffs cannot reconcile the fact that the entirety of 

their argument that the information was misleading is based on 

re-arranging the documents and information that were provided to 

the Board. For instance, Plaintiffs do not argue that in 2011 

the Board was not aware that it paid $113 million in gross 

advisory fees for the management of the Cap App Fund. (Lakind 

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Dec. Ex. 18 at HIF-00030267.) Likewise Plaintiffs do not argue 

that in 2011, the Board was unaware that $43 million of that 

amount was paid by the HIFSCO on to Wellington to cover subadvisory expenses, and that HIFSCO incurred of its own 

operating expenses. (Id.) Of course, the reason that this is 

not argued is because this information was conveyed directly to 

the Board in preparation for its duties to approve the advisory 

fee. (Id.) The fact that the Board was given one accounting 

treatment of these inputs over another does not in and of itself 

impugn the Board’s approval. See Gallus, 497 F. Supp. 2d at 

981.14

Withheld fee bifurcation analysis. Plaintiffs point to a 

request made by the Board in 2009 and 2010, in which the Board 

requested that, “[f]or funds that are parties to the 

Administrative Services Agreement with Hartford Life Insurance 

Company . . . please respond to the following”:

For comparative purposes, please provide information on 

the impact of administrative service fees (in basis 

points) charged by peer fund complexes. If you believe 

it is appropriate to consider the advisory and 

administrative functions together for comparative fee 

purposes, please explain the basis for your belief. To 

the extent you believe this information is not 

 

14 As the Court noted in Gallus, in strong similarity to the 

record before this Court, “while Plaintiffs contend that the 

information Defendants provided the Board was misleading, 

Plaintiffs fail to describe how these alleged deficiencies 

affected the results of the Board’s fee-negotiation process.” 

497 F. Supp. at 983. 

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reasonably available, describe the efforts you have made 

to obtain it. 

(Third SOF ¶ 69.) HIFSCO, in response to a Board inquiry 

providing information on the impact of administrative advisory 

and administrative expenses, responded that they believed “that 

it is appropriate to consider the advisory and administrative 

functions together for comparative fee purposes.” (Second SOF 

at ¶¶ 121-122.) Plaintiffs argue that, despite this answer, 

HIFSCO “undertook a study which it called ‘Assessment of Fee 

Bifurcation/Unified Mgmt. Fee Pricing Strategies’ in which it 

did precisely what the Board asked albeit for a different group 

of Hartford funds.” (Pls.’ Br. at 34.) 

 Plaintiffs’ argument unfairly distorts the record. The 

record does not reflect that the Funds were subject to 

administrative services agreements with Hartford Life. (Hora 

Dec. Ex. 126 at HIF-00011903.)15 As such, the Board’s 2009 and 

2010 requests were not aimed at the information contained in 

HIFSCO’s analysis, but rather funds which were administered 

pursuant to an administrative services agreement. (Third SOF at 

¶ 69.) This Court cannot conclude for purposes of summary 

judgment that the information the Board supposedly lacked — the 

 

15 In fact, the Funds received investment management services and 

administrative services jointly through the IMAs. (Hora Dec. 

Ex. 126 at HIF-00011903.) Subsequent to March 1, 2010, the 

Hartford Life funds also moved to a joint 

advisory/administrative fee agreement. 

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bifurcated profit margin — would have impacted the Board’s 

determination in this case. 

Note taking. Plaintiffs also argue that disabling the note 

taking feature in “Diligent,” the interface used by the Board to 

review documents, inhibited the Board’s review of the fees. 

(Pls.’ MSJ Opp. Br. at 36.) This manufactured deficiency in the 

Board’s approval process does not undermine the Board’s 

approval, either. As the Hartford Defendants point out, if the 

Board had sought to take notes, they could have done so by other 

means outside of the Diligent interface. Moreover, Plaintiffs 

cite to no record evidence indicating the result of the fee 

negotiation would have been different if the Board could takes 

notes through Diligent.

Alternate advisors. Plaintiffs also argue that the Board 

never considered retaining someone other than HIFSCO as the 

adviser, nor did it explore contracting directly with 

Wellington. (Pls.’ Br. at 36.) This argument again seeks to 

manufacture a flaw in the Board’s review. Plaintiffs rely on 

their expert who stated that “information overload” for the 

Board may have caused it to overlook the nature of the Hartford 

Defendants’ duties and “had Wellington’s sub-advisory agreements 

been between it and each fund, rather than between it and 

HIFSCO, the directors would have been better able to assess the 

true nature of HIFSCO’s duties and the reasonableness of its 

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fees.” (Lakind Dec. Ex. 60 at 6.) Regardless of whether the 

Board would have realized this, Plaintiffs’ own expert testified

that he, as a member of a mutual fund board, had never 

terminated the services of an adviser because those boards 

always felt the fund was doing “well or at least okay.” (Hora 

Dec. Ex. 91:4-8.) This meshes coherently with the deposition 

testimony of Mr. Hill, one of the Funds’ directors, who stated, 

“[F]or us to change an investment advisor without there being 

some really substantial reason to do so, I’m not sure that would 

be in the shareholder’s best interest. I mean, it’s a pretty 

catastrophic – I mean, it’s done, but very rarely in the mutual 

fund industry . . .” (Hora Dec. Ex. 184:11-20.) The inquiry 

with regard to Board deference is not whether a better deal 

could hypothetically have been reached. Plaintiffs have not 

shown that the failure to consider alternate advisers to the 

fund rendered the Board’s decision one that could not be arm’s 

length. 

Regulatory violations. Plaintiffs also contend that the 

Hartford Defendants withheld information from the Board 

concerning “large fines for regulatory violations.” (Second SOF

at ¶ 134.) Plaintiffs’ evidence for this fact is the 

recollection of one Board member who testified that he did not 

recall several specific instances of the Hartford Defendants 

being subject to regulatory fines from 2006 and 2007. (Id. at 

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¶¶ 135-37.)16 The record does not demonstrate how regulatory 

fines, typically from long before the fees were negotiated, 

would have been relevant to an arm’s length negotiation of the 

fees during the relevant time period. Moreover, the record does 

not contain a genuine dispute that this information was withheld 

— rather Plaintiffs’ argument relies solely on the recollection 

of one director concerning disclosures that would have happened 

many years before the fees were negotiated. 

HIFSCO’s involvement in selecting peer groups. Plaintiffs 

further contend that the Board was unaware that Lipper’s 

presentation of peer groups against which the Funds were 

compared was influenced by HIFSCO. (Pls.’ MSJ Opp. Br. at 37.) 

In support of this argument Plaintiffs point to communications 

between HIFSCO and Lipper which purportedly show that the peer 

group recommendations were improperly altered at HIFSCO’s 

request prior to being shared with the board. (Second SOF at ¶¶ 

115-16.) The first of Plaintiffs’ e-mails is a 2009 e-mail 

which references a 2005 letter in which it was “suggested to 

[Lipper that they] make some modifications to their peers.” 

(Lakind Dec. Ex. 80 at HIF-00157715.)17 In addition to the fact 

 

16 One settlement agreement for $100,000 reached with FINRA came 

about in February 2013, dealing with conduct from prior to the 

filing of these actions. 

17 In further support of this argument, Plaintiffs also cite a 

2009 internal email stating: “[a]s a follow up to our questions 

that I had on Growth Opps [Fund], Lipper made revisions to the 

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that this refers to a 2005 suggestion to Lipper, this does not 

show that the data Lipper presented to the Board regarding the 

Funds’ peer groups would have been different or could have 

rendered it no longer an arm’s length transaction. 

 Likewise, the Court does not construe from the evidence 

Plaintiffs point to that HIFSCO exerted control over Lipper to 

the detriment of the Board. (Second SOF at ¶ 116.) 

Specifically, Plaintiffs point to Lipper’s alteration of 

language in a footnote reading “Load-specific Performance 

Universes were provided at the request of Hartford and the 

consultant to the Independent Directors,” to remove the fact 

that Hartford requested the inclusion. The Court finds that 

this does not place the factual issue in genuine dispute. 

Plaintiffs have not demonstrated that the Board’s unawareness of 

the Hartford Defendants’ purportedly secret request to include 

load-specific performance universes rendered the Board’s 

decision uninformed. 

 

peer group range. With Lipper revisions . . . fee [rank] 

improved from 4th quintile to 3rd quintile.” (See Second SOF at 

¶ 115.) The cite to this quote is incorrect and the Court has 

no method to verify this quotation. Nevertheless, on its face 

it would not change this Court’s evaluation of the 

communications between HIFSCO and Lipper. Even under a 

charitable reading, the fact that Lipper made some sort of 

revision to their methodology based upon questions asked by 

HIFSCO does not demonstrate that the Board’s process was not 

informed. 

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The float. Plaintiffs argue that the Board was not fully 

informed because the Hartford Defendants’ failed to disclose to 

the Board that it earned interest from collecting its advisory 

fee monthly, but only payed Wellington’s management fee 

quarterly. (Pls.’ Br. at 37.) Instead, the Hartford Defendants 

reported to the Board that, “There are no ‘floats’ realized on 

Fund-related transactions.” (Lakind Dec. Ex. 67 at HIF00029892.) This so-called float amounts to approximately 

$175,000 across all mutual funds, or about $4,000 per fund. 

Against millions (and sometimes hundreds of millions of dollars) 

of fees, Plaintiffs have not genuinely disputed whether the 

Board was fully informed on the basis of this relatively de 

minimis windfall. Indeed, Plaintiffs’ own expert conceded the 

float was not a significant issue and “the case is not going to 

turn on this [issue.]” (Id. Ex. 145 238:17-239:2.) Another of 

Plaintiffs’ experts stated:

Q: And $172,000 spread across 40 funds is relatively 

trivial in terms of amounts? 

. . . 

A: Of course. We’re talking about -- as we’ve been 

talking all day, we’re talking about tens or hundreds of 

millions of dollars of fees. We’re talking about -- 

even as respect to HFMC’s expenses, direct expenses, 

 , here it’s $172,000. So it’s relatively 

insignificant in the broad scheme of things. 

(Id. Ex. 142 221:8-17.) 

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 As such, the Court does not find that the failure to 

disclose the existence of the float, to the extent it was a 

“float” at all, meaningfully undermines the Board’s 

determination by depriving it of important information. See 

Jones, 559 U.S. at 352 (noting a problem only if the adviser 

withheld “important information” (emphasis added)).

In sum, the Court agrees with the Hartford Defendants that 

Plaintiffs’ perceived shortcomings do not create a triable issue 

of fact with regard to whether the Board’s approval is entitled 

to deference.18 Viewing the evidence in the light most favorable 

to Plaintiffs, Plaintiffs have not genuinely contested the board 

members’ independence, 15 U.S.C. § 80a2(a)(9), nor have they 

shown the Board was uninformed or the process tainted by 

important withheld information. See Gallus, 497 F. Supp. 2d at 

983 (“[W]hile Plaintiffs contend that the information Defendants 

provided to the Board was misleading, Plaintiffs fail to 

 

18 Plaintiffs also cite an additional shortcoming in the Board’s 

process in their motions for partial summary judgment. (Pls.’ 

MPSJ Br. at 29.) In particular, Plaintiffs argue that Lipper 

provided two reports to the Board, one demonstrating the 

expenses of competitor funds and one demonstrating the 

performance of competitor funds, and that these two reports made 

use of different competitor funds, thereby misleading the Board. 

Again, this shortcoming does not create a triable issue of fact 

with regard to the Board’s approval of the fees. Plaintiffs 

have not demonstrated that had the Board been presented with the 

information Plaintiffs’ counsel’s law clerk presents in his 

declaration their result would have been any different. 

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describe how these alleged deficiencies affected the results of 

the Board’s fee-negotiation process.”) 

In general, a plaintiff should not be able to survive 

summary judgment through armchair quarterbacking and captious 

nit-picking. Such a standard would put defendants in the 

untenable posture of defending interminable, manufactured, and 

protracted litigation involving second-guessing a board’s 

process. Here, Plaintiffs seek to do just that. They rely only 

upon their own experts’ testimony and cherry-picked deposition 

excerpts suggesting Plaintiffs might have negotiated a different 

deal had they been in the directors’ seats, but not showing that 

the Board abandoned or failed its watchdog function. Such 

carping, if sufficient, would eviscerate the deference that is 

to be paid to an informed Board’s process under Jones. As such, 

the Court determines that the Board’s decision is entitled to 

“substantial weight.”

Nevertheless, as the Supreme Court noted in Jones, “[A] fee 

may be excessive even if it was negotiated by a board in 

possession of all relevant information, but such a determination 

must be based on evidence that the fee is so disproportionately 

large that it bears no reasonable relationship to the services 

rendered and could not have been the product of arm’s length 

bargaining.” 559 U.S. at 351. Accordingly, the Court proceeds 

to review the Gartenberg factors, infra, as a means of 

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determining whether, despite Board approval, the fee 

disproportionately exceeds the bounds of arm’s length 

bargaining. 

iv. Gartenberg Factors

 As noted above, under Gartenberg, courts consider all 

pertinent facts: “(1) the nature and quality of the services 

provided by the adviser to the shareholders; (2) the 

profitability of the mutual fund to the advisers; (3) “fall-out” 

benefits; (4) the economies of scale realized by the adviser; 

(5) comparative fee structures with similar funds; and (6) the 

independence and conscientiousness of the independent trustees.” 

Gallus, 497 F. Supp. 2d at 979. Few courts have reached the 

summary judgment stage with regard the Gartenberg analysis. 

Indeed, the Court is only aware of two recent decisions doing 

so. Nevertheless, one recent decision in this District, which 

Plaintiffs have brought to this Court’s attention, denied

summary judgment on very similar facts. See Sivolella v. AXA 

Equitable Life Ins. Co., Civ. No. 11-4194 (PGS) (D.N.J. Aug. 5, 

2015). On the record as it now stands, the Court is inclined to 

largely agree with the Sivolella court, with exceptions as the 

particular facts of this case require.

1. Nature and Quality 

 The first Gartenberg factor for assessing a mutual fund’s 

advisory fee concerns the nature and quality of the services 

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provided by the adviser. Gallus, 497 F. Supp. 2d at 980. This 

inquiry necessarily involves a determination of what services 

may be permissibly considered. 

 Plaintiffs contend that the proper services to be 

considered are only those directly performed by the Hartford 

Defendants. (Pls.’ MSJ Opp. Br. at 10-12 (“Plaintiffs are 

arguing that the portion of the fee retained by HIFSCO does not 

bear the indicia of an ‘arm’s length bargain.’”).) This stance 

of course precludes consideration of Wellington’s services, 

which were a significant portion of the services owed under the 

IMAs. (See supra pp. 7-9.) Plaintiffs additionally argue that, 

even if one considers the full panoply of services provided by 

the Hartford Defendants and Wellington, the fees could not be 

the product of arm’s length bargaining. (Pls.’ MSJ Opp. Br. at 

14.) Defendants call this view myopic — arguing there is no 

basis in law or the nature of the relationship between the Funds 

and the Hartford Defendants or Wellington to bifurcate the 

consideration of services considered by the adviser or subadviser. 

 With regard to the proper services to consider, the Court 

is inclined to consider both the services performed by 

Wellington in its capacity as sub-adviser and the services 

performed by the Hartford Defendants as adviser. These combined 

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services should be measured against the totality of the advisory 

fee. 

As an initial matter, the IMAs explicitly permitted the 

Hartford Defendants to seek sub-advisers. (Lakind Dec. Ex. 1 at 

§ 4.) Indeed, the contract has an entire provision outlining 

the scope of the Hartford Defendants’ obligation regarding the 

oversight of such sub-advisers. (Id.) It would be a strange 

holding to rule that the nature or quality of the services 

provided by the Hartford Defendants were inferior solely because 

they were contracted out to Wellington, when the parties 

acknowledged this as a possibility in their initial contract. 

Put differently, what’s the difference to the Funds if the 

Hartford Defendants perform the services directly or by way of a 

sub-adviser? The sub-adviser clause in the contract seems to 

indicate that (barring rejection of the sub-adviser by the 

Board) there is no difference. 

This result also meshes with the holding in Gartenberg

itself. There, the Court referred to the House Report, which 

stated: 

It is intended that the court look at all the facts in 

connection with the determination and receipt of such 

compensation, including all services rendered to the 

fund or its shareholders and all compensation and 

payments received, in order to reach a decision as to 

whether the adviser had properly acted as a fiduciary in 

relation to such compensation. 

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House Report, at 37, U.S. Code. Cong. & Admin, News 1970, p. 

4910. Gartenberg dealt with three related entities servicing a 

fund. In evaluating the net earnings, the Court was inclined to 

consider not only services provided by each defendant in 

relation to their respective fee, but also those performed by 

“closely related entities whose functions intimately impinge on 

one another.” Gartenberg, 528 F. Supp. at 1049. Indeed, the 

Gartenberg court considered the totality of services, including 

those performed under “a contractual arrangement” whereby a 

single defendant provided the “overwhelming bulk of shareholder 

services.” Id. at 1047. There is no reason here to consider 

Wellington’s services any differently. The plain fact is, as 

part of the Board’s bargain with the Hartford Defendants, the 

performance of the duties ultimately tasked to Wellington was 

secured. Disregarding those services solely because the 

Hartford Defendants made the permissible business decision that 

they were better or more efficiently (or even more 

inexpensively) performed by Wellington is non-sensical.

 That said, this Court understands the concerns expressed by 

the court in Sivolella. Civ. Nos. 11-4194 & 13-213, Hr’g Tr. at 

78:9-79:12. Here, Plaintiffs have argued that, even considering 

the services performed by Wellington, the nature of the services 

was de minimis in relation to the fee extracted. In Sivolella, 

the court ruled that “the fact that the parties disagree between 

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whether the services were di minimis [in relation to the fee 

extracted] or whether they were in accordance with what [the 

defendant] has set forth to this Court presents a substantial 

question of fact that is not subject to disposition on summary 

judgment.” (Id.) Plaintiffs here, too, have argued the 

services performed by the Hartford Defendants, even in 

combination with Wellington’s services, were de minimis. 

Because the true nature of the services performed remains 

relatively nebulous and wrangled-over, viewing the facts in the 

light most favorable to Plaintiffs suggests that summary 

judgment on this factor is inappropriate. 

Moreover, with regard to the nature of the services, 

viewing the evidence in the light most favorable to Plaintiffs, 

some evidence exists that the quality of the services was poor. 

As Plaintiffs’ expert opined, “For the 5 year period [ending in] 

2014, the Capital Appreciation Fund performed worse than 94% of 

the funds in its peer group, and the Hartford Inflation Plus 

fund performed worse than 80% of the funds in its peer group.” 

(Second SOF at ¶¶ 36-37.) Also with regard to the Cap App Fund, 

Plaintiffs’ expert calculated that for the period ending 

December 31, 2014, the Cap App Fund’s performance as compared to 

its benchmark cost shareholders approximately $6 billion. (Id.

at ¶ 36-37.) This is only some of the evidence Plaintiffs point 

to regarding the performance of the funds. (Id. at ¶¶ 36-44.) 

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 While the Hartford Defendants vehemently refute the 

performance analysis that Plaintiffs put forward, and in the end 

may prevail, the dispute concerning the actual services 

performed by the Hartford Defendants and the quality of those 

services remains genuine. As such, the issue should not be 

resolved on summary judgment. 

2. Profitability 

 In many ways, much of the case comes down to how the 

profits of the Hartford Defendants are viewed. Plaintiffs and 

the Hartford Defendants have each put forward their own 

respective method of accounting for the profits, and have 

provided expert testimony to that effect. 

 One method of calculating the profit margin is to divide 

the cost of the services the Hartford Defendants provides to the 

Funds directly by the advisory fee less the cost of subadvisers. This method treats the sub-adviser expenses as 

“contra-revenue.” This is Plaintiffs’ method and it yields a 

comparatively high profit margin — around . (Pls.’ MSJ Opp. 

Br. at 20.) Another method is to divide the cost of the 

services provided inclusive of the fees paid to the sub-adviser 

by the gross advisory fee. This method essentially treats subadvisers as an “expense” which is factored into profit margin. 

This is the Hartford Defendants’ method and it yields a lower 

profit margin — between and . In support of their 

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arguments that their methodology is the proper one for 

calculation, Plaintiffs and the Hartford Defendants have put 

forward extensive expert opinions on the topic. (Second SOF at 

¶¶ 54-55; Lakind Dec. Ex. 26, 37.) 

 This is a nearly identical argument as the one presented by 

the Court in Silovella. Civ. Nos. 11-4194 & 13-213, Hr’g Tr. at 

78:9-79:12 (“[Plaintiffs’ and defendant’s] expert disagree on 

the proper methodology for calculating [defendant’s] profits, 

and whether [sub-adviser] costs passed along to FMG should be 

incorporated into such a calculation. . . . [T]hat’s a fact 

question that must be determined at trial.”). Nevertheless, 

this is also a similar argument to that which was presented and 

rejected in Gallus, where the court held, 

Plaintiffs do not dispute that Defendants provided 

detailed reports on its profitability to the Board. 

Instead, Plaintiffs' expert takes issue with how the 

information was presented to the Board by criticizing 

the cost allocation methodology used. Although 

Plaintiffs suggest that the Board should have had 

different information than what the Board was provided, 

Plaintiffs do not point to any authority detailing 

requirements for the presentation of profitability data. 

Furthermore, Plaintiffs fail to show how any such 

failings in the data create a genuine issue of material 

fact regarding whether the board negotiates the fees at 

arm's length. 

974 F. Supp. at 981. 

 Unlike Gallus, which did not deal with the allocation of 

sub-adviser costs, Plaintiffs have pointed to at least some 

authority which might suggest it was improper or misleading to 

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present profit margin in a manner that included sub-adviser 

expenses as revenue. (Pls.’ MSJ Opp. Br. at 22-23.) While the 

precedent relied upon by Plaintiffs — an SEC consent order and 

somewhat differentiable case law concerning pass-through 

payments – is thin, it narrowly places Plaintiffs beyond the 

summary judgment standard in combination with their expert 

evidence. As such, this Court rules in line with the Silovella 

court, which held that such a record creates a genuine dispute 

for trial. 

3. “Fall-Out” Benefits

 Fall-out benefits are those which accrue to the mutual fund 

adviser as a result of its work on behalf of the mutual fund. 

Hoffman v. UBS, 591 F. Supp. 2d 522, 539. 

 Plaintiffs’ expert identifies three main fall-out benefits: 

(1) Profits earned by the Hartford Defendants for providing 

fund accounting services and transfer agent services, 

(2) The “float” which occurred while he Hartford Defendants 

retained Wellington’s fee monthly but only paid out 

quarterly and did not disclose this benefit amounting to 

$172,000 annually, and 

(3) Revenue from charging investors a “front-end sales load”

of 5.5% on new investments in the Funds’ class A shares 

which provided an additional $13.7 million, in addition 

to $10 million for its back end sales charge. 

(Hora Dec. Ex. 99, Barrett Report at 29.) 

The Hartford Defendants argue that the fall-out benefits in 

the form of transfer agent fees and accounting fees are not 

fall-out benefits at all because they are not indirect, but 

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rather very direct benefits that were known by the Board. 

(Defs.’ MSJ Br. at 28-29.) The Hartford Defendants also contend 

that the “float” that Plaintiffs’ expert has identified is not a 

float at all, just a timing difference. Moreover, Defendants 

argue that the total value of the so-called float amounted to no 

more than $4300 per fund. (Id.) Defendants do not contest that 

they did not reveal the existence of this benefit to the board. 

Indeed, to the contrary, Defendants represented that they did 

not receive a float at all. (Lakind Dec. Ex. 18 at HIF0029892.) 

As noted with regard to the “float”, supra pp. 36-38, the 

Court is skeptical that this so-called fall-out benefit was an 

important one that would have impacted the Board’s negotiation.

See Jones, 559 U.S. at 352 (noting a problem only if the adviser 

withheld “important information” (emphasis added)). 

Nevertheless, the significance and extent of these fall out 

benefits (particularly the transfer agent fees and front-end 

sales load) remains largely in dispute between the parties. The 

resolution of this factual dispute would be material to the 

analysis of whether, despite the substantial weight to be 

accorded to the Board’s approval, these fall-out benefits in 

conjunction with the other Gartenberg factors in dispute 

rendered the fee excessive.

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4. The Economies of Scale 

 The fourth Gartenberg factor deals with the extent to which 

the fee charged to the Funds shared in economies of scale. An 

“economy of scale” is defined as a “decline in a product’s perunit production cost resulting from increased output, [often] 

due to increased production facilities; savings resulting from 

the greater efficiency of large-scale processes.” Hoffman v. 

UBS-AG, 591 F. Supp. 2d 522, 540 (S.D.N.Y. 2008) (quoting 

Black’s Law Dictionary (8th ed. 2004)).

 Plaintiffs argue that the Hartford Defendants’ fee 

structure did not adequately convey the benefit of economies of 

scale. Indeed, as Plaintiffs point out there is roughly a $130 

million difference between the parties’ respective experts’

calculations of how much the savings of the Hartford Defendants 

were passed on. (Pls.’ Br. at 29.) Plaintiffs also argue that 

by delegating substantial duties to Wellington, substantial 

economies of scale were realized. (Second SOF at ¶ 91; Pls.’

MSJ Opp. Br. at 28.) The Hartford Defendants’ response is that 

Plaintiffs’ have not shown that economies of scale were even 

realized by the Hartford Defendants because Plaintiffs have 

impermissibly compartmentalized their costs. (Pls.’ Br. at 23.) 

Moreover, even if economies of scale were realized, they were 

passed on via breakpoints which saved over $130 million. 

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 Once again, Plaintiffs have narrowly survived the summary 

judgment stage with regard to this Gartenberg factor. Given the 

back and forth nature of negotiations between the Board and the 

Hartford Defendants concerning breakpoints, the Court hastens to 

note that the fees appear to reflect economies of scale, and 

thereby, an arm’s length bargain. Again, this is magnified by 

the substantial weight to be afforded to the Board’s process and 

decision. Nevertheless, viewing the evidence in the light most 

favorable to Plaintiffs, this Court cannot ignore expert 

testimony highlighting a large factual dispute concerning the 

economies of scale that were passed on to the Funds. Silovella, 

Civ. Nos. 11-4194 & 13-213, Hr’g Tr. at 83:9-10 (holding, on 

similar facts, that economies of scale issues remained in 

dispute). 

5. Comparative Fee Structures 

The fifth Gartenberg factor concerns how the fee structure 

of the Funds differs from comparable funds. Gallus, 497 F. 

Supp. 2d at 982. 

Plaintiffs have focused their argument on what a truly 

arm’s length fee would look like. According to Plaintiffs’ 

expert on the subject matter, the Hartford Defendants’ fee 

should be range between .0134% and .0496% to be representative 

of an arm’s length fee. (Pls.’ MSJ Opp. Br. at 27.) Instead, 

Plaintiffs argue, the Hartford Defendants’ fees are 10 to 25 

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times that level. (Id.) Defendants counter that the Board 

reviewed and considered Lipper peer data, and that data 

indicates that the Funds’ fee structures are wholly in line with 

industry peers. (First SOF at ¶ 48-49.)

The Court is again doubtful this evidence, even in 

combination with the remaining Gartenberg factors could overcome 

the substantial weight given to the Board’s process and result. 

This is particularly so given the Court’s skepticism that

Plaintiffs’ idealistic expert analysis of the Funds’ comparative 

fee structure would ultimately carry the day at trial when 

compared to actual peers, as the Hartford Defendants have done. 

Nevertheless, at summary judgment, viewing the evidence in the 

light most favorable to Plaintiff, the Court finds that disputed 

facts remain for trial with regard to this factor as well. If a 

jury were to find that this fee exceeded an arm’s length fee by 

a multiple of 25, in combination with resolving other factual 

disputes in Plaintiffs’ favor, such findings could override the 

substantial deference given to the Board’s result.

6. Independence and Conscientiousness of the Trustees 

This factor dovetails with the procedural aspect of Jones. 

As this Court outlined with regard to the “substantial weight” 

to be granted to independent director approval, the final factor 

of the Gartenberg analysis is not in genuine dispute. As such, 

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the independence and conscientiousness of the trustees factor 

points in favor of finding the fee appropriate.

v. Gartenberg Outcome

As described above, five of the Gartenberg factors remain 

disputed. While the Court has afforded substantial deference to 

the Board’s process, viewing the evidence in the light most 

favorable to Plaintiffs, the Court cannot say that the Hartford 

Defendants are entitled to summary judgment at this stage 

because narrow issues with regard to those factors remain. As 

such, while the Court will preserve the substantial weight 

afforded to the Board’s decision, the factual disputes regarding 

the five Gartenberg factors in dispute require trial. 

The Court also notes its expectation that the trial would 

not be a far-flung foray into the annals of accounting 

procedures or mutual fund administration, as discovery was. 

Instead, the Court believes an adequate trial would resolve 

these remaining factual disputes:

 The nature of the services provided by the Hartford 

Defendants with regard to the Funds. 

 The quality of the services provided, as measured by 

the performance of the Funds. 

 The profitability of the funds, including testimony 

concerning the proper method of accounting for subadviser services. 

 What, if any, fall-out benefits existed and their 

magnitude. 

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 Whether economies of scale were realized and the 

extent to which those realized economies of scale were 

passed along to the Funds. 

 What comparative fee structures indicate about the 

size of the fee. 

The Court does not anticipate that the resolution of these 

factual disputes would require more than a few days of trial 

time. 

B. Plaintiffs’ Motions for Partial Summary Judgment 

i. Plaintiffs’ Motions for Partial Summary Judgment With 

Regard to the Cap App Fund 

 As the above analysis makes clear, while the Board’s 

process is entitled to substantial weight, disputed facts 

permeate the Gartenberg factors. Therefore, a grant of summary 

judgment in favor of either party would be improper. For this 

reason, Plaintiffs’ motions for partial summary judgment with 

regard to liability under § 36(b) regarding the Cap App Fund 

should be denied as well. 

ii. Disgorgement

 Plaintiffs move for summary judgment, as well, with regard 

to the proper remedy, should it be found that the investment 

management fee is so disproportionately large that it could not 

have been the result of an arm’s length bargain. Plaintiffs 

argue that in the event the Hartford Defendants are found 

liable, the proper remedy is disgorgement of all profits by the 

Hartford Defendants. (Pls.’ MPSJ Br. at 34-35.) In support of 

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this argument, Plaintiffs point to fiduciary rules with regard 

to the Restatement of Trusts, which note the significance of 

disgorgement as a remedy for breach of fiduciary duty. (Id.) 

Defendants respond that this reading of fiduciary law misplaces 

the actual statutory language of Section 36(b). Defendants 

argue that the “actual damages” language contained in the 

statute limits damages to the amount paid by the Funds in excess 

of a fee that could be negotiated at arm’s length. (Defs.’ MPSJ 

Opp. Br. at 28-29.)

While Plaintiffs’ argument is tempting in that the Hartford 

Defendants are fiduciaries of the Funds, and thus it might be 

attractive to import breach of fiduciary duty remedies from 

other contexts, it nevertheless misses the mark. Looking to the 

language of the statute itself, this Court determines the proper 

measure of damages “shall be limited to the actual damages 

resulting from the breach of fiduciary duty.” 15 U.S.C. § 80a35(b)(3). In this case, the actual damages would be the 

difference between the fee paid and a fee that would have been 

“fair”—i.e., a fee that could have been negotiated at arm’s 

length. Cf. Krasner v. Dreyfus Corp., 500 F. Supp. 36. 42 

(S.D.N.Y. 1980) (“actual damages” means the “amount by which the 

. . . fee [level] exceeded a fair fee.”); accord In re 

Evangelist, 760 F.2d 27, 29 (1st Cir. 1985) (“the remedy 

Congress created” under Section 36(b) was the “payment of any 

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excess fee to the company”).19 As such, the Court denies

Plaintiffs’ request to determine at summary judgment that 

disgorgement is the proper remedy. 

iii. The Applicable Damage Period

 Finally, Plaintiffs argue that this Court should determine 

that the Hartford Defendants’ affirmative defense relating to 

the applicable damages period is invalid. Specifically, the 

Hartford Defendants assert that the Investment Company Act 

requires that the damages period be limited to one year before 

the filing of the action and cannot continue past the date of 

filing. (Defs.’ MSPJ Opp. Br. at 29-30.) Plaintiffs respond 

that while the explicit statutory text limits damages to no 

earlier than a year before filing, the damages limit does not 

foreclose damages from after the filing. While the case law is 

conflicted, the Court is persuaded by Plaintiffs’ argument.

The applicable statutory provision reads, “No award of 

damages shall be recoverable for any period prior to one year 

before the action was instituted.” 15 U.S.C. § 80a-35(b)(3) 

(emphasis added). The language of this statute would seem quite 

clear: damages are not available to the extent that they 

occurred more than a year before the action was filed. 

Nevertheless, in interpreting this provision, Courts have not 

 

19 It is also worth noting that Plaintiffs make no functional 

reply to Defendants’ contention. (Pls.’ MPSJ Rep. Br. at 18.) 

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uniformly found such clarity with regard to this statute. For 

instance, in In re Franklin Mut. Funds Fee Litig., 478 F. Supp. 

2d 677 (D.N.J. 2007), a court in this District held that 

“[w]hile § 36(b)(3) does not explicitly place an end date on 

when a plaintiff may recover damages under § 36(b), the intent 

and purpose of the statute clearly limits recovery to one year.” 

Id. at 685. The court went on to note that because the 

Investment Company Act required that a fund’s investment 

advisory and principal underwriting contracts be approved 

annually, it can be inferred that “the intent of § 36(b)(3) was 

to provide fund shareholders, along with the Securities Exchange 

Commission, a means for testing newly passed advisory and 

distribution contracts.” Id.

 The Court is not persuaded by the reasoning in Franklin and 

instead adopts the reasoning at play in In re Federated Mutual 

Funds Excessive Fee Litigation, No. 2:04cv352, 2011 WL 846068 

(W.D. Pa. Mar. 8, 2011), in which the Court held that because 

the language in § 36(b)(3) is clear, no limitation on postfiling damages can be inferred. In that case, the Court 

declined to go beyond the clear language of the statute to 

legislative intent. The court noted, “The plain meaning of § 

36(b)(3) as read in its ‘ordinary and natural sense’ indicates 

that the sole temporal limitation imposed is only on those 

damages that were incurred prior to the filing of suit.” Id. at 

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*2. This Court agrees that the provision in § 36(b)(3) is 

clearly a limitation only on how far back damages can go prior 

to filing. 

 Moreover, to the extent this Court were to go beyond the 

plain text of Section 36(b)(3), it would not find the 

legislative intent as clear as the Franklin court makes it out 

to be. Under that court’s reading, the continuous ownership 

obligation throughout the litigation becomes a bizarre 

requirement if the damages period ends at the time of filing. 

Further, reading the statute as the Hartford Defendants suggest 

invites the path Plaintiffs have taken – the filing of multiple, 

substantively identical related actions to avoid (or perhaps 

more aptly put, circumvent) the supposed intent the Franklin 

court finds. 

 In light of the plain language of the statute, the Court 

rules that Plaintiffs’ damages, should Plaintiffs establish 

liability, will not be limited to the one-year period prior to 

filing, but can flow past filing. 

IV. CONCLUSION 

In light of the above analysis, the Court GRANTS

Wellington’s and the Hartford Defendants’ motions to seal. The 

Court GRANTS the Hartford Defendants’ motions for summary 

judgment insofar as they pertain to standing to pursue claims 

regarding the Small Company Fund and the Floating Rate Fund. 

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The Court additionally GRANTS the Hartford Defendants’ motions 

for summary judgment insofar as the Court determines that the 

Board’s determination is entitled to substantial weight. 

Nevertheless, the Court determines genuine issues of material 

fact preclude an outright grant of summary judgment and trial is 

the appropriate venue to resolve whether, despite the 

substantial weight this Court affords the Board’s approval, the 

fee is “so disproportionately large that it bears no reasonable 

relationship to the services rendered and could not have been 

the product of arm’s length bargaining.” Jones, 559 U.S. at 

351. In that respect, the Court DENIES the Hartford Defendants’ 

motions for summary judgment. The Court also DENIES Plaintiffs’ 

motions for partial summary judgment with regard to the Cap App 

Fund and the issue of disgorgement. Finally, the Court GRANTS

Plaintiffs’ motions for summary judgment on the issue of the 

relevant damages period. An appropriate Order follows. 

DATED: March 24, 2016 

 s/Renée Marie Bumb 

 RENÉE MARIE BUMB 

 UNITED STATES DISTRICT JUDGE 

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