Source: http://mo.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20170309_0000177.C08.htm/qx
Timestamp: 2017-07-22 16:53:03
Document Index: 518667387

Matched Legal Cases: ['§\n401', '§\n1001', '§\n1109', '§\n1104', '§\n1132', '§ 1109', '§ 1291']

Ronald C. Tussey; Charles E. Fisher; Timothy Pinnell Plaintiffs-Appellantsv.ABB, Inc.; John W. Cutler, Jr.; Pension Review Committee of ABB, Inc.; Pension & Thrift Management Group of ABB, Inc.; Employee Benefits Committee of ABB, Inc. Defendants-Appellees Fidelity Management Trust Company; Fidelity Management & Research Company Defendants American Association of Retired Persons Amicus on Behalf of Appellants Securities Industry and Financial Markets Association Amicus on Behalf of Appellees Ronald C. Tussey; Charles E. Fisher; Timothy Pinnell Plaintiffs-Appelleesv.ABB, Inc.; John W. Cutler, Jr.; Pension Review Committee of ABB, Inc.; Pension & Thrift Management Group of ABB, Inc.; Employee Benefits Committee of ABB, Inc. Defendants-Appellants Fidelity Management Trust Company; Fidelity Management & Research Company Defendants
Missouri - Jefferson City.
RILEY, Chief Judge, MURPHY and SMITH, Circuit Judges.
of employees who participated in ABB, Inc.'s retirement
plans-"401(k) defined contribution savings plans, "
to be precise, see generally 26 U.S.C. §
401(k)-accuse ABB and its agents (collectively, the ABB
fiduciaries) of managing the plans for their own benefit,
rather than the participants'. In an earlier appeal, we
directed the district court to "reevaluate" how the
participants might have been injured if the ABB fiduciaries
breached their fiduciary duties under the Employee Retirement
Income Security Act of 1974 (ERISA), 29 U.S.C. §§
1001, et seq., when they changed the investment
options for the plans. See Tussey v. ABB, Inc., 746
F.3d 327, 338 (8th Cir. 2014). Because the district court
apparently mistook that direction for a definitive ruling on
how to measure plan losses, and as a result entered judgment
in favor of the ABB fiduciaries despite finding they did
breach their duties, we vacate the judgment on that claim and
remand for further consideration regarding whether the
participants can prove losses to the plans. Because we thus
reopen one of the participants' substantive claims, we
also vacate and remand the district court's award of
plans offered participants a menu of options for investing
the money in their accounts.[2] In 2000, ABB's Pension Review
Committee adopted a written policy statement describing
"the underlying philosophy and process for the
selection, monitoring and evaluation and, if necessary,
removal of investment options." The policy statement
said the plans would offer investments in three "tiers,
" organized by how much active involvement they demanded
from investors. The first tier, meant "[f]or
participants unwilling or unable to make a personal asset
allocation decision, " was to "offer several
'managed allocation' funds designed to offer the
participant a professionally managed, well diversified fund
or funds appropriate for the participants' [sic]
investment goals."
Cutler, Jr., the director of the committee's staff,
thought those "'managed allocation'" funds
should be "target-date" or "life-cycle"
funds, which dynamically change their mix of investments to
become more conservative as a specified date (such as an
employee's expected retirement) approaches. Cutler
favored the Fidelity Freedom Funds, a family of funds with
target dates at ten-year intervals from 2000 to 2040. Cutler
also suggested removing the Vanguard Wellington Fund, an
established fund that invested in stocks and bonds in a
generally static ratio. The committee agreed on both points.
Removing the Wellington Fund raised the question of what to
do with the money participants had invested in it-roughly
$123 million, representing about 8.4% of the total assets in
the plans. The ABB fiduciaries decided to move the money into
the Freedom Funds, a process called "mapping"
assets from one investment to another. Participants whose
money was mapped to a Freedom Fund remained free to choose a
different investment option (or options) at any time, but the
mapping decision made the Freedom Funds the default for
anyone who had been invested in the Wellington Fund and did
not take affirmative steps to do something else with their
2006, the participants sued the ABB fiduciaries and two
Fidelity companies-the record keeper for the plans and the
investment advisor for the Fidelity mutual funds included in
the plans-under ERISA. See 29 U.S.C. §§
1109, 1132(a)(2) (fiduciary liability and cause of action).
After a bench trial, the district court found both sets of
defendants "breached some fiduciary duties that they
owed to the . . . Plans." See id. §
1104(a)(1) (fiduciary duties). In particular, the district
court found the ABB fiduciaries breached their fiduciary
duties by (1) deciding effectively to replace the Wellington
Fund with the Freedom Funds based on self-interest rather
than what was best for the plans, (2) failing to properly
monitor and control record keeping costs, and (3) agreeing to
make the plans overpay for Fidelity's services in return
for Fidelity charging ABB less for corporate services it
bought for itself. The Fidelity defendants were liable as
well, according to the district court, because interest
earned when money in the process of being added to or taken
out of plan investments was invested overnight-called
"float income"-should have been credited to the
plans, not back to the investments. The district court
awarded the participants $21.8 million against the ABB
fiduciaries for swapping the Wellington and Freedom Funds,
$13.4 million for the ABB fiduciaries' other breaches,
and $1.7 million against the Fidelity defendants on the float
claim, plus attorney fees of $12.9 million from all the
defendants jointly and severally, see id. §
1132(g)(1) (attorney fees).
defendants appealed. We vacated the finding of breach for
changing the investment options, explaining the district
court should have afforded more deference to the discretion
the plans explicitly granted the ABB fiduciaries. See
Tussey, 746 F.3d at 338. Because the issue could be
relevant again on remand-if the district court still found a
breach after a properly deferential review-we added that,
"[a]s calculated, " the original award for
switching the funds was "speculative and exceed[ed] the
'losses to the plan[s] resulting from' any fiduciary
breach." Id. at 338 n.7, 339 (quoting 29 U.S.C.
§ 1109(a)). The district court had calculated the
plans' losses by comparing the returns on the Freedom
Funds to what the participants would have earned if they had
invested in the Wellington Fund instead. We suggested
"it seems the participants' mapping damages, if any,
would be more accurately measured by comparing the difference
between the performance of the Freedom Funds and the minimum
return of the subset of managed allocation funds the ABB
fiduciaries could have chosen without breaching their
fiduciary obligations." Id. at 339. We affirmed
the ABB fiduciaries' liability on the other claims,
reversed the judgment against the Fidelity defendants, and
vacated the fee award-now only against the ABB fiduciaries-so
the district court could account for the resolution of the
remanded issue. See id. at 336-37, 340-41.
remand, the district court again held the ABB fiduciaries
breached their fiduciary duties. Yet the district court
concluded the participants had failed to prove any losses
under the theory we "tacitly approved" in the first
appeal-comparing the Freedom Funds' returns to the
worst-performing of the funds the ABB fiduciaries could have
properly chosen-so the ABB fiduciaries nonetheless prevailed
on that claim.[3] In light of that result, the district
court reduced the participants' attorney fee award for
work through trial by almost $2.2 million, to $10, 768, 474.
The district court also awarded the participants $900, 000
for work on the appeal-just over two-thirds of what they
requested-for a total of $11, 668, 474. The participants
appeal the district court's ruling on measuring losses
and liability for the breach. In a consolidated cross-appeal,
the ABB fiduciaries argue both parts of the fee award are
still too high. See 28 U.S.C. § 1291 (appellate
start with the ABB fiduciaries&#39; assertion, presented as
an alternative ground for affirming the district court&#39;s
judgment on the merits, that they did not actually breach
their fiduciary duties, so there is no need to reach the
issue of how much the plans lost. Whether the ABB
fiduciaries&#39; actions constituted a breach is a legal
question we must answer de novo. See, e.g.,
Tussey, 746 F.3d at 333. But what they did, and why,
are factual matters on which we accept the district
court's findings unless ...