Opinion ID: 214359
Heading Depth: 2
Heading Rank: 3

Heading: State Street's Float Income

Text: Plaintiffs' remaining claim involves the compensation paid to State Street. As noted, State Street was the Plan's trustee and held the Plan's assets. In addition to paying a fee for State Street's services, the Plan allowed State Street to retain interest income from float. In general, float consists of a set of funds on deposit at two different financial institutions at the same time. See Thomas P. Fitch, Dictionary of Banking Terms 198 (5th ed.2006); David L. Scott, Wall Street Words 152 (3d ed.2003); http://en.wikipedia.org/wiki/ Float_% 28money_supply% 29 (last viewed April 6, 2011). When a check is deposited with a financial institution, the financial institution credits the depositor's account with the amount of the check, allowing the depositor to earn interest on the funds immediately. However, until the check clears, the funds remain on the books of the financial institution on which the check was written, and thus the person who wrote the check also continues to earn interest on the funds for a short time. As applied to the present case, float refers to funds that remained on deposit at State Street pending clearance of a check written on Plan assets. When the Plan issued a check, State Street would set aside funds sufficient to cover the amount of the check in a separate account. However, until the check cleared, those funds could be used on a short-term basis to generate income. Under State Street's agreement with the Plan, State Street was allowed to retain the income earned from float. Absent this agreement, any float income would have been property of the Plan. The amount of float income earned over a period of time varies depending on a number of factors, including the number of checks written and interest rates. Plaintiffs argue that defendants failed to determine how much float income State Street was earning. Plaintiffs further argue that unless defendants knew how much float income State Street was earning, they could not satisfy their fiduciary duty to ensure that State Street's total compensation (fees + float income) was reasonable. The district court granted summary judgment to defendants on this claim, and we affirm. A key component of plaintiffs' claim is their contention that defendants did not know the amount of State Street's float income. However, in support of their summary judgment motion, defendants submitted a declaration from a Plan fiduciary stating that defendants received annual reports from State Street that disclosed the dollar amount of State Street's float income. (Dolsen Decl. ¶ 14.) Plaintiffs did not produce any evidence contradicting this statement in opposition to defendants' motion for summary judgment, and they do not point to any such evidence on appeal. Thus, as far as the record reveals, it is undisputed that defendants received annual reports regarding State Street's float income. Moreover, plaintiffs do not show that defendants failed to review these reports, and they do not point to any other steps that prudent fiduciaries would have taken to ensure that State Street's total compensation was not excessive. Instead, plaintiffs emphasize that defendants have not disclosed the actual dollar amount of the float income retained by State Street. But we fail to see why that is a problem. Plaintiffs do not direct us to an interrogatory, deposition question, or other discovery request in which they asked defendants to identify the amount of State Street's float income, and thus the absence of any evidence in the record as to the amount of this income does not give rise to an inference that defendants did not know what it was. Accordingly, the district court properly granted summary judgment on this claim. [12]