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Appellate court sends ABB 401(k) case back to District Court, again

A federal appeals court in St. Louis has again remanded to a District Court an ERISA breach lawsuit filed by participants in two 401(k) plans administered by ABB Inc., Cary, N.C.

Commenting on a lawsuit that was filed in 2006, the appellate court on Thursday said a District Court judge had erred in a 2015 ruling for ABB relating to plan executives' mapping of one investment option to another.

In its decision Thursday, the 8th U.S. Circuit Court of Appeals vacated a July 2015 ruling by U.S. District Judge Nanette K. Laughrey, Jefferson City, Mo., in the case of Tussey et al. vs. ABB Inc. et al. At issue were the plans mapping participants to the Fidelity Freedom Funds target-date series from Vanguard Group's Wellington Fund.

Although Ms. Laughrey ruled that ABB plan executives had “abused their discretion” in mapping the funds, she ruled for ABB because participants “failed to prove damages consistent with the method of damage calculation” as previously recommended by the 8th Circuit, according to her ruling.

However, on Thursday, a three-judge panel wrote that Ms. Laughrey “apparently mistook that direction (by the appeals court) for a definitive ruling on how to measure plan losses.”

Noting Ms. Laughrey acknowledged ABB “did breach their duties,” the appeals court vacated her ruling and remanded the case. The judges asked Ms. Laughrey for “further consideration regarding whether participants can prove losses to the plans.”

Plan participants had accused ABB of a mapping decision that was “based on self-interest rather than what was best for the plans,” according to the Thursday decision, which recounted the case's complex history.

“We leave to the District Court's discretion whether and how to expand the record and hear additional argument from the parties on the issue,” the appeals court judges wrote. “The District Court should have decided for itself how to measure what the plans lost as a result” of the mapping of investment options.