A federal appeals court in Chicago turned down a request to reconsider its decision that upheld dismissal of a lawsuit that accused Deere & Co. and two Fidelity Investments units of charging unreasonable fees for investment options in Deeres $3.1 billion 401(k) plan.
In its order Wednesday denying the rehearing request in Hecker vs. Deere, the U.S. Court of Appeals for the 7th Circuit said its ruling in the case should not be read as a sweeping statement that any plan fiduciary can insulate itself from liability by the simple expedient of including a very large number of investment alternatives in its portfolio and then shifting to the participants the responsibility for choosing among them.
The court had originally rejected the appeal Feb. 12.
A U.S. District Court judge in Madison, Wis., on June 20, 2007, dismissed the suit against Moline, Ill.-based Deere and Fidelity, which served as the plans trustee and record keeper and as investment adviser for two mutual fund options in the plan. The original suit by plan participants claimed that Deere, Fidelity Management Trust Co. and Fidelity Management & Research Co. violated their fiduciary duties by charging unreasonable fees for plan investment options.
The court (in its order rejecting the hearing request) significantly narrowed its decision, said Jerome J. Schlichter, founder of the law firm of Schlichter, Bogard & Denton, which represented the plaintiffs in the case. Contrary to what some claimed, the court said it was not making a sweeping statement that a fiduciary can insulate itself from liability by simply having a large number of investment options. It puts the burden on fiduciaries to analyze each investment alternative, as we have said all along.
Mr. Schlichter said a decision on whether to appeal to the U.S. Supreme Court has not been made.
Vin Loporchio, a Fidelity spokesman, said, We believe dismissal was the correct ruling, and we are proud of our services to 401(k) plan sponsors and participants.
Ken Golden, a Deere spokesman, declined comment.