A U.S. appeals court affirmed a lower court ruling that determined United Technologies Corp. did not breach its fiduciary duties concerning its 401(k) plan expenses and investments.
Plan participants had filed a class-action lawsuit in September 2006, claiming the plan should not have offered actively managed mutual funds because they generally don’t outperform passively managed funds. The lawsuit also claimed that the plan’s revenue-sharing arrangement was improper and led to excessive fees, and that those fees and other expenses were not properly disclosed to plan participants. The lawsuit sought damages exceeding $230 million. The U.S. District Court in Bridgeport, Conn., ruled against the plaintiffs in March, and the 2nd U.S. Circuit Court of Appeals, New York, affirmed its ruling.
“We’re pleased that the Second Circuit recognized that courts should not second-guess fiduciaries who carefully discharged their duties under ERISA,” Thomas Cubbage, a partner with the defendants’ law firm Covington & Burling, said in an e-mail response to questions.
A spokeswoman for the plaintiffs’ law firm, Schlichter, Bogard & Denton, did not return a call seeking comment.