Four other float-income lawsuits, all filed in U.S. District Court in Boston last year, had based their complaints on the initial 2012 decision in Tussey vs. ABB, which criticized Fidelity's float-income practices.
However, that ruling and the $1.7 million judgment against Fidelity were overturned by the 8th U.S. Circuit Court of Appeals in St. Louis on March 19.
The appeals court's reversal “was not particularly good news for us,” said Gregory Porter, a Washington-based partner for Bailey & Glasser LLP, who represents two plaintiffs in one of the Massachusetts lawsuits. “We believe the (appeals) court analysis is wrong.”
The 8th Circuit decision doesn't necessarily sink the chances of the plaintiffs in the Massachusetts lawsuits because “the decision in one circuit isn't binding on a District Court in another circuit,” said attorney Thomas E. Clark Jr., the St. Louis-based chief compliance officer and director of fiduciary oversight at FRA PlanTools, a fiduciary consulting firm. “The appeals court ruling is not binding, but it certainly is persuasive.”
Mr. Porter said he will “wait to see what happens with the Tussey vs. ABB plaintiffs” before making his next move.
That case involves not only the float-income litigation, but also two other decisions involving ABB Inc., Cary, N.C., the sponsor of two 401(k) plans. Fidelity wasn't named as a defendant in the two other decisions.
Attorneys for ABB and the plaintiffs have filed notices that they intend to appeal the appellate court ruling.
Meanwhile, the Massachusetts lawsuits have been consolidated into a single case. Among the plaintiffs are participants and/or former participants of eight 401(k) plans, including those sponsored by Bank of America, EMC Corp., Hewlett-Packard Co. and Delta Air Lines Inc.
On March 7, Fidelity petitioned the Massachusetts court to dismiss the consolidated lawsuit. On April 7, plaintiffs' attorneys filed a motion opposing the request for dismissal.