Plaintiffs and a defendant have filed dueling requests to appeal a recent court ruling in the complex ERISA fiduciary-breach case of Tussey vs. ABB Inc.
Both the defendant, ABB Inc., Cary, N.C., and the plaintiffs, current and former participants in two ABB 401(k) plans, found something they didn't like in a March 19 ruling by a three-judge panel of the 8th U.S. Circuit Court of Appeals in St. Louis.
In documents filed April 16, each group asked that all 11 judges on the appeals court reconsider parts of the decision. As an alternative to a full-court review, each petition asked that the three-judge panel rehear the elements of the March 19 decision.
In the March 19 ruling, the three-judge panel:
- Upheld, by a 3-0 vote, a decision by a U.S. District Court in Jefferson City, Mo. that ABB had violated its fiduciary duties by, among other things, failing to control record-keeping costs. On April 16, ABB said that decision and the $13.4 million judgment against the company should be overturned.
- Vacated a lower court ruling, and its $21.8 million judgment against ABB, by a vote of 3-0 that criticized ABB for mapping one investment in the 401(k) plans' menu — Vanguard's Wellington Fund — to the Fidelity Freedom Funds target-date series. The appeals court panel sent this matter back to the lower court “for further consideration.” Both ABB and the plaintiffs have asked, for different reasons, that this action be reconsidered.
- Reversed the District Court judge's ruling, by a vote of 2-1, that Fidelity Investments breached its fiduciary duty by improperly managing float income — money earned from interest-bearing accounts used temporarily by 401(k) plans before plan assets are disbursed when participants move assets among investment options. The reversal eliminated the $1.7 million lower court judgment against Fidelity. The plaintiffs asked that this reversal be overturned.
“We agreed with the recent decision by the Court of Appeals affirming that Fidelity's actions were in all respects consistent with our fiduciary duties to our clients and all legal requirements,” Vincent Loporchio, a spokesman for Fidelity, said in an e-mailed comment.
Tussey vs. ABB is one of the most-watched ERISA-breach cases by sponsors and record keepers because the District Court ruling, in March 2012, represented a solid victory for plaintiffs and because the recent appeals court panel decision presented such a complex split decision. The original suit was filed in late 2006, and the prospect of a prolonged appeals process suggests the case is far from being resolved.