April 27, 2012
Authored by: benefitsbclp
At the end of last month, Judge Laughrey handed down her decision in Tussey v. ABB, Inc. (W.D. Mo., No. 2:06-CV-04305). In their simplest recitation, the facts of Tussey v. ABB are that ABB selected Fidelity to provide not only recordkeeping and other administrative services to its 401(k) plans, but also certain investment management services through one of Fidelity’s affiliates. During the time period at issue in this lawsuit, Fidelity also provided services to ABB in other capacities, including recordkeeping services for ABB’s defined benefit plan, non-qualified deferred compensation plan, health benefits, and payroll services (collectively referred to as “corporate services” by the court). Plaintiffs brought claims on behalf of a class of present and former ABB employees who are participants in ABB’s 401(k) plans alleging various breaches of fiduciary duties on account of ABB’s relationship with Fidelity, ABB’s management of the plans and Fidelity’s treatment of “float” income (i.e., earnings resulting from the short-term investment of funds held in accounts used to facilitate benefit plan transactions).
Following a four-week bench trial which concluded in January 2010, Judge Laughrey issued an 81-page decision on March 31st finding that the ABB Defendants (hereinafter “ABB”) and Fidelity Defendants (hereinafter “Fidelity”) each breached certain of their fiduciary duties under ERISA. Specifically, the Court found that the: (1) ABB violated its fiduciary duties by (i) failing to monitor recordkeeping costs, (ii) failing to negotiate rebates from either Fidelity or other investment companies utilized on the plan’s investment platform, (iii) selecting