Hecker Fee Case Prompts Exelon Suit Dismissal

December 14, 2009 (PLANSPONSOR.com) – With one eye cast toward the recent closely watched excessive fee case Hecker v. Deere & Co., a federal judge in Illinois has thrown out a similar participant suit involving the Exelon Corp.

U.S. District Judge John W. Darrah of the U.S. District Court for the Northern District of Illinois said the recent Hecker ruling from the 7th U.S. Circuit Court of Appeals (see Appellate Court Backs Deere Case Dismissal) dictated his holding in Loomis v. Exelon Corp. In Loomis, Exelon employees argued that the company breached its fiduciary duties to its 401(k) by providing investment options requiring the payment of excessive fees. (see Court Tosses 401(k) Participants’ Request for Investment Losses Relief).

Darrah compared allegations in the two cases and found they were nearly identical, claiming a fiduciary breach under the Employee Retirement Income Security Act (ERISA) by providing investment options requiring the high fees. 

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Hecker already resolved the issues in favor of the plan and its fiduciaries, according to Darrah. Quoting Hecker, Darrah said, “nothing in ERISA requires every fiduciary to scour the market to find and offer the cheapest possible fund. ”

Finally, Darrah ruled that asset-based fee schedules were permissible under Hecker. The caseexpressly approved of a plan that calculated fees as a percent of assets the investor placed in it, the court said (see Case Sensitive:Limit “Ed”?).

The court rejected plaintiffs’ arguments that the case against Exelon was materially different than in Hecker so the appellate case should not control.

The Exelon suit was one of a handful filed in September 2006 by St. Louis attorney Jerome Schlichter alleging that 401(k) plans fees were excessive.

Darrah’s Exelon ruling is here.

A list of court documents filed in the Hecker case is available here.

Teacher Acting as Chaperone Entitled to Workers Comp

December 14, 2009 (PLANSPONSOR.com) – Massachusetts' Supreme Judicial Court has ruled that a high school mathematics teacher is entitled to workers compensation benefits for an injury she suffered while serving as a chaperone for the school’s ski club.

Business Insurance reports that the self-insured city of Peabody sought to deny the teacher benefits for a 2004 shoulder injury, arguing it occurred while she voluntarily participated in a recreational activity, court records show. However, the high court upheld a Department of Industrial Accidents finding that the recreational aspect of serving as a chaperone was incidental to the teacher’s duties of monitoring student safety.

“We affirm the (DIA) decision because we conclude that a teacher who acts as a chaperone to students participating in a school-sponsored activity is acting in the course of her employment and is not engaged in ‘recreational activity,'” the court said, according to Business Insurance.

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