A federal appellate court has affirmed dismissal of a lawsuit against Wells Fargo alleging that it engaged in self-dealing and imprudent investing of its own 401(k) plan’s assets by funneling billions of dollars of those assets into Wells Fargo’s proprietary target-date funds (TDFs).

John Meiners filed the lawsuit last November, also accusing Wells Fargo of using a quick enroll option which defaulted participants into the TDFs to seed the funds and make more money.

The appellate court agreed with U.S. District Court Judge David S. Doty of the U.S. District Court for the District of Minnesota that Meiners’ allegations that the bank breached its fiduciary duty by continuing to invest in its own TDFs when better-performing funds were available at a lower cost are insufficient to plausibly allege a breach of fiduciary duty. Specifically, the 8th U.S. Circuit Court of Appeals said Meiners did not plead facts showing that the Wells Fargo TDFs were underperforming funds. “He only pled that one Vanguard fund, which he alleged was comparable, performed better than the Wells Fargo TDFs. The fact that one fund with a different investment strategy ultimately performed better does not establish anything about whether the Wells Fargo TDFs were an imprudent choice at the outset,” the appellate court wrote in its opinion.

The 8th Circuit said it is also unpersuaded by Meiner’s argument that the Wells Fargo TDFs were too expensive due to their fees. The appellate court cited Braden v. Wal-Mart Stores in which the court found that different shares of the same fund were a meaningful benchmark, but the appellate court said Meiners does not match that benchmark by alleging that cheaper alternative investments with some similarities exist in the marketplace. “Such an expansion of Braden is inappropriate because it permits plaintiffs to dodge the requirement for a meaningful benchmark by merely finding a less expensive alternative fund or two with some similarity,” the appellate court said.

The 8th Circuit ruled that Meiners failed to allege sufficient facts to demonstrate that the Wells Fargo TDFs were an imprudent choice. It also said it cannot reasonably infer it acted out of a motive to seed underperforming or inordinately expensive funds by making the TDFs the plan’s default investment if Meiners has not plausibly alleged that those funds were, in fact, underperforming or inordinately expensive.