Compliance April 29, 2010

Unisys, Fidelity Win Excessive Fee Case Dismissal

April 29, 2010 (PLANSPONSOR.com) – A federal court has dismissed charges that Unisys Corporation and Fidelity Management Trust Company caused participants in Unisys’ retirement savings plan to pay excessive fees.
Reported by

In his opinion, U.S. District Judge Berle M. Schiller of the U.S. District Court for the Eastern District of Pennsylvania found that Fidelity Management Trust Company and other Fidelity defendants were not functional fiduciaries with respect to investment selection for the plan, so no claim could be made against them.

Schiller found that Unisys met the requisite standard of care in its investment offerings to participants. According to the opinion, the plan offered participants 70 investment options with varying fees, risks, and potential rewards – including commingled pools, index funds, bond funds, funds representing various parts of the global economy, and a money market fund – and the fees charged by these funds were disclosed to investors who could choose from among the investment options to create a portfolio tailored to meet their investment objectives.

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

Referencing the 7th U.S. Circuit Court of Appeals’ decision in Hecker v. Deere & Co., Schiller said the Employee Retirement Income Security Act does not require fiduciaries to get the best deal imaginable for the plan; it requires them to act carefully, skillfully, prudently, diligently, and solely in the interest of participants and beneficiaries. “While this is not a light duty, it does not support a lawsuit that simply claims the fiduciaries could have done better had they worked harder to leverage their market power,” Schiller wrote.

He also said he failed to see the importance of any alleged system of revenue sharing. “Plan participants were made aware of the fees they would pay for allocating their Plan contributions to particular funds. To whom that money ultimately flowed would seem irrelevant to a participant once it left his wallet,” Schiller wrote. He ruled that Unisys defendants’ failure to disclose information about revenue sharing among the Fidelity defendants cannot form the basis of an ERISA breach of fiduciary duty claim.

Participants accused Fidelity defendants and Unisys defendants of breaching ERISA fiduciary duties by causing plan participants and beneficiaries to pay excessive administrative and investment management fees. In particular, they alleged that the defendants did not take advantage of the plan’s large size to negotiate lower fees or increased services for plan participants and beneficiaries.

The opinion in Renfro v. Unisys Corporation, et.al., is here.

Compliance April 29, 2010

Court Tosses Workplace Lawsuit Waiver

April 29, 2010 (PLANSPONSOR.com) – A federal appellate court has struck down an employment lawsuit waiver signed by a Michigan couple when they applied for paramedics jobs in 2005.
Reported by

The 6th U.S. Circuit Court of Appeals ruled that the waivers, in which Alan and Kimberly Alonso promised not to sue Huron Valley Ambulance over workplace issues, were not valid because the couple never got enough information to “knowingly and intelligently” give up their right to go to court.  The couple didn’t know exactly what they were signing nor were they clear on what the alternatives to litigation would be; in the Alonsos’ case, the waiver provided that disputes would go to an internal Grievance Review Board, the court said.

The appellate court held the Alonsos can move forward with claims they were discriminated against and were the victims of retaliation despite having signed the waiver documents.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

“At the time the Alonsos signed waivers of their rights to a judicial forum, they had no idea what the Grievance Review Board process entailed. They were never informed of their right to revoke their waiver. They were not given any documentation regarding the process until almost a month after they began their employment,” the court wrote.

The Alonsos’ allege that Huron Valley Ambulance retaliated and discriminated against them for taking time off for health issues.

In February 2008, Alan Alonso was terminated for allegedly lying about his attendance at an Army National Guard training course and testing positive for drugs while at work.  Meanwhile, Kimberly Alonso, who had requested time off under the Family and Medical Leave Act (FMLA) due to a pregnancy, was allegedly subjected to a hostile work environment and retaliated against for taking FMLA leave. A district court dismissed all claims.

The company has defended its actions, saying it believes its dealings with the Alonsos were legal.

«