Supreme Court won’t review 401(k) suit against Deere, Fidelity

The U.S. Supreme Court today rejected a review of the dismissal of a lawsuit against Deere & Co. and two Fidelity Investments units, claiming unreasonable fees were charged for investment options in Deere’s $3.1 billion 401(k) plan.

The high court rejected the case without comment.

The suit against Moline, Ill.-based Deere and Fidelity, which served as the plan’s trustee and record keeper and as investment adviser for two mutual fund options in the plan, originally had been dismissed in June 2007 by a U.S. District Court judge in Madison, Wis. That dismissal was affirmed by the U.S. Court of Appeals in Chicago, on Feb. 12, 2009.

The original suit by plan participants claimed that Deere, Fidelity Management Trust and Fidelity Management & Research violated their fiduciary duties by charging unreasonable fees for plan investment options.

In the original case, Deere plan participants claimed the company failed to negotiate the lowest possible fees for plan participants under an arrangement in which most of the plan investment options were Fidelity funds. In addition, they claimed, Deere officials failed to disclose or were unaware of a revenue-sharing arrangement that Fidelity was using to share some of the asset-based investment fees it was getting from plan participants with a Fidelity affiliate.

In his decision, U.S. District Court Judge John C. Shabaz said Deere was protected from fiduciary responsibility by a provision in ERISA that provides safe harbor for plans that comply with its Section 404(c) regulations. That provision requires the plan sponsor to advise plan participants that they are responsible for their own investment decisions.

Mr. Shabaz also ruled that Department of Labor regulations do not require disclosure of revenue-sharing arrangements.

In a statement, Fidelity spokeswoman Jenny Engle said: “We’re pleased to see that there’s final resolution in this case for both Fidelity and our client. We continue to believe that we provide valuable service at a reasonable cost and that this decision was the correct one.”

Representatives of Deere and the plaintiffs in the case, Hecker vs. Deere & Co., could not be reached for immediate comment.

Doug Halonen is a reporter with Pensions & Investments, a sister publication to InvestmentNews.