Deere Fee Suit Decision Stands

A federal judge has refused to reconsider his earlier ruling that Deere&Co. was not obligated to disclose the revenue sharing arrangements in its 401(k) plan, clearing the company of fiduciary breach allegations.

U.S. District Judge John C. Shabaz of the U.S. District Court for the Western District of Wisconsin issued the ruling in response to a plea from three employees of the heavy equipment manufacturer to take another look at his June 2007 decision that no violation of the Employee Retirement Income Security Act (ERISA) had occurred (See Deere and Fidelity Fee Lawsuit Thrown Out).

Shabaz also asserted in his June ruling that Deere was protected by the safe harbor of 404(c) for its selection of investment options.

In their class action suit, the employees alleged that Deere and the Fidelity Management Trust Co. provided investment options with excessive and unreasonable fees and did not properly disclose information about plan fees to participants.

The move by Shabaz to stand behind his earlier ruling came after employees’ claim they had discovered “new evidence” of the company’s ERISA wrongdoing. Shabaz accused the plaintiffs of merely rehashing their earlier arguments.

“Plaintiffs effectively collect policy arguments for requiring some form of disclosure of revenue sharing,” Shabaz wrote. “There are contrary arguments that such disclosure would be of limited practical use to participants and that information concerning a non-fiduciary fund manager’s disposition of its profits is generally unavailable to the plan administrator. It was not Deere’s obligation to sort out these conflicts.”

The court likewise refused to reconsider its earlier conclusion about 404(c) protections. Declared Shabaz: “The point of the safe harbor provision is to preclude claims that, although there was a broad array of fully described options in which to invest, participants might have achieved a better return (or lost less) if only the plan sponsor had chosen different options with better returns or lower costs.”

The case is Hecker v. Deere & Co., W.D. Wis., No. 06-C-719-S, 10/19/07.