A federal judge in Colorado upheld this week a recommendation from a magistrate judge to dismiss a lawsuit brought against DISH Network alleging that it failed to uphold its fiduciary duties in administrating its workplace retirement plan.
The plaintiffs in Jones et al. v. DISH Network, represented by the Miller Shah law firm, had alleged that DISH failed to monitor the fees charged to the plan, as well as the performance of the Fidelity Freedom Funds TDF suite and other actively managed funds in the plan, therefore hurting participant outcomes. DISH should have used its size to negotiate lower fees and better monitored the performance of funds in the investment menu, they alleged.
In January, Magistrate Judge Scott Varholak recommended the case be dismissed because plaintiffs had failed to propose proper peer funds to which the fees and performance of the existing funds could be compared. He also noted that the plaintiffs compared the average fees for the plan across five years to a single year for one comparator, which was not a legitimate comparison.
Varholak also wrote in his recommendation that the plaintiffs did not have standing to challenge the Royce Total Return Fund, an actively managed fund, because none of the plaintiffs had actually invested in it and therefore were not harmed by it.
The plaintiffs objected to the recommendation in February. They argued that they were damaged by the TDF suite which they did invest in and that the TDF series was evidence of a flawed process. That flawed process also led to the selection of the Royce Fund, and therefore they could challenge it on that basis, they argued. They reiterated that the fees were too high for these funds and that the plan fiduciaries have a duty to continuously monitor the plan.
On Monday, U.S. District Judge Christine Arguello, presiding in the District of Colorado, accepted Varholak’s recommendation and dismissed the complaint. She accepted that the plaintiffs had no standing to challenge the Royce Fund because they could not prove that it was selected along with the Fidelity TDFs as part of the same decisionmaking process and because none of the plaintiffs had, in fact, invested in it. The plaintiffs must show a common practice that injured both them and other investors who did invest in the Royce Fund, the judge ruled.
Arguello also concurred with Varholak by saying the fee comparisons were not apples-to-apples and that fiduciaries can offer a range of prudent options. They are not required to scour the market for the lowest fees on the lowest-risk and highest-return funds, she wrote.
The Miller Shah firm did not return a request for comment.