ERISA-First Circuit Holds That Plaintiffs’ Claim Against Fidelity Of Breach Of Its Duties Of Loyalty And Prudence Fails

In Ellis v. Fidelity Management Trust Company, No. 17-1693 (1st Cir. 2018), Plaintiffs James Ellis and William Perry brought a certified class action under ERISA, alleging that Fidelity Management Trust Company (“Fidelity”), the fiduciary for a fund (namely, the Barnes & Noble 401(k) plan) in which plaintiffs had invested, breached its duties of loyalty and prudence in managing the fund.  Fidelity was awarded summary judgment by the district court, and the plaintiffs appealed.

In reviewing the case, the First Circuit Court of Appeals (the “Court”) ruled that, because the district court correctly concluded that plaintiffs failed to adduce evidence necessary to proceed to trial, the district court’s award of summary judgment is affirmed.

In so ruling, the Court said that, though the record in this matter is voluminous, the essential issues are relatively straightforward.  Plaintiffs failed to adduce evidence after ample discovery that would have provided reasonable, non-speculative support for their claims of disloyalty or imprudence.  The record shows, instead, an alignment between the interests of Fidelity and the fund participants, and an investment strategy that lacked not prudence, but rather, a crystal ball.  The district court applied the correct legal test in its evaluation of the evidence.

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