Fidelity Management Trust Company and Fidelity Management Research Co.

O’Melveny achieved a victory in the Eighth Circuit Court of Appeals on behalf of clients Fidelity Management Trust Company and Fidelity Management Research Co. The court reversed the district court’s US$1.7 million judgment against Fidelity in an ERISA class action brought against Fidelity and ABB, Inc. by the participants in ABB’s employee retirement plans. In the district court, the plaintiffs claimed that ABB and Fidelity breached their fiduciary duties to the retirement plans by paying excessive recordkeeping fees and by imprudently selecting investment funds for the plans. The plaintiffs also claimed that Fidelity breached its fiduciary duties by failing to give the plans “float income”-interest earned on money in the process of moving to and from the retirement plans' investment options. After a 16-day bench trial, the district court held that ABB was liable for lineup and compensation breaches and awarded damages of US$35 million. The court ruled in favor of Fidelity on those claims but held that Fidelity had breached its fiduciary duties by failing to distribute float income to the plans. The court awarded damages of US$1.7 million on that claim and also held that Fidelity and ABB were jointly and severally liable for attorneys' fees and costs of US$13.5 million. On appeal, the Eighth Circuit reversed the judgment against Fidelity and held that Fidelity did not have a duty to pay float income to the retirement plans.