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Compliance April 11, 2011
Appellate Court Sends Back Kraft Fee Case
A federal appellate court has thrown out a lower court’s decision in
favor of an excessive retirement plan fee lawsuit and sent the matter
back for further proceedings.
Reported by Fred Schneyer
Ruling in Gerald George vs. Kraft Foods Global, the 7th U.S. Circuit Court of Appeals contended there were still too many potential disagreements between the two sides, concluding that U.S. Magistrate Sidney I. Schenkier for the U.S. District Court for the Northern District of Illinois was wrong when he ruled for Kraft in the fiduciary breach case.
“In sum, because we find that the record reveals a genuine issue of material fact as to whether defendants breached the prudent man standard of care by failing to make a reasoned decision under circumstances in which a prudent fiduciary would have done so, we reverse the district court’s grant of summary judgment on this issue and remand for further consideration,” wrote U.S. District Lynn S. Adelman, of the U.S. District Court for the Eastern District of Wisconsin.
In the original suit, the plaintiffs argued that the recordkeeping fees and an employer’s decision to unitize its company stock fund were a fiduciary breach under the Employee Retirement Income Security Act (ERISA) (see “Case Sensitive: Reasonable Redoubt“).