Court Denies Attorneys’ Fees in Institutional Versus Retail Shares Case

The Bureau of National Affairs (BNA) reports the U.S. District Court for the Central District of California ruled that participants in Southern California Edison Co.’s tax code Section 401(k) plan are not entitled to attorneys’ fees for succeeding “minimally” in their action alleging the plan’s fiduciaries breached their fiduciary duties when they selected three retail-class mutual funds for the plan instead of attempting to secure institutional-class mutual funds.  

Judge Stephen V. Wilson reconsidered a decision from December 2010 in which he exercised his discretion to award fees. Wilson said that at the time of the earlier ruling, he had not considered who was the “prevailing party” in the case. In the minute order, Wilson explained Edison was the prevailing party, as the participants had only “succeeded minimally on only part of one of ten of their claims.”  

However, the court held that Edison could offset its prevailing party costs up to the amount of the participants’ requested fee award. The court said that after the offset, neither party would receive fees or costs.  

The lawsuit against Edison and its associated companies was filed in 2007. In July 2010, the court found that fiduciaries of Edison’s Section 401(k) plan breached their duty of prudence when they selected three retail-class mutual funds for the plan instead of attempting to secure institutional-class mutual funds (see “Court Buys Retail vs. Institutional Fee Claims“). However, BNA said, in 2009, the court had dismissed the bulk of the participants’ claims.  

In December 2010, the court found that a limited award of attorneys’ fees was appropriate. However, in light of the participants’ limited success, the court directed them to adjust their requested fees. The participants originally sought $2.5 million in attorneys’ fees and nontaxable costs, but later revised that amount to roughly $410,000.