Case Sensitive
Win, Win
Loomis, et al. v. Exelon Corporation, et al. 09-4081 & 10-1755
THE VENUE: United States Court of
Appeals for the 7th Circuit
THE ISSUE: Under ERISA, are plan
administrators allowed to offer only
retail mutual funds as a means of investment and require that the participants
bear the cost burden of those expenses?
THE RULING: Relying on precedent set
in Hecker v. Deere & Co., a previous
ruling by the 7th Circuit, the court ruled
in favor of the Exelon Corporation,
deciding that the use of retail mutual
funds was allowable under ERISA
because market competition would be
sufficient to ensure that fees would be
reasonable. Here, the 7th Circuit noted
that “the district court decided that the
current suit is a replay of Hecker and
dismissed it on the pleadings,” and,
despite some discussion of the issues,
upheld the lower court’s dismissal—with
prejudice—of the case.
THE CASE: Brian Loomis and other
participants in Exelon Corporation’s
pension plan filed a class-action suit
against the plan, claiming that the plan’s
offering only retail funds resulted in
excessive costs for participants. Participants in Exelon’s defined contribution
plan had 32 options to invest in, 24 of
which were mutual funds open to the
public. These funds were no-load funds
and had expense ratios ranging between
0.03% and 0.96%. The lower-expense
funds were passively managed, while
the higher-expense funds were actively
managed.
Loomis and the other participants
charged that the Exelon plan administra-
tors violated their fiduciary duties under
ERISA by ( 1) offering retail mutual
