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Fidelity 'Stable Value' Appeal Opinion Blasts Plaintiffs

When the court disagrees with a movant, sometimes it can constructively reflect on how the litigant could have been mistaken, and sometimes a First Circuit Court of Appeals justice can just let a group of plaintiffs have it.

In the Ellis v. Fidelity case, the appellate court really didn't hold back their criticism of plaintiffs' theories. In short, the plaintiffs claimed Fidelity was liable for acting in its own self interest over its investors' interest by acting too conservatively in managing the most conservative investment fund option available. In ruling, the court actually said:

"Plaintiffs' theory of how Fidelity behaved disloyally suffers from the added disability of making little sense."

Sadly for the plaintiffs, it doesn't get much better from there.

Harsh Words for an Unhappy Ending

The appellate court did not hold back in the least bit when it came to pointing out how the plaintiffs' case failed to make sense at every turn. It explained:

"Plaintiffs' theory of a loyalty breach [ ... ] requires that we infer that Fidelity embarked on a course that was not only against both its interests and the interests of its investors, but was also plainly illogical. Such an inference, without more to support it, is too speculative to carry a claim forward."

And when the plaintiffs attempted to raise a new argument for the first time on appeal, the appellate court dismissed it thrice over, but only after pointing out: "There are multiple problems with this argument, the first being that plaintiffs did not raise it in their briefing before the district court."

The court even found it prudent to remind the plaintiffs as to one of the other potential claims alleging mismanagement: "As we have made clear, hindsight regret cannot be the basis for an ERISA claim."

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