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WASHINGTON, DC, March 4, 2009 — Covington & Burling LLP has secured an important victory for United Technologies Corp. in a closely-watched ERISA class action lawsuit that alleged breach of fiduciary duties in connection with 401(k) plan expenses and investment options. On March 3, the U.S. District Court for the District of Connecticut granted summary judgment in favor of United Technologies on all claims. Plaintiffs had sought damages in excess of $230 million.
The court’s decision establishes important precedent on a variety of 401(k) plan issues and is the first decision to reject a challenge to so-called “cash drag” in company stock funds. The court also rejected three other important claims: (1) that 401(k) plans should not offer actively managed mutual funds to plan participants, (2) that the so-called “revenue sharing” arrangement among service providers was improper and led to excessive fees, and (3) that plan fees and expenses were not properly disclosed to plan participants. The UTC case is the first one of this particular type of ERISA case to be resolved after full discovery by both parties.
The Covington ERISA litigation team was led by partners Jeffrey Huvelle and Thomas (T.L.) Cubbage, with associate Peter Swanson. All are based in the firm’s Washington office.