Glass Dimensions, Inc. ex rel. Glass Dimensions, Inc. Profit Sharing Plan & Trust v. State Street Bank & Trust Co.
931 F. Supp. 2d 296
D. Mass.2013Background
- ERISA class action alleging fiduciary breach and prohibited transactions related to securities lending by State Street entities through a Collective Trust and Lending Funds.
- Plaintiff Glass Dimensions Plan seeks relief on behalf of itself and similarly situated ERISA plans that invested in Lending Funds and paid State Street a 50% loan income share.
- Defendants State Street Corporation, State Street Bank & Trust, and State Street Global Advisors serve as trustee, investment manager, and lending administrator for the Lending Funds.
- Key documents include Investment Management Agreements, Declaration of Trust, Fund Declarations, and the Securities Lending Authorization Agreement, with dispute over authority to lend and the 50% lending fee.
- Plaintiff contends self-dealing and lack of arm’s-length negotiation in appointing State Street as lending agent and setting the 50% fee; Defendants contest fiduciary status and the reasonableness of fees.
- Court denied both parties’ summary-judgment motions, finding genuine issues of material fact precluding judgment at this stage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Statute of limitations governs claims | Class members lacked actual knowledge before Apr 2007 | Declarations disclosed fee caps, not actual breaches | Not barred; factual disputes on knowledge remain |
| Whether State Street was a fiduciary regarding the 50% fee | Contracts gave discretion to State Street over compensation | No fiduciary status for compensation decisions | Genuine issues preclude summary judgment on fiduciary status |
| Whether State Street breached their fiduciary duties | Evidence of self-dealing and non-arm’s-length process | Evidence insufficient to show breach | Genuine issues preclude summary judgment on breach of loyalty/prudence |
| Whether conduct violated ERISA § 406 and PTE 2006-16 | 50% fee likely prohibited; noncompliant disclosures | Disputes over reasonableness and disclosures create triable facts | Genuine disputes preclude summary judgment on PTE compliance and prohibited transactions |
| Damages | Damages measured by difference between 50% fee and arm’s-length equivalents | Damages depend on causation and proper benchmarking | Triable issue; damages not summarily resolved |
Key Cases Cited
- Braden v. Wal-Mart Stores, Inc., 588 F.3d 585 (8th Cir. 2009) (fiduciary duty analysis focuses on decision-making process)
- Beddall v. State St. Bank & Trust Co., 137 F.3d 12 (1st Cir. 1998) (discretion as sine qua non of ERISA fiduciary status)
- Seaway Food Town, Inc. v. Med. Mut. of Ohio, 347 F.3d 610 (6th Cir. 2003) (discretion in contracting can create fiduciary status over compensation)