Laborers' Local 265 Pension Fund v. iShares Trust
769 F.3d 399
6th Cir.2014Background
- Affiliates BTC (lending agent) and BFA (investment adviser) receive 35% of net securities-lending revenue from iShares funds.
- Plaintiffs are two pension funds holding iShares ETFs/trusts; allege BTC’s 35% fee is excessive under ICA §36(b).
- The district court dismissed the complaint for failure to state a claim; plaintiffs appealed after final judgment.
- SEC exemption order (2002) authorized affiliated lending arrangements; creates a carve-out under §36(b)(4).
- BFA’s separate advisory fee is not challenged here and is not aggregated with BTC’s lending fee for §36(b) analysis.
- Court affirms district court’s dismissal of §36(b) claim and holds no implied private right of action under §36(a).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §36(b) permits a claim against BFA for excess compensation when an SEC exemption covers the lending arrangement | Aggregation of BTC’s lending fee with BFA’s advisory fee is permissible under §36(b) | Aggregation is improper; carve-out applies; only BTC’s lending fee is at issue | §36(b) claim fails; exemption carve-out applies |
| Whether §36(a) provides an implied private right of action | §36(a) creates private rights to sue for fiduciary breaches by advisers | No implied private right under §36(a); text/structure show no private remedy | No implied private right of action under §36(a) |
| Whether the district court properly dismissed the §36(b) claim given Meyer v. Oppenheimer and related authorities | Meyer supports aggregating affiliate fees to assess §36(b) claims | Meyer does not authorize aggregation of separate services; BTC’s fee is the focus | Aggregation not permitted; §36(b) claim properly dismissed |
Key Cases Cited
- Meyer v. Oppenheimer Mgmt. Corp., 895 F.2d 861 (2d Cir. 1990) (aggregation of fees not permitted; separate services viewed separately)
- Alexander v. Sandoval, 532 U.S. 275 (U.S. 2001) (express enforcement methods suggest Congress’s intent; not directly about private rights here)
- Touche Ross & Co. v. Redington, 442 U.S. 560 (U.S. 1979) (private rights implied only when Congress intends; explicit private remedy exists otherwise)
- Santomenno ex rel. John Hancock Trust v. John Hancock Life Ins. Co., 677 F.3d 178 (3d Cir. 2012) (SEC enforcement structure and ICA provisions used to interpret private rights)
- Mik v. Fed. Home Loan Mortg. Corp., 743 F.3d 149 (6th Cir. 2014) (factors for implied private rights of action and text/structure analysis)
- Olmsted v. Pruco Life Ins. Co. of N.J., 283 F.3d 429 (2d Cir. 2002) (text/structure analysis; private rights not implied absent clear intent)
- Bellikoff v. Eaton Vance Corp., 481 F.3d 110 (2d Cir. 2007) (§36(a) does not provide an implied private right of action)