(Dow Jones) A case against Ameriprise Financial Inc. over allegedly excessive mutual-fund fees is being sent back to a federal appeals court by the U.S. Supreme Court, which says it fits the pattern of a similar lawsuit it turned back last week.

In its decision Monday in the Gallus v. Ameriprise case, the high court cited Jones v. Harris Associates. "The court is basically saying, 'We decided the Jones case last week. This case presents the same issues as the Jones case, so we're sending it to the Eighth Circuit for further consideration,'" said Robert Skinner, an attorney with Boston law firm Ropes & Gray, who represents Ameriprise in the case.

The Supreme Court's decision last week mirrored in key ways the decision a circuit court made a year ago in the case involving Ameriprise, said William Birdthistle, assistant professor of law at Chicago-Kent College of Law. Both reaffirmed a legal standard from the 1980s known as the Gartenberg standard, but with added conditions that may make it easier for shareholders to win in cases alleging they were overcharged, he said.

"It's still difficult to be a plaintiff, but it's easier today that it was seven days ago," said Prof. Birdthistle. "It's true in Jones, and it's true in Gallus."

The circuit court's decision in the Gallus v. Ameriprise case a year ago "was a real forerunner of last week's Supreme Court ruling in the Jones v. Harris case." And it may be a harbinger of how they may rule in the future, he said. "The court could look at it and say, 'This is Gartenberg-plus.' "

Skinner said of Monday's decision, "Amerprise is pleased that the court has granted its request to have the Eighth Circuit Court address this case again in light of the strong reaffirmation of the Gartenberg standard."

In the Jones v. Harris case, the Supreme Court last week upheld the Gartenberg standard. In that case, the high court chose not to uphold an appeals court decision that would have set a tougher standard for shareholders who want to challenge excessive fees, and sent the case back to a lower court to decide.

But the high court added a test, which effectively means that if fund companies charge individual investors more than they do institutional investors, the companies must be able to justify those fees to their boards, Mr. Birdthistle said.

In the Gallus v. Ameriprise case, shareholders of 11 mutual funds said the fees charged by Ameriprise were much more than those charged to institutional investors. The U.S. District Court for the District of Minnesota had ruled in favor of the investment advisor. In April 2009, however, the Eighth Circuit court reversed the Minnesota court's decision.

Karrie McMillan, general counsel of the Investment Company Institute, the mutual-fund industry trade group, said, "I don't think the Supreme Court [in Jones v. Harris] really changed the way the boards do things as a practical matter."

First « 1 2 » Next