On March 30, 2012, the Eighth Circuit Court of Appeals granted summary judgment in favor of Ameriprise Financial, ending the Gallus litigation. Plaintiffs had alleged in part that Ameriprise breached its fiduciary duty to shareholders because of a flawed fee negotiation, saying that Ameriprise provided comparable advisory services to institutional clients at lower fees, and that the adviser had misled the board about those arrangements. The plaintiffs also had alleged that the fee negotiation was flawed because it relied in part on a fee comparison with similar funds.
In an earlier decision in this case, the Eighth Circuit had looked to both the adviser's conduct during fee negotiations and the end result, ruling that "[u]nscrupulous behavior with respect to either can constitute a breach of fiduciary duty." The Supreme Court subsequently ruled, in the Jones v. Harris case, that courts must give deference to a robust board process for reviewing and negotiating fees. The Supreme Court sent the case back to the Eight Circuit for more consideration in light of the ruling in the Jones case, and after being sent back to the District Court once again, the matter ultimately ended up on appeal in the Eighth Circuit.
Following Jones, the Eighth Circuit reasoned that "a process-based failure alone does not constitute an independent violation of section 36(b)." Rather, the court held, if the process of approving the fees was flawed, the court would merely give less deference to the board's decision to approve the fees. The court noted, "A defective process affects the amount of deference we give to the fee arrangement reached between the board of directors and the adviser of the fund." The court held that because the board had asked for and received information relevant to the fee differences between accounts, "its process can fairly be described as robust."