Selected Cases

Jones v. Harris Associates

In a unanimous decision regarding the Seventh Circuit’s consideration of Gartenberg v. Merrill Lynch Asset Management, Inc. as the controlling authority in mutual fund “excessive fee” suits, the U.S. Supreme Court vacated and remanded the lower court’s ruling in Jones v. Harris Associates. The High Court’s decision was reported by The Wall Street Journal and other major media.

The Supreme Court’s ruling essentially upholds Gartenberg, which the U.S. District Court for the Northern District of Illinois, Eastern Division relied upon in its summary judgment finding in favor of Analysis Group client Harris Associates, the management company for Oakmark Funds. The Seventh Circuit subsequently upheld the District Court’s ruling on other grounds, which the Supreme Court rejected in its March 30, 2010 ruling.

Ropes & Gray LLP attained summary judgment for Harris Associates in February 2008. In that litigation, an Analysis Group team including Managing Principal Michael Quinn and Vice Presidents Michael Holland and Aaron Yeater supported academic affiliate Professor Laura Starks and Dr. Ajay Khorana in their examination of the case within the scope of Gartenberg factors, and in the preparation of expert testimony. Professor Starks and Dr. Khorana evaluated the fees Harris charged to mutual funds versus institutional clients, the independence and conscientiousness of Harris’ directors, and the extent of scale economies in operating the funds. The experts determined that Harris Associates had performed better than the market average in its management of Oakmark Funds, while charging fees that were below the market average.

Read the Supreme Court opinion 

The Real Story behind Mutual Fund Fees: Q&A with Mark Egland and Stan Ornstein of Analysis Group