After a string of successes in the courtroom through most of last year, the mutual fund industry suffered a setback recently in a federal class action lawsuit which contends that directors lost their independence by earning high pay for serving on multiple mutual fund boards.

U.S. District Court Judge Daniel T. K. Hurley has rejected directors' arguments that a new Maryland law effectively prohibits lawsuits that allege fund directors lose their independence when they serve on several boards within the same mutual fund complex. Hurley made his initial ruling as a part of a 13-page decision Dec. 6. In that ruling, Hurley allowed to go forward a case that shareholders filed in West Palm Beach, Fla. federal court against Templeton Asset Management of San Mateo, Calif. and directors of the Templeton Vietnam Opportunities Fund.

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