Judge Paul A. Crotty of the U.S. District Court for the Southern District of New York ruled that defendant Salomon Brothers sufficiently proved that the fees it charged on nine of its mutual funds were justifiable in light of the funds’ superior performance and customer service, Dow Jones reports.

In so doing, he dismissed a lawsuit against the investment advisors and distributors to the funds.

“Plaintiffs allege that the ‘performance of these funds was not up to par with other similar funds in the industry,’” the judge ruled. “According to plaintiffs, this failure belies defendants’ argument that their superior quality and performance justifies their high fees. Performance is only one measure, however, and plaintiffs fail to allege anything about the array of services offered to fund customers, such as telephone or Web assistance or the ease with which transactions are effected,” the judge continued. “Instead, they ask the court to extrapolate deficient services from allegedly substandard investment returns.”

The lawsuit, originally filed in 2004, said that the fees charged by the funds’ distributors were disproportionate, given that they had not been negotiated at arm’s length but granted to a transfer agent subsidiary of the then-parent company.

In May 2005, Citigroup, then owner of the Salomon Smith Barney funds, settled Securities and Exchange Commission fraud charges against its Citigroup Global Markets and Smith Barney Fund Management units over an alleged windfall of nearly $100 million in transfer agent fees that the units pocketed by distributing $208 million to investors.

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