Justia Professional Malpractice & Ethics Opinion SummariesArticles Posted in ERISA
Whitley v. BP, P.L.C.
After the BP Stock Fund lost significant value, the affected investors filed suit alleging that the plan fiduciaries breached their duties of prudence and loyalty by allowing the Plans to acquire and hold overvalued BP stock; breached their duty to provide adequate investment information to plan participants; and breached their duty to monitor those responsible for managing the BP Stock Fund. The district court held that the stockholders had failed to overcome the Moench v. Robertson presumption and dismissed their claims. The stockholders appealed, and while their appeal was pending in this court, the Supreme Court issued Fifth Third Bancorp v. Dudenhoeffer, holding that there was no such “presumption of prudence” under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. On remand, the district court held that the stockholders had plausibly alleged that defendants had inside information; and the stockholders had plausibly alleged two alternative actions that defendants could have taken that met the Fifth Third standard: freezing, limiting, or restricting company stock purchases; and disclosing unfavorable information to the public. The district court granted the motion to amend with respect to pleading these alternative actions. It then certified defendants’ motion for interlocutory appeal. The court concluded, however, that the district court here erred when it altered the language of Fifth Third to reach its holding. Under the Supreme Court’s formulation, the plaintiff bears the significant burden of proposing an alternative course of action so clearly beneficial that a prudent fiduciary could not conclude that it would be more likely to harm the fund than to help it. In this case, the stockholders have failed to do so. Because the stockholders' amended complaint is insufficient and the district court erred in granting their motion to amend, the court reversed and remanded. View "Whitley v. BP, P.L.C." on Justia Law
Clark v. Feder Semo and Bard, P.C., et al.
Plaintiff filed suit against her former law firm alleging that decisions made by the firms' directors who administered the retirement plan breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. The court concluded that ERISA's adoption of the common law's standard of fiduciary care in section 1104(a)(1)(B) permitted prudent fiduciaries making important decisions to rely on the advice of counsel in appropriate circumstances. Therefore, the court affirmed the district court's conclusion that the directors rightfully relied upon the advice of the plan's lawyer.View "Clark v. Feder Semo and Bard, P.C., et al." on Justia Law
Tiblier, et al. v. Dlabal, et al.
Plaintiffs filed suit alleging violations of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. Plaintiffs claimed that the bonds that they invested in were an unsuitable investment for the Plans' funds and that defendant made multiple oral misrepresentations to plaintiffs in violation of his fiduciary duties. The district court ruled that there was a disputed issue of material fact as to whether defendant was an ERISA fiduciary, but nonetheless granted summary judgment because defendant provided plaintiffs with written disclosures. The court concluded that defendant did not qualify as a fiduciary under ERISA subsection 1002(21)(A)(i) because he did not exercise discretionary authority or control over the investment at issue; subsection 1002(21)(A)(ii) because he did not receive a fee from the Plans in connection with the investment; and section 1002(21)(A)(iii) because it was inapplicable in this instance. Accordingly, the court affirmed the judgment of the district court. View "Tiblier, et al. v. Dlabal, et al." on Justia Law
In Re: Lehman Bros. ERISA Litig.
Plaintiffs, former Lehman employees, filed suit alleging that defendants, members of the Benefits Committee, and the company's Directors, breached their duties under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. In regards to plaintiffs' claims that the Benefits Committee Defendants breached their duty of prudence in managing the company's employee stock ownership plan (ESOP), the court concluded that plaintiffs have not rebutted the Moench v. Robertson presumption because they failed to allege facts sufficient to show that the Benefits Committee Defendants knew or should have known that Lehman was in a "dire situation" based on information that was publicly available during the class period. In regards to plaintiffs' claims that the Benefits Committee Defendants breached their duty of disclosure, the publicly-known information available to defendants did not give rise to an independent duty to investigate Lehman's SEC filings prior to incorporating their content into a summary plan description issued to plan-participants. The court affirmed the district court's dismissal of plaintiffs' remaining claims. View "In Re: Lehman Bros. ERISA Litig." on Justia Law
Kopp v. Klein, et al.
Plaintiff brought a class action suit under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., alleging various breaches of fiduciary duty to plan participants. The district court dismissed the complaint for failure to state a claim. The court concluded that the district court correctly dismissed Counts I and IV of the amended complaint which alleged that Idearc Defendants breached their fiduciary duties by allowing plan participants to buy and hold Idearc stock when it was no longer prudent to do so where the amended complaint failed to allege sufficient facts to overcome the "presumption of prudence" the court adopted in Kirschbaum v. Reliant Energy Inc. The court also concluded that the district court correctly dismissed plaintiff's claim for inaccurate disclosures and nondisclosures (Count II) where plaintiff alleged no specific circumstance or specific injury mandating the Idearc Defendants disclose non-public information to plan participants and no general duty to disclose non-public information existed under ERISA or under the court's precedents. The court affirmed the district court's dismissal of plaintiff's remaining claims. View "Kopp v. Klein, et al." on Justia Law
Harris v. Amgen
Plaintiffs, current and former employees of Amgen and AML, participated in two employer-sponsored pension plans, the Amgen Plan and the AML Plan. The Plans were employee stock-ownership plans that qualified as "eligible individual account plans" (EIAPs) under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1107(d)(3)(A). Plaintiffs filed an ERISA class action against Amgen, AML, and others after the value of Amgen common stock fell, alleging that defendants breached their fiduciary duties under ERISA. The court concluded that defendants were not entitled to a presumption of prudence under Quan v. Computer Sciences Corp., that plaintiffs have stated claims under ERISA in Counts II through VI, and that Amgen was a properly named fiduciary under the Amgen Plan. Therefore, the court reversed the decision of the district court and remanded for further proceedings. View "Harris v. Amgen" on Justia Law
Pension Benefit Guaranty Corp. v. Morgan Stanley Inv. Mgmt. Inc.
Saint Vincent's alleged that Morgan Stanley - the fiduciary manager of the fixed-income portfolio of Saint Vincent Catholic Medical Centers Retirement Plan - violated its fiduciary duties under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. Saint Vincent's alleged that Morgan Stanley disproportionately invested the portfolio's assets in mortgaged-backed securities, including the purportedly riskier subcategory of "nonagency" mortgage-backed securities, despite warning signs that these investments were unsound. Although Saint Vincent's, as the fiduciary administrator of an ERISA-governed plan, was in a position to plead its claims with greater factual detail than was typically accessible to plaintiffs prior to discovery, and although it received two opportunities to amend its complaint, the Amended Complaint failed to plead sufficient, nonconclusory factual allegations to show that Morgan Stanley failed to meet its fiduciary responsibilities under ERISA. Accordingly, the court affirmed the district court's dismissal of the Amended Complaint. View "Pension Benefit Guaranty Corp. v. Morgan Stanley Inv. Mgmt. Inc." on Justia Law
Taveras v. UBS AG et al.
Plaintiffs brought a putative class action on behalf of current and former UBS and UBSFS employees, alleging that defendants violated various fiduciary duties imposed on them by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1001 et seq. Plaintiffs argued that the district court erred in analyzing their claim for breach of the duty of prudence, as it applied a presumption of prudence to the fiduciaries of both investment plans at issue. The court held that the district court wrongly applied the presumption as to one of the two plans, the Savings and Investment Plan (SIP), as the SIP Plan Document neither required nor strongly encouraged investment in UBS stock or the UBS Stock Fund. The court held, however, that the District Court correctly applied the presumption of prudence as to the second plan, the Plus Plan, which required plan fiduciaries to invest in the UBS Stock Fund. Accordingly, the court affirmed the dismissal order of the district court in part, vacated in part, and remanded the case for further proceedings. Plaintiffs' remaining arguments were addressed in a companion Summary Order. View "Taveras v. UBS AG et al." on Justia Law
Lanfear, et al. v. Home Depot, Inc., et al.
Plaintiffs claimed that the fiduciaries of their retirement plan violated the Employment Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., in ways that damaged their efforts to stockpile savings for their winter years. The court held that because plaintiffs have not pleaded facts establishing that defendants abused their discretion by following the Plan's directions, they have not stated a valid claim for breach of the duty of prudence. The court also held that plaintiffs have failed to state a viable breach of loyalty claim. Accordingly, the court affirmed the district court's dismissal of plaintiffs' third and last amended complaint. View "Lanfear, et al. v. Home Depot, Inc., et al." on Justia Law
Gearren, et al. v. The McGraw-Hill Companies, Inc., et al.
Plaintiffs appealed from a decision granting defendants' motion to dismiss plaintiffs' complaints for failure to state a claim upon which relief could be granted. Plaintiffs, participants in two retirement plans offered by defendants, brought suit alleging breach of fiduciary duty under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq. Plaintiff alleged that defendants acted imprudently by including employer stock as an investment option in the retirement plans and that defendants failed to provide adequate and truthful information to participants regarding the status of employer stock. The court held that the facts alleged by plaintiffs were, even if proven, insufficient to establish that defendants abused their discretion by continuing to offer plan participants the opportunity to invest in McGraw-Hill stock. The court also held that plaintiffs have not alleged facts sufficient to prove that defendants made any statements, while acting in a fiduciary capacity, that they knew to be false. Accordingly, the judgment was affirmed. View "Gearren, et al. v. The McGraw-Hill Companies, Inc., et al." on Justia Law