A federal appeals court judge ruled Thursday that an ERISA case challenging a presumption of prudence for employee stock ownership plans can continue.
Writing the opinion for Harris vs. Amgen Inc., 9th U.S. Circuit Court of Appeals Judge William Fletcher in San Francisco upheld its previous ruling that the presumption of prudence did not apply, and that the plaintiffs — current and former Amgen employees — had sufficiently alleged violation of fiduciary duties.
The latest ruling was triggered by a June 25 U.S. Supreme Court decision in Fifth Third Bancorp et al. vs. Dudenhoeffer et al. that removed the presumption of prudence standard often used by defined contribution plans to defend their use of employer stock against fiduciary-breach lawsuits when the company stock sank. The unanimous Supreme Court decision also established several guidelines for lower courts to determine whether stock-drop lawsuits should proceed to trial. Rebuffing a petition by Amgen, the Supreme Court sent Harris v. Amgen back to the 9th Circuit Court.
“On reconsideration in light of Fifth Third, we again reverse the district court’s dismissal,” Mr. Fletcher wrote.