A stock drop case against Eastman Kodak Co. and plan fiduciaries is allowed to continue.
In a Wednesday ruling, U.S. District Court Judge David Larimer of the Western District of New York in Rochester denied the company's motion to dismiss, saying “plaintiffs have stated a facially valid claim.”
The case consolidates seven suits filed by participants and beneficiaries of the Savings and Investment Plan of Eastman Kodak Company and the Eastman Kodak Stock Ownership Plan against the plan administrators and fiduciaries as the company went through bankruptcy. The size of the plans could not be learned by press time.
Mr. Larimer noted “the United States Supreme Court changed the legal landscape” in its June 25 decision in Fifth Third Bancorp et al. vs. Dudenhoeffer et al., which removed a presumption of prudence standard, but he said that in the Kodak case, “accepting the truth of plaintiffs' allegations, a reasonable fact-finder could conclude that at some point during the class period, the ESOP fiduciary should have stepped in and, rather than blindly following the plan directive to invest primarily in Kodak stock, shifted the plan's assets into more stable investments, as permitted by the plan document, and as consistent with the plan's and ERISA's purposes.”