The U.S. Supreme Court hasn't shown interest in revisiting its 2014 stock-drop ruling in Fifth Third Bancorp et al. vs. Dudenhoeffer et al., having rebuffed two attempts this year from different defined contribution plan participants who sought to expand the scope of that ruling.
In late June, the court offered no comment in declining to hear a petition from participants in two General Motors Co. 401(k) plans who alleged the independent fiduciary of a GM stock fund violated its ERISA duties.
In Pfeil et al. vs. State Street Bank & Trust Co. et al., participants said the fiduciary should have acted sooner to freeze and sell GM stock during the economic crisis of 2008-"09. The participants didn't sue GM.
In November 2015, the 6th U.S. Circuit Court of Appeals in Cincinnati upheld a Detroit U.S. District Court judge's summary judgment for State Street in 2014. When they sought Supreme Court review, participants argued the appeals court had misinterpreted the Dudenhoeffer ruling.
In January, the Supreme Courtissued an unsigned opinion in Amgen et al. vs. Harris et al., reversing a ruling by the 9th U.S. Circuit Court of Appeals. In a case stretching back to 2007, participants had argued that DC plan fiduciaries violated their ERISA duties in managing Amgen Inc. stock funds in two defined contribution plans.
In 2010, a U.S. District Court dismissed the claim, but the appeals court reversed the decision in 2013 and remanded the case. Amgen petitioned the Supreme Court. While this appeal was pending, the Supreme Court issued its Dudenhoeffer ruling, then vacated the appeals court's ruling and remanded the case.
The district court again dismissed the complaint, the appeals court again reversed it, and Amgen again appealed to the Supreme Court. “The 9th Circuit failed to properly evaluate the complaint,” the Supreme Court wrote in January, reversing the appeals court and remanding the case.
“This was a real exclamation point for lawyers defending sponsors,” said James P. McElligott Jr., a Richmond, Va.-based partner for McGuire Woods LLP, who represents sponsors in stock-drop cases.
“The court sent a very stern message to the plaintiffs' bar,” added Nancy Ross, a partner in the law firm Mayer Brown, Chicago, who also represents sponsors in stock-drop cases.
