A federal appeals court in Washington has upheld a lower court's dismissal of a stock-drop lawsuit filed against Evercore Trust Co. in its role as fiduciary for a J.C. Penney Co. stock fund within the retailer's 401(k) plan.
Citing poor earnings and a declining stock price by J.C. Penney starting in 2012, a plan participant sued Evercore, saying it should have acted to eliminate the stock fund as an investment option and/or sell shares in the stock fund. In the case, Coburn v. Evercore Trust Co., J.C. Penney was not named as a defendant.
“We believe Coburn's claim falls far short” of establishing a basis for imprudence, the appeals court wrote. “Coburn's complaint was properly dismissed” by the District Court.
The company stock fund accounted for $95.4 million of the $2.7 billion J.C. Penney Corporation Inc. Savings, Profit-Sharing and Stock Ownership Plan as of Dec. 31, 2015, according to an 11-K filed with the Securities and Exchange Commission.
According to court documents, plan participant Donna Coburn — on behalf of herself and others — sued Evercore in 2015, alleging the company breached its fiduciary duty and was liable for an alleged $300 million in losses through its administration of the stock fund.
In February 2016, a U.S. District Court in Washington dismissed the complaint, saying Ms. Coburn failed to state a claim that Evercore acted imprudently.
