Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Consultants
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Regulation
    • SECURE 2.0
    • Special Reports
    • Washington
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • ESG Investing | Industry Brief
    • Innovation in ESG Investing
    • 2023 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • The Plan Sponsor's Guide to Retirement Income
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2023 Defined Contribution East Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Research Center
    • The P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2023 Canadian Pension Risk Strategies
    • 2023 Retirement Income
Breadcrumb
  1. Home
  2. COURTS
April 29, 2019 01:00 AM

High court asked to revisit company stock fiduciary case

Robert Steyer
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    The Supreme Court has been asked to review an appeals court's ruling on stock-drop litigation guidelines set by the high court in 2014.

    Among the recent ERISA case petitions now before the Supreme Court, one asks the court to revisit its unanimous 2014 ruling that set a high bar for plaintiffs in making fiduciary breach claims about company stock in defined contribution plans.

    The court ruled in the 2014 case in Fifth Third Bancorp vs. Dudenhoeffer et al. — and which it reiterated in its 2016 decision in Harris vs. Amgen — on specific guidelines that lower courts should follow to determine if a complaint should be dismissed or be allowed to go to trial.

    In its March 8 petition, the Retirement Plans Committee of IBM asked the court to reaffirm its guidelines and declare that a New York federal appeals court was "plainly mistaken" in interpreting the stock-drop standards. The appeals court decision "reopens the door to lawyer-driven class actions that spring up after every stock drop," the petition said.

    The plaintiff, a participant in an IBM 401(k) plan, asked the Supreme Court to reject IBM's request, saying the appeals court correctly followed the litigation guidelines. "Lacking any basis to criticize" the decision, "petitioners make a variety of bombastic claims about the parade of horribles about to descend on the federal courts" due to the ruling, according to court documents.

    The IBM case — Retirement Plans Committee of IBM et al. vs. Larry W. Jander, et al. — represents a rare victory for plaintiffs.

    Since the Supreme Court's 2014 ruling, U.S. District Courts have repeatedly dismissed — backed by appeals courts — plaintiffs' allegations that sponsors violated ERISA in managing investment menus containing a company stock fund.

    Participants sued IBM in 2015, saying its 401(k) plan managers should have acted to protect holders of company stock due to IBM's writing down $2.4 billion of a troubled microelectronics unit and paying $1.5 billion to another company to take the unit.

    A District Court judge ruled in September 2016 and September 2017 that participants failed to show a prudent fiduciary could have taken actions without causing more harm than good, referencing the Supreme Court's guidelines.

    In December 2018, the 2nd Circuit Court of Appeals reversed and remanded the ruling. A three-judge panel said participants "plausibly allege" that plan managers "had the requisite knowledge" that IBM's stock was overvalued due to the microelectronics unit's problems. "The allegations regarding the sale of the microelectronics business … tip the scales toward plausibility," the court wrote.

    The appeals court ruling "is unsettling given Dudenhoeffer and Amgen," said Aliya Robinson, senior vice president, retirement compensation policy, for the ERISA Industry Committee, Washington.

    Her organization, the American Benefits Council and the U.S. Chamber of Commerce jointly filed an amicus brief arguing that if the appeals court decision prevails, employers will be discouraged from offering employee stock ownership plans "for fear of being forced into high-dollar settlements or incurring significant legal fees to defend imprudence claims."

    Related Articles
    Appeals court rejects Disney 401(k) participants' fiduciary breach complaint
    Wells Fargo settles charges of improper sales practices
    Kraft Heinz DC participants file suit over company stock decline
    More turning to Supreme Court for ERISA relief
    Parts of fiduciary lawsuit against University of Pennsylvania can go forward
    DOL to revisit fiduciary rule by December
    Recommended for You
    magna_HQ_1550_main_i.jpg
    401(k) lawsuit against Magna International Inc. of America can proceed
    gavel_scales_of_justice_1550-main.jpg
    CoreLogic hit with lawsuit over 401(k) fees, mutual fund options
    Verizon_logo_i.jpg
    Verizon to settle 7-year-old 401(k) lawsuit
    Quest for Quality Amid Market Turmoil
    Sponsored Content: Quest for Quality Amid Market Turmoil

    Reader Poll

    May 1, 2023
     
    SEE MORE POLLS >
    Sponsored
    White Papers
    Middle market credit: We’re gonna need a bigger boat
    Alternative Credit: Differences and Opportunities in CLOs and Credit Risk Shari…
    Fixed Income is Attractive, but Beware of "Fake" Yield
    Counting on a Crisis: A Catalyst for Investment Innovation?
    A Strategic Allocator's Guide to Productivity and Profits
    Research for Institutional Money Management
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    December 12, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Custom Content
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Regulation
      • SECURE 2.0
      • Special Reports
      • Washington
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • ESG Investing | Industry Brief
      • Innovation in ESG Investing
      • 2023 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • The Plan Sponsor's Guide to Retirement Income
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2023 Defined Contribution East Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Research Center
      • The P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2023 Canadian Pension Risk Strategies
      • 2023 Retirement Income