U.S. Solicitor General Donald B. Verrilli Jr. said the U.S. Supreme Court should not review RJR Pension Investment Committee et al. vs. Richard Tatum et al., a complex reverse stock-drop case pending before the court.
“This case would be in any event a poor vehicle for consideration of the questions presented,” Mr. Verrilli wrote in a May 26 brief filed with the court, which had asked for the solicitor general's opinion in March.
RJR 401(k) plan executives had petitioned the Supreme Court in December to take the case, following a ruling by the 4th U.S. Circuit Court of Appeals in Richmond, Va., against the plan. Mr. Verrilli said the court should deny certiorari — decline to hear the case — because the appeals court ruled correctly.
The appeals court voted 2-1 in August 2014 to reverse a February 2013 decision by a U.S. District Court in Greensboro, N.C., supporting the plan and its administrators. The appeals court remanded the case to the District Court.
Participants filed a class-action lawsuit in May 2002 alleging breach of fiduciary duty relating to the former RJR Nabisco Holdings splitting into a separate tobacco company (R.J. Reynolds) and a food company (Nabisco).
When R.J. Reynolds was spun off, its new 401(k) plan's investment lineup included its publicly traded company stock. This 401(k) plan's lineup also contained shares of Nabisco, as well as shares of the former parent company, whose primary asset was its stake in Nabisco after the spinoff.
The RJR plan sold its Nabisco and former parent company shares at a loss in January 2000. Nabisco shares later rose thanks to a bidding war that led to Nabisco being acquired by Philip Morris Cos., in December, 2000.
The RJR 401(k) participants said plan executives breached their fiduciary duty in planning and executing the sale of the Nabisco and former parent company shares.
ERISA attorneys have said the Supreme Court's asking the solicitor general for comments on a pending case is a strong — but not guaranteed — indication that the court wishes to review a case.
“The solicitor general's expressing that certiorari should be denied has some persuasive impact on the Supreme Court's decision” to hear or reject a case, said Jeremy Blumenfeld, a partner at law firm Morgan Lewis & Bockius, who isn't involved in the litigation. “But it really depends on the reasons for the solicitor general's view. In ERISA cases in particular, the court has granted certiorari recently despite the solicitor general's views.”