Before last year’s Supreme Court’s decision in Fifth Third Bancorp v. Dudenhoeffer, 134 S. Ct. 2459, 58 EBC 1405 (U.S. 2014)(123 PBD, 6/26/14), the law in almost every Circuit entitled ERISA fiduciaries to a presumption that they acted prudently by offering employer stock as an investment option in a defined contribution plan. In Dudenhoeffer, the Supreme Court surprised many in the industry by eliminating this presumption. Many viewed the opinion as a boon to plaintiffs, while others predicted that Dudenhoeffer’s framework for analyzing such claims at the pleadings stage would ultimately make it more difficult for plaintiffs to craft complaints that could survive a motion to dismiss.
Now that over a year has passed, this article will discuss how those predictions have fared in light of recent court opinions applying Dudenhoeffer. This article also will provide considerations for practitioners and fiduciaries in defending against and managing litigation risk associated with ERISA stock drop claims.
Reproduced with permission from Pension & Benefits Daily, 172 PBD, 09/04/2015. Copyright 2015 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com