Employee Benefits & Executive Compensation Blog

The View from Proskauer on Developments in the World of Employee Benefits, Executive Compensation & ERISA Litigation

Tag Archives: Employer Stock Fund Litigation

Sixth Circuit Dismisses ERISA Stock Drop Action Against Cliffs Natural Resources

The Sixth Circuit affirmed the dismissal of ERISA stock drop claims by participants in the Cliffs Natural Resources’ 401(k) Plan. The participants alleged fiduciary breach claims based on public and non-public information arising out of the collapse in iron ore prices that caused the company’s stock price to decline 95%. With respect to the public information claim, … Continue Reading

District Court Applies Dudenhoeffer “More Harm Than Good” Standard to Closely-Held Corporation

A federal district court in Mississippi ruled for the first time that the “more harm than good” pleading standard established by the Supreme Court in Fifth Third Bancorp v. Dudenhoeffer, 134 S. Ct. 2459 (2014), applied to employer “stock drop” claims brought against the fiduciaries of plans sponsored by closely-held corporations. Hill Brothers Construction Company, … Continue Reading

On Remand, District Court Rules for the Fiduciaries in Tatum v. R.J. Reynolds

The R.J. Reynolds defendants have again prevailed against allegations that they breached their fiduciary duties by divesting the RJR 401(k) plan of funds invested in Nabisco stock.  Following remand by the Fourth Circuit, the district court held that a hypothetical fiduciary “would” have divested the plan of the Nabisco investments in the same time and … Continue Reading

Eleventh Circuit Again Affirms Dismissal of Stock Drop Claim Against Delta Air Lines

The Eleventh Circuit affirmed dismissal of ERISA breach of fiduciary claims against Delta Air Lines and other alleged plan fiduciaries in connection with a defined contribution plan’s investments in Delta Air Lines stock.   In so ruling, the Court joined a growing number of decisions following Dudenhoeffer that have dismissed claims based on public information.… Continue Reading

Supreme Court Denies Review of Fourth Circuit Loss Causation Case

The U.S. Supreme Court recently declined to grant certiorari to review the Fourth Circuit’s decision in RJR Pension Investment, et al. v. Tatum, 761 F.3d 363 (4th Cir. 2014).  As we previously reported here, a divided panel of the Fourth Circuit held that, because the plaintiff proved that the plan fiduciaries acted imprudently by liquidating … Continue Reading

Second Circuit Affirms Dismissal of ERISA Stock Drop Claims

The Second Circuit recently affirmed the dismissal of an ERISA stock drop class action because, like the district court, it held that Named Plaintiff Debra Taveras lacked constitutional standing to pursue her claims.  Taveras alleged that defendants, which included UBS and a number of individuals, breached their fiduciary duties by maintaining the company stock fund … Continue Reading

Settlement Reached in Stock-Drop Case

A class of former LandAmerica Financial Group employees agreed to a $5 million settlement of stock-drop claims arising from LandAmerica’s 2008 bankruptcy, and have submitted the agreement for court approval.  LandAmerica filed for bankruptcy following the 2008 collapse of its title insurance subsidiary. … Continue Reading

Divided Fourth Circuit Panel Rules On Burden of Proving Loss Causation in ERISA Fiduciary Breach Case

“As for those who might contemplate future service as plan fiduciaries, all I can say is: Good luck.”  That was the sentiment expressed in a blistering dissent by Fourth Circuit Judge J. Harvie Wilkinson in the latest ruling in a lawsuit challenging the decision by the fiduicaries of the RJR 401(k) plan to liquidate two … Continue Reading

High Court Employee Benefits Cases: A Review and Look Ahead

Having settled into the new year, we reflect on decisions from the U.S. Supreme Court in 2013 that are likely to have a significant impact in the world of pension and welfare employee benefits and, in some cases, already have had such an impact. The issues addressed by the Supreme Court are wide ranging and … Continue Reading

Regions Financial Agrees to Pay $22.5 Million to Settle ERISA Stock-Drop Litigation

According to a December 18, 2013 motion for preliminary approval, Regions Financial Corp. has agreed to pay $22.5 million to settle an ERISA stock-drop litigation pending in the Western District of Tennessee. Plaintiffs alleged that defendants, which included members of the plan investment committees, among others, imprudently retained Regions Financial stock as an employee retirement … Continue Reading

Second Circuit Dismisses Lehman Brother’s ERISA Stock-Drop Action

The Second Circuit recently affirmed the dismissal of former Lehman Brothers employees’ fiduciary breach claims relating to their investment in the Lehman Brothers stock fund through their 401(k) plan. Rinehart v. Akers, 2013 WL 3491281 (2d Cir. July 15, 2013). As is typical for cases of this type, the complaint included both a claim for … Continue Reading

Second Circuit Issues Additional Ruling on Scope of Moench Presumption

In Taveras v. UBS AG, 2013 WL 692535 (2d Cir. Feb. 27, 2013), the Second Circuit held the Moench presumption of prudence did not apply to fiduciaries of an eligible individual account plan where the plan document neither required nor “strongly” encouraged investment in the defendant’s stock fund. The Court accordingly reversed and remanded a … Continue Reading
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