Earlier today, in Fifth Third Bancorp v. Dudenhoeffer, the U.S. Supreme Court declined to adopt the so-called Moench presumption of prudence pursuant to which many circuit courts had dismissed ERISA stock drop claims unless plan participants had pled allegations that the company’s economic situation was dire or the company was on the brink of collapse. The Court, however, made it clear that, to withstand a motion to dismiss, a participant would have to plead facts and circumstances that could plausibly lead to the conclusion that the plan fiduciaries acted imprudently, taking into account the unique circumstances presented by ESOPs. The Court stated that, absent “special circumstances,” allegations that plan fiduciaries should have recognized from publicly available information that a company stock fund was under- or overvalued are “implausible as a general rule.” Where a claim of imprudence is premised on nonpublic information, “a plaintiff must plausibly allege an alternative action that the defendant could have taken that would have been consistent with the securities laws and that a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the fund than to help it.”

Watch for our in-depth analysis of the Court’s decision, and tune into Proskauer’s Webinar tomorrow, June 26, 2014, to hear our views on the decision and its implications for plan sponsors and fiduciaries. Please follow these steps to register for the webinar or webinars you would like to attend:

  • Go to: https://university2.learnlive.com/?ReturnUrl=%2funiversity%2fproskaueronlineevents.
  • If you are a first time user, create a new account by clicking the “New User Registration” button and completing the New User Registration fields. The Company Pass Code is 9736529. If you are a returning user, login with your existing account information.
  • Click the “Submit” button.
  • This will bring you to the Catalog page.
  • Click the “Enroll” button for the session titled: Fifth Third Bancorp v. Dudenhoeffer – An Analysis of the Supreme Court’s Decision
Posted in Employer Stock Fund Litigation
Tags: Employee Stock Ownership Plan, ESOP, Moench Presumption, Presumption of Prudence, U.S. Supreme Court
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Photo of Russell Hirschhorn Russell Hirschhorn

“Russell has strong subject matter expertise.”

“Russ is extremely responsive and practical. He listens to the client perspective and is hands on and engaged, while also delegating work as appropriate.” 

-Chambers USA

Russell L. Hirschhorn is co-head of Proskauer’s premier ERISA Litigation Group…

“Russell has strong subject matter expertise.”

“Russ is extremely responsive and practical. He listens to the client perspective and is hands on and engaged, while also delegating work as appropriate.” 

-Chambers USA

Russell L. Hirschhorn is co-head of Proskauer’s premier ERISA Litigation Group, which is a significant component of the firm’s ERISA Practice Center and globally renowned Labor and Employment Law Department.  Russell’s practice focuses on employee benefits issues arising under the Employee Retirement Income Security Act of 1974 (ERISA), including class action and complex litigation, U.S. Department of Labor and Internal Revenue Service investigations, and counseling clients on best practices to avoid litigation.

Russell has more than two decades of experience representing plan sponsors, fiduciaries, trustees, and service providers across the country.  His work on behalf of clients has included all types of plans, including 401(k) plans, 403(b) plans, defined benefit plans, employee stock ownership plans, executive compensation plans, health and welfare plans, multiemployer plans, multiple employer plans, and severance plans.  And, it has included the full gamut of claims arising under ERISA, including excessive investment and plan administration fees and investment underperformance claims; cash balance plan litigation; claims for benefits; company stock fund cases; claims for delinquent contributions; ERISA § 510 claims; ERISA statutory claims; ESOP litigation; executive compensation claims; independent contractor claims; independent fiduciary representations; multiemployer fund litigation; plan service provider claims; recoupment of plan overpayments; retiree benefits claims; severance plan claims; and withdrawal liability claims.

Deeply dedicated to pro bono work, Russell has been recognized on several occasions for his commitment to pro bono work including by President George W. Bush in receiving the U.S. President’s Volunteer Service Award.  His pro bono work has included serving as lead litigation counsel in several impact litigations: on behalf of social security recipients whose benefits were unlawfully suspended based on an outstanding warrant, deaf and hard of hearing prisoners in Louisiana prisons seeking disability accommodations, and Swartzentruber Amish in upstate New York to obtain religious exemptions from certain building code requirements. Russell also was a principal drafter of several amicus briefs for the Innocence Project, a legal non-profit committed to exonerating wrongly convicted people.

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