Stock Drop

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Since the Supreme Court’s ruling in Fifth Third Bancorp v. Dudenhoeffer, courts around the country have overwhelmingly rejected ERISA fiduciary-breach claims by 401(k) plan participants seeking relief related to investments in company stock funds.  The Seventh Circuit recently continued that trend by affirming the dismissal of claims brought by participants in the Boeing 401(k) plan, but did so on grounds that (i) the fiduciary responsibilities associated with the company stock fund had been delegated to an independent fiduciary, and (ii) the insider fiduciaries had no duty to disclose corporate inside information to the plan participants or the independent fiduciary.  Burke v. The Boeing Co., No. 20-3389 (7th Cir. Aug. 1, 2022).  As discussed below, the Seventh Circuit’s opinion provides helpful guidance to plan sponsors and fiduciaries that go beyond the specific circumstances presented in the case.

In December 2018, we reported here that the Second Circuit became the first court at any level to allow an ERISA stock-drop claim to survive a motion to dismiss since the Supreme Court revamped the pleading standard for such claims several years ago.  The Second Circuit reinstated a claim for breach of fiduciary duty under…

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…