Harris v. Amgen, Inc.

An employer has a fiduciary duty to employer-sponsored pension plan participants under the Employee Retirement Income Security Act and the employer violates the Employee Retirement Income Security Act by failing to provide material information about the investment fund.

In March 2010, current and former employees (collectively “plaintiffs”) of Amgen, Inc. and its subsidiary (collectively “Amgen”) brought a class action lawsuit pursuant to the Employee Retirement Income Security Act (“ERISA”), asserting that Amgen breached their fiduciary duties vis-à-vis employer-sponsored pension plans (the “Plans”). The plaintiffs stock ownership plans qualified as “eligible individual account plans” and included the Amgen Common Stock Fund, which only held Amgen common stock. The district court dismissed the class action because Amgen was not a fiduciary under a “presumption of prudence.” The United States Supreme Court remanded for reconsideration consistent with Fifth Third Bancorp v. Dudenhoeffer, which held that the presumption of prudence is not applicable to fiduciaries, except that fiduciaries have no statutory duty to diversify holdings. Accordingly, the Ninth Circuit concluded that Amgen was a properly named fiduciary and violated their fiduciary duty by providing Amgen common stock as an investment option when they knew or should have known that the stock price was being artificially inflated. Further, the panel determined Amgen violated their duty of loyalty and care under ERISA by not providing plan participants material information regarding investment alternatives of the Amgen Common Stock Fund, finding that Amgen did more than act in their corporate capacity by preparing and distributing summary plan distributions to plan participants, in which Amgen incorporated Securities Exchange Commission filings by reference. Hence, it was possible for Amgen to remove the Amgen Stock Fund from the investment alternatives available to plan participants without considerable adverse impact on the share price. Lastly, the panel found that Amgen is a fiduciary because the Plans did not clearly delegate exclusive authority to its trustees and investment managers in regards to managing investments. REVERSED and REMANDED.