Retirement Plans Comm. of IBM v. Jander

In Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. 409 (2014), the United States Supreme Court held that claims for breach of the duty of prudence by fiduciaries under the Employee Retirement Income Security Act of 1974 must be supported by a plausible allegation from the plaintiff that a prudent fiduciary in the same circumstances could have taken an alternative action that would not have done the fund more harm than good.

Petitioners were members of IBM’s Retirement Plans Committee and were sued by for allegedly artificially inflating the market price of IBM’s common stock. Respondents then filed an Employee Retirement Income Security Act of 1974 (ERISA) action for the fraudulent activates alleged in the first suit and asserted that Petitioners had breached their fiduciary duty. Respondents alleged that the imprudent investment at issue in the first suit violated the fiduciary duty of prudence under § 404 of ERISA. The suits were dismissed in district court, which ruled Respondents' pleadings failed to demonstrate that Petitioners could not have concluded that publicly disclosing the alleged fraud or halting further investments would be more likely to harm the fund than help it. The United States Court of Appeals for the Second Circuit reversed the dismissal and held that Respondents sufficiently pleaded facts through generalized allegations. Petitioners appealed, presenting to the United States Supreme Court the question of whether the Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. 409 (2014) “more harm than good” pleading standard could be met with generalized allegations. The Supreme Court determined that both Petitioners' and Respondents' briefs focused on other arguments involving inside information rather than the Fifth Third Bancorp pleading requirements. The Court held that the Second Circuit should decide whether these arguments have merit and take action as it deems appropriate. VACATED and REMANDED.