News & Events

Today, the Supreme Court clarified the requirements for pleading an Employee Retirement Income Security Act (ERISA) breach of the duty of prudence claim involving Employee Stock Ownership Plans (ESOPs), employee benefit plans that invest primarily in employer stock.  The Court concluded, in a unanimous opinion, that ESOP fiduciaries are not entitled to a special presumption of prudence.  At the same time, however, the Court articulated alternative defenses that defendants can assert in response to ERISA stock drop cases, including, for example, that a complaint fails to plausibly allege a legal alternative action that the defendant could have taken that a prudent fiduciary in the same circumstances would not have viewed as more likely to harm than to help.  The Court also held that allegations that defendants should have sold based on publicly available information are generally insufficient to state a claim.  Moreover, ERISA does not require a fiduciary to break the law by acting on non-public or inside information.