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ESOP and 401(k) Plan Employer Stock Litigation Review 1990-2013
by Corey Rosen
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You also may be interested in our related publication ESOP Regulatory Rulings 1990-2013, which provides a summary of rulings and regulations on ESOPs and related plans.
Format: Photocopied, 53 pages
Publication date: August 2013
Status: In stock
- Summary of ESOP Case Decisions
- ESOP Cases
- Claims Against Providers
- Deferral of Gains Issues
- Disclosure of Information
- Employment Rights and Plan Eligibility Issues
- ESOPs as a Takeover Defense
- Executive Compensation
- Indemnification and Insurance
- Lenders as Fiduciaries
- Management of Plan Assets: General
- Management of Plan Assets: "Stock Drop" Cases
- Party-in-Interest Definitions
- S Corporation Anti-Abuse Rules
- Securities Law Issues Other Than Disclosure
- State Law Claims
- Voting, Tendering Rights, and ESOP Governance Rights
- Who Is a Fiduciary?
- 401(k) Cases
- Issues with Offering and Holding Company Stock Other than Presumption of Prudence
- Presumption of Prudence Issues
- Securities Law and Required Disclosure Issues: Disclosure May Be Required
- Securities Law and Required Disclosure Issues: Disclosure May Not Be Required
- Standing Affirmed for Former Participants
- Standing Not Affirmed for Former Participants
- Other Standing and Class Certification Issues
- Who Is a Fiduciary?
From "Presumption of Prudence Issues"Pfeil v. State Street Bank and Trust Co., No. 10-2302 (6th Cir. Feb. 22, 2012): The court reversed a lower court ruling (Pfeil v. State Street Bank and Trust Co., No. 09 CV 12229 [E.D. Mich. Sept. 30, 2010]) that dismissed claims that State Street should have removed GM stock from the ESOP component of GM's 401(k) plan by 2008 on the basis that employees could choose to invest in many investments, not just company stock, and participants had knowledge about GM's problems, In a significant departure from other appellate decisions, the Sixth Circuit ruled that the presumption of prudence is not a pleading requirement. In reaching its decision, the court turned to its precedent, Kuper v. Iovenko, 66 F.3d 1447 (6th Cir. 1995), which set the standard for the presumption of prudence in the Sixth Circuit. Under Kuper, a plaintiff may rebut the presumption of prudence by "showing that a prudent fiduciary acting under similar circumstances would have made a different investment decision."
Guididas v. Community National Bank Corp., No. 8:11-cv-02545- JSM-TBM (M.D. Fla. May 10, 2012): In a ruling two days after the Lanfear decision (see the next section) upholding a version of the presumption of prudence the court held that plaintiffs' allegations, if true, would meet the abuse of discretion standard laid out in Lanfear. Distinguishing the two cases, the court noted that plaintiffs in this case alleged that defendants operated the bank in a way that raised regulatory concerns about its safety and soundness.
Dalton v. Old Second Bancorp Inc., No. 1:11-cv-01112 (N.D. Ill. Nov. 2, 2012): A district court applied Sixth Circuit precedent that the presumption of prudence is not available at the pleading stage.
Griffin v. Flagstar Bancorp Inc., No. 11-1497 (6th Cir. July 23, 2012): The Sixth Circuit applied its recent decision in Pfeil v. State Street Bank and Trust Co., No. 10-2302 (6th Cir. Feb. 22, 2012) to reverse the lower court's dismissal of the case on presumption of prudence grounds.
Morrison v. Citizens Republic Bancorp, No. 2:11-cv-11709 (E.D. Mich. Aug. 20, 2012): A district court applied the Sixth Circuit case Pfeil v. State Street Bank and Trust Co., holding that neither the presumption of prudence nor safe harbor protections is available to defendants at the pleading stage.
Fisch v. Suntrust Banks Inc., No. 11-11607 (11th Cir. Mar. 15, 2013, unpublished): The Eleventh Circuit ruled that fiduciaries of SunTrust's 401(k) plan are not exempt from prudence rules under Eligible Individual Account Plan (EIAP) rules. A district court ruled that the claim was a "rebadged" failure to diversify claim and dismissed it, but the appeals court ruled that the claim actually was about the prudence of offering SunTrust stock, citing the decision in Lanfear v. Home Depot in the same circuit.
Taveras v. UBS AG, No. 12-1662 (2nd. Cir. Feb. 27, 2013): In this case, the Second Circuit narrowed the use of the Moench presumption. It agreed with a lower court that the presumption applied to one of the two plans in question because it required investment in employer stock, but the second plan did not have that requirement and thus created a higher standard for fiduciaries.