Supreme Court Again Remands Amgen Case

In Amgen Inc. v. Harris, 577 U.S. ___, No. 15-278 (Jan. 25, 2016), the Supreme Court for the second time reversed the Ninth Circuit's decision on the prudence of continuing to hold employer stock in Amgen's 401(k) plan. The first time, the Supreme Court remanded the case after its ruling in Fifth Third v Dudenohoeffer eliminated the presumption of prudence rule (the "Moench presumption"). The Ninth Circuit on remand said that the fiduciaries should have removed Amgen stock, which would have the same effect on the market as disclosure of the potentially adverse information. The Supreme Court ruled that a plausible argument could be made along these lines, but "the facts and allegations supporting that proposition should appear in the stockholders' complaint. Having examined the complaint, the Court has not found sufficient facts and allegations to state a claim for breach of the duty of prudence." The Supreme Court said that the complaint needs to claim an alternative action that "a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the fund than to help it." The district court can now decide it if wants to allow the stockholders to amend their complaint.