Yesterday, ERIC joined the US Chamber, SIFMA and the American Benefits Council in an amicus brief supporting IBM in the Second Circuit. As you may recall, we previously filed in this case in support of IBM’s petition for certiorari and at the merits stage in the Supreme Court. In January, the Supreme Court vacated the Second Circuit’s decision and remanded the case for further consideration. The amicus brief follows the brief we filed in the Supreme Court, arguing that the plaintiffs’ complaint fails to state a plausible claim for breach of the duty of prudence. Specifically, we argue that ERISA provides that fiduciaries may wear two hats and that ERISA should not be interpreted to create its own system of securities law. In addition, we argue that permitting meritless stock-drop cases to proceed to discovery would undermine the viability of ESOPs, which Congress has sought to protect.
A favorable decision in the Second Circuit could have a significant effect on ERISA stock-drop suits within the Second Circuit and could be persuasive authority in other Circuits, which would be important in preventing meritless stop-drop suits.
Article by Aliya Robinson, Senior Vice President of Retirement and Compensation Policy