The First Case of Its Kind: Morgan Lewis Team Wins Post-Enron ERISA “Stock Drop” Trial for US Airways

In the first post-Enron “stock drop” case to go to judgment following a trial, DiFelice v. US Airways, Inc., Case No. 1:04cv889 (E.D. Va. June 26, 2006), a Morgan Lewis team headed by Labor and Employment Law partners Charles C. Jackson and Christopher A. Weals prevailed at trial in an ERISA class action brought against US Airways, Inc. (http://www.usairways.com). The court held that US Airways did not breach its fiduciary duties under ERISA by continuing to permit voluntary investment in the stock of its parent corporation, US Airways Group, Inc., in the company’s 401(k) plan during the months leading up to US Airways’ bankruptcy in 2002.

In addition to the company stock fund, the US Airways 401(k) plan offered 12 different investment options with varying levels of risk and return. The court found that the plan’s investment options were sufficiently diverse enough that participants could select a portfolio mix that achieved their individually desired level of risk and return. During the period covered by the lawsuit, approximately 5% of the plan’s assets were invested in the company stock fund.

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