Morgan Lewis Team Wins Second Post-Enron ERISA “Stock Drop” Trial for Tellabs

In only the second post-Enron ERISA “stock drop” case to go to trial—and the second to be tried by Morgan Lewis—a trial team led by Labor and Employment partners Chuck Jackson, Debbie Davidson, and Sari Alamuddin secured a complete victory for Tellabs and its 401(k) plan fiduciaries (Brieger, et al. v. Tellabs, No. 06-1882 (N.D. Ill., June 1, 2009)).

The Brieger plaintiffs, on behalf of a nationwide class of plan participants, alleged that Tellabs stock was an “imprudent” 401(k) plan investment option under ERISA because (1) Tellabs executives (who were also plan fiduciaries) made misstatements to the market and to participants regarding sales/demand for Tellabs’ products, which operated to artificially inflate the stock price; and (2) the stock lost about 90% of its value between December 2000 and July 2003, when Tellabs and other telecom companies went through a significant industry downturn and Tellabs had reduced sales and multiple rounds of layoffs.

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