Anticipating the Outcome of Fifth Third on Fiduciary Breach Claims

February 18, 2014
01:00 PM - 02:00 PM

Morgan Lewis partners Brian T. Ortelere and Jeremy P. Blumenfeld will participate in Anticipating the Outcome of Fifth Third on Fiduciary Breach Claims, a webinar hosted by the Momentum Event Group

In the wake of a swift, and no doubt effective, kick from the United States Solicitor General, the United States Supreme Court, on December 13, 2013, granted certiorari in Fifth Third Bancorp v. Dudenhoeffer, No. 12-751, to decide whether the much ballyhooed Moench “presumption of prudence” should apply to fiduciary breach claims challenging 401(k) plan investments in employer stock.  The Sixth Circuit in Fifth Third held that, while the fiduciaries are entitled to a presumption of prudence, the presumption should not apply at the pleading stage of the litigation and that a plaintiff-participant need only demonstrate that “a prudent fiduciary acting under similar circumstances would have made a different investment decision”—a much less stringent standard than the “dire circumstances” test applied by most other Circuit Courts.  The Sixth Circuit’s substantive standard and refusal to apply the presumption upon consideration of a motion to dismiss represents a sharp departure from the extraordinarily fiduciary-friendly standards applied by all other Circuits that considered these issues.

Practitioners, fiduciaries, and plan sponsors have long taken comfort in the Circuit Courts’ receptiveness to the Moench standard and the Supreme Court’s grant of certiorari is a wakeup call to those who may once again be subjected to a deluge of claims challenging the reasonableness of investments in employer stock, which claims were often brought on the heels of even small declines in the price of that stock.  The government’s insistence that the presumption finds absolutely no support in ERISA and that application of the standard at the pleading stage is predicated upon “policy considerations that extent beyond ERISA’s text and are unconvincing in their own right,” requires familiarity with the both the litigation and its possible outcomes, and revisiting prophylactic steps to minimize litigation risks.

Join us during this engaging session as prominent ERISA litigators dissect the antecedents to the Supreme Court proceedings; prognosticate on possible outcomes; talk about related issues and defenses including the state of the case law on ERISA section 404© and, again, talk about best practices for the administration of such investments in an uncertain litigation environment.

Topics to be discussed during this session will include:

  • Background to and Sixth Circuit’s ruling in Fifth Third
  • The Moench presumption and its treatment in the Sixth Circuit
  • Overview of remaining Circuits’ treatment of Moench
  • Scope of the presumption
  • Rebutting the presumption
  • Application/timing of the Moench presumption at pleadings stage
  • Possible outcomes in Supreme Court
  • Review of recent Supreme Court ERISA rulings and possible impact on Fifth Third
  • Related timely issues
  • 404© safe harbor
  • Incorporation by reference of SEC filings, the issue refused in Fifth Third
  • Presumption of reliance, Ninth Circuit’s ruling in Harris v. Amgen
  • Best practices in an uncertain and unruly world

Tuesday, February 18, 2014
1-2 pm