Keller Rohrback Files Amici Curiae Brief as Counsel for Law Professors in Support of Respondents in Fifth Third Bancorp, et al. C. John Dudenhoeffer, et al. Before the U.S. Supreme Court
SEATTLE, WA. March 6, 2014 (GLOBE NEWSWIRE). Keller Rohrback L.L.P. recently filed an Amici Curiae Brief (“Brief”) with the U.S. Supreme Court in support of John Dudenhoeffer, et al. (“Respondents”) arguing that the judgment of the Sixth Circuit Court of Appeals in Dudenhoeffer v. Fifth Third Bancorp. should be affirmed.
Dudenhoeffer was a former employee of Fifth Third Bank and a participant in the company’s 401(k) retirement plan. At the time of the loss a large amount of the retirement plan’s assets were invested in Fifth Third stock. Dudenhoefferalleges that the retirement plan fiduciaries knew or should have known that continuing to own and invest in the employer stock was imprudent and that the stock’s price was artificially inflated due to risks that were not disclosed to the participants. The complaint alleges that, despite their knowledge, the fiduciaries took no steps whatsoever to protect employees.
The Dudenhoeffer case on appeal concerns the presumption of prudence, a judge-made standard originated by the Third Circuit Court of Appeals in 1995 in Moench v. Robertson, which states that ERISA fiduciaries of employee stock ownership plans (“ESOPs”) are entitled to a presumption that their investment decisions concerning employer stock are prudent.
Drawing on ERISA’s statutory language, statutory purpose, and legislative history, the law professors’ Amici Curiae Briefargues that the presumption of prudence should “not be applied to any stage of the proceedings” and should be rejected by the Court in the interest of protecting the rights of retirement plan participants and beneficiaries under ERISA.
The Brief notes that in the last two decades, there has been a dramatic shift in retirement plans from defined benefit to defined contribution plans such as the 401(k) plan at issue in Dudenhoeffer. Accordingly, the Brief argues that “resolution of the issues in this case is enormously important, as it potentially affects the retirement income security of millions of plan participants.”
The Brief recognizes that the collapse of Enron raised the national awareness of the problem of employee ownership of a company. At year-end 2000, about 60% of Enron’s plan assets were in the Enron stock fund. The market price of a share of Enron stock fell from a high of nearly $90 to less than a dollar one year later. When Enron Corp. collapsed, the employees of Enron lost their retirement savings at the same time they lost their jobs. The Brief notes that if the artificially high standard for overcoming the presumption of prudence that the Dudenhoeffer defendants propose is adopted by the Supreme Court, fiduciaries would be immunized from misconduct concerning company stock in virtually every case – even in a situation like Enron. This could put employee retirement plans in grave danger.
Oral argument in Dudenhoeffer is scheduled for April 2, 2014, with an opinion expected by June.
Keller Rohrback has extensive ERISA experience. Its lawyers have been involved in numerous ERISA company stock cases similar to Dudenhoeffer, including the leading retirement plan cases involving the collapse of Enron, WorldCom and Global Crossing. Our attorneys are frequently invited to speak at ERISA continuing legal education seminars and conferences. Additionally, Keller Rohrback attorneys have written numerous other ERISA-related amicus briefs and articles.
If you would like more information regarding the Amici Curiae Brief filed in the Dudenhoeffer ERISA litigation or you would like to speak with someone regarding Keller Rohrback’s experience litigating ERISA cases, please contact attorneys Lynn Sarko and Erin Riley at (800) 776-6044 or via email at firstname.lastname@example.org.
With offices in Seattle, Phoenix, New York, and Santa Barbara, Keller Rohrback serves as lead and co-lead counsel in ERISA cases throughout the country. Our Complex Litigation Group is proud to offer its expertise to clients nationwide, and our trial lawyers have obtained judgments and settlements on behalf of clients in excess of seven billion dollars.
Brief for Law Professors as Amici Curiae in Support of the Respondents, Fifth Third Bancorp v. Dudenhoeffer, No. 12-751 (U.S. March 5, 2014)
Keller Rohrback L.L.P.
Lynn Sarko or Erin Riley