PSCA Joins Amicus Curiae Brief in Supreme Court ESOP Case

PSCA joined four other benefits associations on an amicus curiae brief in Fifth Third Bancorp v Dudenhoeffer. The Supreme Court is reviewing whether the Sixth Circuit Court of Appeals “erred by holding that respondents were not required to plausibly allege in their complaint that the fiduciaries of an employee stock ownership plan abused their discretion by remaining invested in employer stock, in order to overcome the presumption that their decision to invest in employer stock was reasonable, as required by the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1101 et seq. (“ERISA”), and every other circuit to address the issue.”  At issue is the Sixth Circuit’s variance from that held in several other Circuits that, in order to overcome a motion to dismiss, a plaintiff must reasonably allege that a plan sponsor is in “dire financial condition,” meaning that viability as an ongoing concern is threatened.   The Sixth Circuit held that the plaintiff was only required to allege that “a prudent fiduciary acting under similar circumstances would have made a different investment decision.”  Additionally, and importantly, the Sixth Circuit also held that the presumption does not apply at the motion to dismiss stage, but must be adjudicated at trial.  PSCA urged the court to reject the Sixth Circuit decision.