ERISA-D.C. Circuit Upholds Dismissal Of Stock Drop Case Based On Breach Of Fiduciary Duty

In Coburn v. Evercore, No.16-7029 (D.C. Cir. Dec. 30, 2016), Donna M. Coburn (“Coburn”), on behalf of herself and all others similarly situated, appeals the district court’s dismissal of her complaint against Evercore Trust Company, N.A. (“Evercore”) under ERISA.  Coburn, a former J.C. Penney employee and investor in a J.C. Penney employee stock ownership plan (ESOP) managed by Evercore, claims that Evercore breached its fiduciary duties of prudence and loyalty when it failed to take preventative action as the value of J.C. Penney common stock tumbled between 2012 and 2013, thereby causing significant losses.

Despite clear factual similarities, Coburn argues, on appeal, that the pleading requirements outlined by the U.S. Supreme Court in Fifth Third Bancorp v. Dudenhoeffer are inapplicable to her allegations because she challenges Evercore’s failure to appreciate the riskiness of J.C. Penney stock rather than Evercore’s valuation of its price.  The D.C. Circuit Court of Appeals said that it disagrees with Coburn’s arguments, therefore it affirms the district court’s judgment.

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