ERISA-Fifth Circuit Holds That Plaintiff’s Complaint-Alleging Breach Of Duty of Loyalty And Prudence When Managing The Company Stock Fund-Did Not State A Claim Against The Defendants

In Kopp v. Klein, No. 16-11590 (5th Cir. 2018), Randy Kopp, a former employee of Idearc, Inc., filed this action on behalf of himself and a putative class of participants in, and beneficiaries of, Idearc’s retirement benefits plan.  He asserted that the defendants breached their duties of loyalty and prudence as ERISA fiduciaries in managing the company’s stock fund, resulting in the depletion of millions of dollars of the retirement savings and anticipated retirement income of the plan participants. The district court dismissed Kopp’s complaint for the failure to state a claim.

Upon reviewing the case, the Eighth Circuit Court of Appeals (the “Court”) affirmed the district court’s decision.  The Court found that, in this ERISA action, the plaintiff had not plausibly alleged an alternative action that defendants would have taken if they had considered the possibility of a response to the rapidly increasing instability of the company.  Also, the employee’s allegations did not give rise to a plausible inference that defendants’ concern about the stock price was self-serving.  At most, the complaint alleged that defendants took steps to protect the value of the stock—a course of action that was equally consistent with protecting the retirement savings plan’s existing holdings of the company’s stock.

Posted in:

Comments are closed.