ERISA-Second Circuit Upholds District Court’s Dismissal Of Plaintiff’s Complaint Under ERISA For Failing To State Claims For Which Relief Can Be Granted

In Allen v. Credit Suisse Securities (USA), Nos. 16-3327-cv (L), 16-3571-cv (CON (2nd Cir. 2018)), the Second Circuit Court of Appeals (the “Court”) faced an appeal from a judgment by the district court, dismissing plaintiffs’ ERISA complaint for failure to state claims for which relief can be granted.  On the appeal, the plaintiffs fault the district court for failing to recognize that the defendant banks acted as ERISA functional fiduciaries in conducting foreign currency exchange transactions at issue and, thus, that their alleged manipulation of the foreign exchange market breached ERISA fiduciary duties owed to plaintiffs’ employee benefit plans.  Plaintiffs further fault the district court’s denial of their request for a 60-day adjournment and leave to file a fourth amended complaint.

Upon reviewing the case, the Court concluded that:

  1. Plaintiffs fail to allege facts showing that the defendant banks and their affiliates exercised the requisite level of control over the disposition of Plan assets so as to warrant their identification as ERISA functional fiduciaries with respect to the FX transactions at issue.
  2. Because plaintiffs here pursue their party-in-interest claim not in the alternative to, but in reliance on, their functional fiduciary theory, the claim necessarily fails for lack of the requisite proof of control.
  3. The district court neither committed legal error nor abused its discretion in denying plaintiffs an adjournment to conduct further investigation in anticipation of amending their complaint for a fourth time.

Accordingly, Court affirmed the district court’s judgment of dismissal.