Pension & Benefits Daily™ covers all major legislative, regulatory, legal, and industry developments in the area of employee benefits every business day, focusing on actions by Congress,...
Aug. 29 — A Georgia bank formerly known as First Citizens Bankshares Inc. must defend claims that it failed to investigate whether its employees should continue investing retirement savings in company stock that declined from $340 to $29 per share ( Brannen v. First Citizens Bankshares Inc. , 2016 BL 278918, S.D. Ga., No. 6:15-cv-00030, 8/26/16 ).
In partly denying the bank’s motion to dismiss, a federal judge on Aug. 26 drew a distinction between claims challenging the decision to invest in company stock and claims challenging the failure to adequately investigate the propriety of that investment going forward. The judge allowed the investigation claim to proceed but dismissed the investment claim as time-barred under the Employee Retirement Income Security Act.
The judge’s ruling is significant in the world of ERISA litigation because he assumed without deciding that a recent U.S. Supreme Court decision on ERISA-based challenges to employer stock drops would apply to the stock plans of privately held companies. This assumption runs contrary to the Department of Labor’s stated position and a decision by the U.S. Court of Appeals for the Seventh Circuit issued just one day before the judge decided this case.
Rather than focusing on the distinction between public and private company employee stock ownership plans, which the parties debated at length in their briefs, the judge said that the relevant distinction was between claims challenging investment decisions by plan fiduciaries and accusations that fiduciaries failed to investigate whether employer stock remained a prudent investment.
Because the latter accusation wasn’t subject to the Supreme Court’s new pleading requirements—specifically, the requirement that plaintiffs plead an alternative course of action that plan fiduciaries could have taken—the judge allowed this claim to proceed against the bank.
However, the judge dismissed several remaining claims in the lawsuit, including claims of disloyalty and claims seeking equitable relief. Claims that the bank failed to honor a participant’s distribution request remain pending.
Judge J. Randal Hall of the U.S. District Court for the Southern District of Georgia wrote the decision.
The plan participant who filed suit is represented by Fortson Bentley & Griffin PA, Epps Holloway Deloach & Hoipkemier LLC and Monnolly Pridgen Colon-Machargo & Ellenberg LLC. The bank is represented by Bryan Cave LLP.
To contact the reporter on this story: Jacklyn Wille in Washington at email@example.com
To contact the editor responsible for this story: Jo-el J. Meyer at firstname.lastname@example.org
Text of the decision is at http://www.bloomberglaw.com/public/document/Brannen_v_First_Citizens_Bankshares_Inc_No_615cv30_2016_BL_278918.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)