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Oct. 7 — SunTrust Banks Inc.'s directors and general counsel dodged allegations that they breached their ERISA fiduciary duties by offering poorly performing company stock as an investment option in the bank’s 401(k) plan ( In re SunTrust Banks Inc. ERISA Litig. , N.D. Ga., No. 1:08-cv-03384, 10/5/16 ).
In his Oct. 5 opinion, Judge Richard W. Story of the U.S. District Court for the Northern District of Georgia noted that the class only opposed the entry of judgment in favor of SunTrust’s general counsel Steve Castle. In granting summary judgment to Castle, Story held that he wasn’t a plan fiduciary. Castle attended meetings of the benefits plan committee as a representative from the bank’s legal department, but he wasn’t a member of the committee, and as such he wasn’t a fiduciary.
Story expressly rejected the class’s argument that Castle should be considered a fiduciary for the legal services he provided to the plan. In doing so, Story said that Castle performed the “same professional services that in-house counsel routinely provide to the employee benefit plans that are sponsored by their corporate employer.”
Attorneys performing their usual professional functions will ordinarily not be considered fiduciaries under the Employee Retirement Income Security Act, Story said.
The decision is the latest development in a case that this summer won class treatment for thousands of members of SunTrust’s 401(k) plan. The bank still has to defend from accusations that it breached its ERISA fiduciary duties by allowing artificially inflated company stock to remain as an investment option in the plan. According to court documents, participants lost hundreds of millions of dollars as the market price of SunTrust stock fell 73 percent between May 2007 and October 2009.
Kessler Topaz Meltzer & Check LLP, Stull Stull & Brody, Douglas E. Hart, Dyers & Berens LLP, Statman Harris & Eyrich LLC, Salpeter Gitkin LLP and Holzer & Holzer LLC represents the class. King & Spalding LLP represents SunTrust.
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