ERISA Stock Drop Suits & the 404(c) Safe Harbor Defense

Description

Several years into a wave of ERISA stock drop litigation, a body of law is developing. Though suits have largely been decided in favor of companies, the state of the law is far from settled. The DOL is aggressively arguing for courts to give less deference to a plan investment in company stock.

Most circuits have adopted the Moench presumption of prudence, but there are varying applications. Courts appear more willing to apply the presumption at the pleadings stage, yet some courts have found Moench inapplicable in motions to dismiss.

In several stock drop cases, plaintiffs have successfully used Section 404(c)’s safe harbor protection for participant-directed investments. Several courts have adopted the DOL’s narrow view of the scope of that protection. A number of courts, however, have disagreed with DOL’s position.

Listen as our authoritative panel of ERISA attorneys discusses the latest developments in stock drop litigation and strategies for defending these claims, including the use of Section 404(c) safe harbor protection as a defensive shield.

Outline

1. Defense of stock drop cases
   1. Moench presumption of prudence
      1. Scope of the presumption
      2. Rebutting the presumption
      3. Application of presumption at pleadings stage
   2. Misrepresentation claims and disclosure obligations
   3. DOL’s position in amicus briefs
   4. Directors and officers as fiduciaries
   5. Recent case rulings and settlements
2. Section 404(c) safe harbor protection
   1. Scope of the protection
   2. Defense to stock drop litigation
   3. DOL’s narrow interpretation and amicus filing
   4. Design and operational requirements to qualify for the protection

Benefits

The panel will review these and other key questions:

• Under what circumstances does the Moench presumption apply at the pleadings stage?
• What is the DOL's rationale for rejecting or limiting the Moench presumption in stock drop cases?
• Does a plan fiduciary have a duty to override plan language that expressly provides for employer stock investments?
• How has the Section 404(c) safe harbor protection been used in the defense of stock drop claims?
• What are the design and operational requirements for a plan to qualify for 404(c)'s protection?

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