ERISA Stock Drop Suit Defense Tactics

Navigating Unsettled Court Treatment of the Moench Presumption, 404(c) Safe Harbor Defense, and Alternative Investment Theory

Eleventh Circuit Adopts Moench Presumption

Recording of a 90-minute premium CLE webinar with Q&A

Conducted on Thursday, August 2, 2012

Recorded event now available

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Course Materials

This CLE course examine the current state of ERISA plan stock drop litigation, including courts' various approaches to the Moench presumption of prudence, the 404(c) safe harbor defense, and judicial reactions to plaintiff efforts to prove loss through comparisons to alternative investments.


The recession and stock market declines triggered a wave of stock drop lawsuits against fiduciaries of ERISA plans based on losses in portfolio values. Though courts have generally decided in favor of defending companies, the degree of deference granted by courts remains unsettled.

In May 2012, the Eleventh Circuit joined other circuits that have adopted the Moench presumption favoring plan fiduciaries of employee stock ownership plans. Whether courts will apply the presumption at the pleading stage is not consistent and impacts whether a motion to dismiss will be accepted.

Counsel must stay on top of current stock drop litigation trends, particularly cases where litigation gets past the pleading stage. The Section 404(c) safe harbor can provide a defense, but plaintiffs have also attempted to prove loss and causation by comparing plan performance to alternative investments.

Listen as prominent ERISA litigators provide a guide to recent trends among courts, including various degrees of deference provided to the Moench presumption, the use of the 404(c) safe harbor defense, and receptiveness of courts to plaintiffs comparing ERISA plan performance to that of alternative investments.



  1. Defense of stock drop actions
    1. The Moench presumption
      1. Scope of the presumption
      2. Rebutting the presumption
    2. Application of the Moench presumption at pleadings
    3. Expected developments
  2. 404(c) Safe harbor defense
    1. Scope of the defense
    2. DOL interpretation
    3. Design and operational requirements
  3. Plaintiff claims: alternative-investment theory


The panel will review these and other key questions:

  • How extensive is the protection provided by the Moench presumption to ERISA plan fiduciaries?
  • What are the differing treatments by federal circuit courts on applying the Moench presumption at the pleadings stage?
  • What are the design and operational requirements for a plan to qualify for protection under ERISA Section 404(c)?
  • What is the status of alternative-investment theory as a foundation for ERISA claims?

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.


Azeez Hayne
Azeez Hayne

Morgan Lewis & Bockius

His practice focuses primarily on defending ERISA and systemic discrimination class actions. This practice includes...  |  Read More

Russell L. Hirschhorn
Russell L. Hirschhorn

Senior Counsel
Proskauer Rose

His practice focuses on complex ERISA litigation and he advises employers, fiduciaries and trustees on ERISA benefit...  |  Read More

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