Second Circuit Breathes Life Into Stock-Drop Claims
Participants in an employee stock ownership plan (ESOP) brought a class action against their employer and its corporate officers asserting claims under the Employee Retirement Income Security Act (ERISA). The plaintiffs alleged a failure to prudently and loyally manage the plan's assets and adequately monitor the plan's fiduciaries. On appeal the Second Circuit reinstated the class claims holding the participants stated a plausible ERISA claim for breach of duty to manage ESOP assets prudently. This decision put the Second Circuit in a class by itself with other circuits having turned away plan participants for failing to meet the high standard for breach of fiduciary duty in this context set by the U.S. Supreme Court in Fifth Third Bancorp v. Dudenhoeffer in 2014.