John Houston Pope Quoted in “5 ERISA Cases to Watch in the 2nd Half of 2019”Law360 June 21, 2019
John Houston Pope, Member of the Firm in the Employee Benefits & Executive Compensation, Litigation, and Employment, Labor & Workforce Management practices, in the firm’s New York office, was quoted in Law360, in “5 ERISA Cases to Watch in the 2nd Half of 2019,” by Emily Brill. (Read the full version – subscription required.)
Following is an excerpt:
In this mid-year case roundup, Law360 lists five pending ERISA cases that attorneys should have on their radar. …
Jander v. IBM
About a week before the high court agreed to look at the Intel case, it granted a petition by IBM to revisit the Second Circuit’s ruling in a case called Jander v. IBM.
The first worker-friendly decision in a so-called “stock-drop” case in a long time, Jander v. IBM revived IBM employees’ claims that the company breached its fiduciary duty under ERISA by failing to take action on 401(k) investors’ behalf when it knew IBM stock was about to plummet.
Most stock-drop suits bite the dust because judges decide a prudent fiduciary might think taking action before a stock decline would do more harm than good. The “more harm than good” standard, laid out in the Supreme Court’s 2014 Fifth Third Bancorp v. Dudenhoeffer, is relatively easy to meet, attorneys say.
But in the Second Circuit’s IBM ruling, a panel of judges held that no prudent fiduciary would think it proper to keep workers’ retirement savings invested in company stock after learning IBM’s microchip division was losing $700 million per year, even though the company maintained publicly that the business was doing well.
IBM could have at least told employees or halted the trade of company stock before paying another company $1.5 billion to take the microchip division, sending stocks plummeting, the Second Circuit said.
The Second Circuit’s decision didn’t establish a standard itself — the ruling simply described the level of conduct that must occur to flout the “more harm than good” standard. …
The high court’s decision to accept review of the case means that companies might get a better idea of what they should do when they learn their stocks are about to fall, when they know workers have savings invested in that stock. Corporate attorneys say they hope the high court will clarify what type of behavior companies must exhibit to beat the “more harm than good” standard in court — or establish a new standard.
“My wild speculation here is they would come up with a standard that’s more fact-specific and less generic than the Second Circuit approved, and vacate and remand to see if the new standard can be met,” said John Houston Pope, a member of Epstein Becker & Green PC’s benefits practice area.