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The U.S. Supreme Court on Monday remanded two ERISA cases to their respective appeals courts for reconsideration in light of recent high court decisions.
Ruling in Harris vs. Amgen Inc., the Supreme Court ordered an appeals court, for a second time, to reconsider a case challenging the legal standard for lawsuits involving employer stock in defined contributions plans. In reversing and remanding the 9th U.S. Circuit of Appeals in San Francisco’s decision allowing Harris vs. Amgen Inc. to continue after the District Court had dismissed it, the justices ruled that the appeals court had failed to properly consider a pivotal 2014 Supreme Court ruling in Fifth Third Bancorp vs. Dudenhoeffer when the case was initially remanded. The Fifth Third decision removed the presumption of prudence standard often used to defend the use of employer stock against fiduciary-breach lawsuits.
“The parties agree that the decision in Fifth Third is fully applicable to the plans at issue here,” the Supreme Court order said.
Employer groups, including the American Benefits Council, that filed amicus briefs with the Supreme Court, were pleased with the decision to remand. “It seemed to follow the arguments made in our amicus brief that the 9th Circuit failed to assess whether the complaint met new pleading requirements outlined in Fifth Third,” said Jan Jacobson, senior counsel for retirement policy at the American Benefits Council, which represents large plans. “When the 9th Circuit looks at it in light of the Supreme Court remand, I think they’ll say there were insufficient facts,” which could result in the case going back to the District Court, Ms. Jacobson said. “Then the question remains whether they amend their complaint to try to meet the pleadings standard.”
The participant stockholders, the Supreme Court ruled, “are the masters of their complaint.”
In Elem vs. Airtran Airways Inc., a case questioning the definition of equitable relief when there are benefit overpayments, the Supreme Court vacated the judgment and remanded the case to the 11thU.S. Circuit Court of Appeals in Atlanta, following a Jan. 20 decision in Montanile vs. Board of Trustees of National Elevator Industry Health Benefit Plan. In the 8-1 decision in Montanile, Justice Clarence Thomas said plan fiduciaries cannot go after other assets because they are not considered equitable relief.
In Elem, lower courts granted and affirmed summary judgment for Airtran.
Hazel Bradford writes for Pensions & Investments, a sister publication of Business Insurance.
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