• In Matschiner v. Hartford Life & Accident Ins. Co., 2010 WL 3910217 (8th Cir. Oct. 7, 2010), the Eighth Circuit applied the “plan documents rule” established by the Supreme Court in Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 129 S.Ct. 865 (2009), and concluded that Hartford properly paid benefits pursuant to a beneficiary designation form rather than a Nebraska state divorce decree that purported to divest the decedent’s ex-husband of his right to the benefits.
  • In Leimkuehler v. American United Life Insurance Co., 2010 U.S. Dist. LEXIS 114121 (S.D. Ind. Oct. 22, 2010), a district court denied defendant’s motion for judgment on the pleadings with respect to the plan trustee’s fiduciary breach claim based on American United Life’s (“AUL’s”) alleged failure to disclose its revenue sharing agreements with the mutual funds that it packaged as investment options. In so ruling, the court found the Seventh Circuit’s decision in Hecker v. Deere inapplicable because the revenue sharing in Hecker occurred between two non-fiduciaries, whereas, in this case, “AUL was alleged to have received shared revenue as a plan fiduciary, with its attendant higher legal duties.” The court dismissed plaintiff-trustee’s prohibited transaction claims, however, because mutual fund monies out of which shared revenue is paid are not plan assets.
  • In Jones v. MEMC Electronic Material, Inc., 2010 WL 4065202 (E.D. Mo. Oct. 18, 2010), the court granted MEMC Electronic Material, Inc.’s motion for reconsideration of its decision denying defendants’ motion to dismiss plaintiffs’ employer stock drop claims. In so ruling, the court acknowledged that it had erroneously relied on Braden v. Wal-Mart, 588 F.3d 585 (8th Cir. 2009) in concluding that plaintiffs’ complaint satisfied the pleading requirements of Fed. R. Civ. P. 12(b)(6) because Braden did not address employer stock drop claims and, in particular, the Moench presumption of prudence.
  • In Yost v. First Horizon Nat’l Corp., 2010 WL 4116986 (W.D. Tenn. Oct. 19, 2010), the court denied defendants’ motion for reconsideration of the court’s earlier decision denying defendants’ motion to dismiss plaintiffs’ employer stock drop claims. In so ruling, the court acknowledged that other courts have granted motions to dismiss based on the Moench presumption of prudence, but observed that such rulings were outside the Sixth Circuit and that defendants failed to note any change of law within the Sixth Circuit.
  • In Pfeil v. State Street Bank and Trust Co., 2010 WL 3937165 (E.D. Mich. Sept. 30, 2010), a district court dismissed plaintiffs’ employer stock drop claims against State Street, the plan’s independent fiduciary. Although the court concluded that plaintiffs sufficiently alleged “red flags” that should have alerted State Street to the need to discontinue the company stock investment option, it found that plaintiffs failed to adequately allege causation. In so ruling, the court stated that the “Plans at issue allow the participants to change the allocation of the assets from one account to another on any business day. Plaintiffs had total control over how to allocate their assets . . . . Plaintiffs had knowledge . . . that GM was in financial trouble yet they continued to invest in the [company stock]. State Street cannot be held liable for actions which Plaintiffs controlled.”
  • In Taylor v. ANB Bancshares, Inc., 2010 WL 4053575 (W.D. Ark. Oct. 14, 2010), a district court adopted a magistrate judge’s report and recommendation and denied defendants’ motion to dismiss plaintiffs’ employer stock drop claims. The report and recommendation concluded that, even if the Moench presumption of prudence applied, plaintiffs alleged that defendants knew or should have known that the escalation in ANB’s brokered deposits and in its non-current real estate, construction, and commercial loans, and other unsafe and unsound banking practices, made ANB stock an imprudent investment for the Plan. In addition, the court observed that, contrary to defendants’ contentions, defendants were allegedly on notice of the potential demise of the Bank since there were reports that placed ANB on a “watch list” for “banks that deserve close attention.” The court also allowed some of plaintiffs’ disclosure claims to proceed, finding that plaintiffs sufficiently alleged that defendants breached their fiduciary duties by making misstatements about the stock’s share value and by failing to disclose ANBs’ financial and regulatory difficulties to the plan’s participants. The court did, however, dismiss plaintiffs’ disclosure claim based on an email from the vice president of human resources telling plan participants that they could purchase ANB stock at its value of $36.60 because she was not acting as a fiduciary when she sent the e-mail. The court determined that even if the email was inaccurate, a “clear reading of the e-mail reveals that it is merely an employee communication, and that [the vice president] was not encouraging, promoting, or directing Plaintiffs to invest in the stock.”
  • In In re Suntrust Banks, Inc. ERISA Litig., No. 08-cv-03384 (N.D. Ga. Oct. 25, 2010), a district court dismissed plaintiffs’ employer stock drop claims insofar as they were merely alleging a failure to diversify, but refused to dismiss fiduciary breach claims based on the failure to adequately inform participants about SunTrust’s finances so that participants could properly assess the risks of investing in the stock.
  • In Morrison v. MoneyGram Int’l, Inc., No. 08-cv-01121 (D. Minn. Oct. 20, 2010), a district court preliminarily approved a $4.5 million settlement of an employer stock drop class action.
  • In Kanawi v. Bechtel Corp., No. C 06-05566 (N.D. Cal. Oct. 12, 2010), the parties reached a $18.5 million settlement of plaintiffs’ claims that the plan fiduciaries breached their fiduciary duties by paying excessive fees for to a Bechtel subsidiary to manage the Plan’s investments.