Amgen Inc. v. Harris
136 S. Ct. 758
| SCOTUS | 2016Background
- Former Amgen employees (plan participants) sued Amgen fiduciaries under ERISA for breaching the duty of prudence after Amgen stock fell, alleging fiduciaries failed to act on inside information about stock value.
- The plans at issue were individual account plans functionally like ESOPs and held an Amgen Common Stock Fund composed of Amgen stock.
- District Court dismissed the complaint; the Ninth Circuit reversed. The Supreme Court granted certiorari, vacated, and remanded after its decision in Fifth Third Bancorp v. Dudenhoeffer.
- On remand the Ninth Circuit again reversed dismissal, finding the complaint plausibly alleged alternatives (e.g., removing the stock fund) consistent with Fifth Third; the fiduciaries sought review again.
- The Supreme Court granted certiorari, held the Ninth Circuit misapplied Fifth Third by not testing whether the complaint plausibly alleged that a prudent fiduciary could not have concluded the alternative would do more harm than good, and reversed.
- The Court left open whether plaintiffs may amend their complaint to plead facts sufficient under Fifth Third’s standards and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the complaint plausibly alleges a breach of ERISA duty of prudence based on inside information | Plaintiffs (Harris) allege fiduciaries knew negative inside information and could have taken alternative actions (e.g., remove the Amgen stock fund) consistent with securities laws, so dismissal was improper | Fiduciaries (Amgen) argue plaintiffs failed to plead facts showing that any alternative action would clearly be prudent and not more harmful than helpful, as required by Fifth Third | Reversed Ninth Circuit: complaint lacks sufficient factual allegations to show a prudent fiduciary could not have concluded the alternatives would do more harm than good; dismissal warranted unless amended plausibly to meet Fifth Third standards |
Key Cases Cited
- Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. 409 (2014) (sets pleading standard for ESOP fiduciary duty of prudence claims based on inside information)
- Harris v. Amgen, Inc., 738 F.3d 1026 (9th Cir. 2013) (Ninth Circuit decision reversing dismissal before Fifth Third)
- Amgen Inc. v. Harris, 788 F.3d 916 (9th Cir. 2015) (Ninth Circuit decision on remand that again reversed dismissal)