Jander v. International Business Machines Corporation, 205 F.Supp.3d 538

IBM announced a $2.4 billion write-down for its Microelectronics business in Oct. 2014, coinciding with disappointing Q3 results and a ~17% drop in IBM stock.
Plan participants (Jander and Waksman) suing under ERISA §502 challenge fiduciaries’ management of an IBM 401(k) Plan option (an ESOP-style Fund heavily invested in IBM stock) for the period Jan 21–Oct 20, 2014.
Defendants named: IBM, the Retirement Plans Committee, and three IBM officers (Carroll, Schroeter, Weber); plaintiffs allege defendants knew Microelectronics was impaired and that IBM stock was artificially inflated.
Plaintiffs allege breaches of ERISA fiduciary duties of prudence and loyalty and a failure-to-monitor claim; they propose alternative actions (corrective disclosures or a temporary halt to Plan purchases of IBM stock).
Court considered pleading standards (Iqbal/Twombly) and the Dudenhoeffer framework for ESOP insider-information claims and dismissed the Amended Complaint without prejudice, granting leave to replead.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Microelectronics assets were impaired such that fiduciaries knew stock was inflated	Plaintiffs: fiduciaries (officers) had knowledge of impairment and undisclosed material facts justifying earlier write-down	Defendants: plaintiffs fail to plead impairment	Court: plaintiffs plausibly alleged impairment under ERISA pleading standards (not PSLRA scienter)
Whether IBM is a de facto fiduciary	Plaintiffs: IBM had ultimate oversight and amendment power over the Plan, making it a de facto fiduciary	Defendants: bare conclusory allegations; insufficient to show discretionary control	Court: allegations insufficient; IBM not plausibly pled as de facto fiduciary
Whether plaintiffs pleaded a viable alternative action under Dudenhoeffer (disclose or stop purchases)	Plaintiffs: fiduciaries could have issued corrected disclosures or frozen Fund purchases consistent with securities law	Defendants: alternative actions would conflict with securities laws and likely harm the Fund	Court: plaintiffs failed Dudenhoeffer’s second prong—did not plausibly allege a prudent fiduciary would have concluded alternatives wouldn’t do more harm than good; dismissal accordingly
Duty to monitor claim (derivative)	Plaintiffs: fiduciaries failed to monitor plan fiduciaries and protect participants	Defendants: monitoring claim is derivative of underlying breach claims	Court: dismissed duty-to-monitor as derivative because underlying breach not adequately pled

Ashcroft v. Iqbal, 556 U.S. 662 (pleading must be plausible; conclusory allegations insufficient)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (erects plausibility standard for federal pleadings)
Fifth Third Bancorp v. Dudenhoeffer, 134 S. Ct. 2459 (sets ESOP insider-information pleading test and two-prong alternative-action framework)
Amgen Inc. v. Harris, 136 S. Ct. 758 (clarifies Dudenhoeffer’s requirement that complaints plausibly allege alternatives would not do more harm than good)
Rinehart v. Lehman Bros. Holdings Inc., 817 F.3d 56 (ESOP claims dismissed where prudent fiduciary could have concluded divesting would do more harm than good)
Mertens v. Hewitt Assocs., 508 U.S. 248 (definition of fiduciary under ERISA includes those with discretionary control)
Gearren v. The McGraw-Hill Companies, Inc., 660 F.3d 605 (rejects duty to disclose nonpublic information about employer stock under Second Circuit principles)
In re Lehman Bros. Sec. & ERISA Litig., 113 F. Supp. 3d 745 (discusses ERISA prudence standard and interplay with securities-law claims)