John Dudenhoefer v. Fifth Third Bancorp
692 F.3d 410
| 6th Cir. | 2012Background
- Participants in Fifth Third Bancorp Master Profit Sharing Plan invested in Fifth Third stock via the Plan, which is not exclusively invested in company stock.
- Plan fiduciaries allegedly knew of subprime risks and misrepresented or inadequately disclosed these risks to participants.
- Fifth Third stock declined about 74% during the class period, causing material Plan losses.
- District court dismissed Counts I–IV, treating the ESOP presumption of reasonableness as a ground to dismiss.
- Plaintiffs alleged the SPD incorporated by reference certain SEC filings, creating fiduciary communications about Fifth Third stock.
- Court analyzes whether incorporating SEC filings into the SPD constitutes fiduciary conduct and whether the complaint plausibly states ERISA fiduciary breaches.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Kuper presumption applies at pleading stage | Kuper applies to ESOPs to presume reasonableness. | Kuper presumption applies at dismissal as an affirmative rule. | Kuper presumption does not apply at pleading stage. |
| Whether failure to divest Fifth Third stock violates ERISA duties | Plaintiffs allege imprudence by continuing to offer/divest stock. | ESOP exemptions allow limited diversification and presumption of reasonableness. | Amended Complaint plausibly states breach by continuing to offer/divest. |
| Whether incorporating SEC filings into the SPD is a fiduciary act | Incorporation of SEC filings into the SPD is fiduciary communication. | Preparation of SEC filings is nonfiduciary; inclusion in SPD is not inherently fiduciary. | Incorporating by reference SEC filings into the SPD can be fiduciary conduct; complaint plausible. |
| Whether misrepresentations in the SPD were actionable | Defendants disseminated misleading stock information via the SPD. | Incorporated filings are not fiduciary misrepresentations if not within fiduciary acts. | Misrepresentations through fiduciary communications could state a claim. |
| Whether counts II–IV survive after Count I is revived | Counts II–IV depend on Count I's fiduciary breach. | If Count I fails, others fail too. | Counts II–IV are viable on remand, as they depend on the plausibility of Count I. |
Key Cases Cited
- Kuper v. Iovenko, 66 F.3d 1458 (6th Cir. 1995) (ESOP fiduciary duties; diversific. exemption; Kuper presumption)
- Pfeil v. State Street Bank & Trust Co., 671 F.3d 585 (6th Cir. 2012) (presumption not pleading-stage; standard to plead breach)
- Varity Corp. v. Howe, 516 U.S. 489 (S. Ct. 1996) (fiduciary communications; plan administration context)
- Gregg v. Transp. Workers Union Int’l, 343 F.3d 833 (6th Cir. 2003) (fiduciary duties; loyalty and prudence; high duties)
- James v. Pirelli Armstrong Tire Corp., 305 F.3d 439 (6th Cir. 2002) (material misrepresentations; reliance element)
- In re Unisys Sav. Plan Litig., 74 F.3d 420 (3d Cir. 1996) (misrepresentation; fiduciary duties; trial questions of fact)