Mike Laffen v. Hewlett-Packard Company, 15-16360

HP acquired U.K.-based Autonomy in 2011; plaintiffs are current and former HP employees who held HP stock in the company 401(k) plan between Oct. 3, 2011 and Nov. 21, 2012.
Plaintiffs (Laffen) allege plan fiduciaries breached ERISA duty of prudence by allowing the Plan to buy and hold HP stock when HP’s stock was allegedly artificially inflated because HP overpaid for Autonomy.
Laffen alleges HP knew Autonomy’s value was inflated (due to accounting practices) and concealed that knowledge, harming Plan participants.
A whistleblower later alleged Autonomy committed fraud (e.g., bundled hardware sales, sham reseller transactions), prompting HP to investigate and disclose reductions to Autonomy’s valuation.
The district court dismissed the Second Amended Complaint with prejudice; the Ninth Circuit reviews dismissal de novo and affirms.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether fiduciaries concealed knowledge that HP knew Autonomy’s accounting inflated revenue and thus HP stock was imprudent	Laffen: HP knew about Autonomy’s GAAP-related valuation problems and hid that knowledge from plan participants	Defendants: The whistleblower disclosed different fraud allegations; HP disclosed revenue declines and had no prior knowledge to conceal	Dismissed — concealment theory implausible because whistleblower’s revelations differ from the allegedly concealed information and HP lacked prior knowledge
Whether fiduciaries breached duty of prudence by not restricting new purchases of HP stock or publicly warning after whistleblower allegations	Laffen: Fiduciaries should have stopped new investments or warned participants once allegations emerged	Defendants: A prudent fiduciary reasonably would investigate before acting; premature action could harm the plan and might violate securities laws	Dismissed — plaintiffs failed to allege a plausible alternative action a prudent fiduciary would have taken that wouldn’t likely do more harm than good

Skilstaf, Inc. v. CVS Caremark Corp., 669 F.3d 1005 (9th Cir.) (pleading-stage factual-allegation standards)
Knievel v. ESPN, 393 F.3d 1068 (9th Cir.) (de novo review of dismissal)
Starr v. Baca, 652 F.3d 1202 (9th Cir.) (plaintiff’s theory must be plausible against a convincing alternative explanation)
Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir.) (Rule 9(b) particularity for fraud allegations)
Howard v. Shay, 100 F.3d 1484 (9th Cir.) (courts review thoroughness of fiduciary investigations)