Steve Harris v. Amgen, Inc.
2013 U.S. App. LEXIS 21503
| 9th Cir. | 2013Background
- Plaintiffs are current/former Amgen and AML Plan participants who held assets in EIAPs, including a Company Stock Fund that contained only Amgen stock.
- Amgen stock was the largest single asset in the Amgen Plan and AML Plan during 2004–2005.
- Plaintiffs allege ERISA fiduciary breaches arising from a period when Amgen’s ESAs were under safety scrutiny and stock price was inflated due to misrepresentations and off-label marketing.
- District court dismissed Amgen as a non-fiduciary and dismissed Counts II–VI under Quan’s presumption of prudence; the court assumed the complaint’s allegations as true for Rule 12(b)(6) purposes.
- The Amgen Plan permitted a Company Stock Fund and allowed up to 50% allocations to it, but did not mandate that the Stock Fund exist or be continued; a 2008 AML amendment stated the Stock Fund will be an available investment and not eliminable; no exclusive delegation to trustees/investment managers was shown.
- The court holds that there is no presumption of prudence and Amgen is a properly pled fiduciary; Counts II–VI are viable under ERISA and the district court’s dismissal is reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Quan presumption applies to EIAP fiduciaries. | Harris: presumption should apply because plan terms encourage Amgen stock. | Amgen: no presumption since plan terms do not require but merely allow stock. | Presumption does not apply to these EIAPs. |
| Whether Counts II–VI plead viable ERISA fiduciary claims without the presumption. | Pls adequately allege prudence breach and reliance. | Defs plea for dismissal under Quan or lack of plausibility. | Counts II–VI plead viable ERISA fiduciary claims. |
| Whether defendants owed material-disclosure duties to plan participants about Amgen stock. | ERISA duties include material disclosures and reliance through fraud-on-the-market. | Disclosures governed by securities laws, not ERISA; reliance must be shown. | ERISA duty to disclose material information satisfied; fraud-on-the-market presumption applies. |
| Whether Amgen is a fiduciary despite delegation language. | Plan does not clearly delegate exclusive fiduciary authority; Amgen remains fiduciary. | Authority delegated to committees and trustees; Amgen not fiduciary. | Amgen is a properly pled fiduciary; not precluded by delegation. |
| Whether Count VI is barred by §1108(e) exemption. | Exemption not clearly indicated on face of pleading. | Sale of employer stock may be exempt under §1108(e). | §1108(e) defense not clearly indicated on the face of the complaint; not dismissible on this basis. |
Key Cases Cited
- Quan v. Computer Sciences Corp., 623 F.3d 870 (9th Cir. 2010) (presumption of prudence for employer stock EIAPs)
- In re Syncor Int'l Corp. ERISA Litig., 516 F.3d 1098 (9th Cir. 2008) (breach possible where stock inflated by illegal scheme)
- Kirschbaum v. Reliant Energy, Inc., 526 F.3d 243 (5th Cir. 2008) (plan documents compel stock availability; prudence standard)
- Dudenhoefer v. Fifth Third Bancorp, 692 F.3d 410 (6th Cir. 2012) (fiduciaries’ communications about securities may be fiduciary acts)
- Cal. Ironworkers Field Pension Trust v. Loomis, Sayles & Co., 259 F.3d 1036 (9th Cir. 2001) (ERISA requires disclosure of material investment information by fiduciaries)
- Erica P. John Fund, Inc. v. Halliburton Co., 131 S. Ct. 2179 (S. Ct. 2011) (fraud-on-the-market theory for reliance under securities law applies to ERISA misrepresentation claims when relevant)