770 F.3d 865
9th Cir.2014Background
- Plaintiffs are participants in Amgen-sponsored individual account pension plans (Amgen Plan and AML Plan) that included an Amgen-only Common Stock Fund; plaintiffs allege the Fund’s shares were artificially inflated during 2005–2007.
- Amgen’s ESA drugs (EPOGEN and Aranesp) faced safety concerns from clinical trials (DAHANCA, CHOIR, CREATE, others) and regulatory action (FDA black-box warnings, ODAC restrictions) that caused a large stock price decline.
- Plaintiffs allege Amgen officers and plan fiduciaries misled investors and concealed adverse trial results and engaged in improper off-label marketing, while continuing to offer the Amgen Stock Fund to plan participants.
- District court dismissed ERISA claims on Rule 12(b)(6): it held Amgen was not a fiduciary and applied the Ninth Circuit’s prior “presumption of prudence” reasoning to dismiss claims against other fiduciaries.
- The Ninth Circuit previously reversed; after the Supreme Court’s decision in Fifth Third Bancorp v. Dudenhoeffer, the Ninth Circuit (on remand) again reverses the dismissal, holding plaintiffs plausibly pleaded breaches of ERISA fiduciary duties (Counts II–VI) and that Amgen can be a plan fiduciary.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether fiduciaries breached ERISA duty of prudence by continuing to offer employer stock fund while stock was allegedly artificially inflated | Fiduciaries knew or should have known of material misrepresentations, omissions, and illegal off‑label marketing that inflated stock and yet continued purchases/allowed investments | Fiduciaries acted prudently; no presumption of imprudence needed; removal of fund might have harmed plan or been impermissible insider action | Plausibly alleged breach of prudence survives Rule 12(b)(6); dismissal reversed (context‑specific inquiry required) |
| Whether fiduciaries breached duty of loyalty/care by failing to disclose material information to plan participants | Omissions and SEC filings incorporated into SPDs were fiduciary communications; participants relied (fraud‑on‑the‑market) | Disclosure duties under ERISA are limited and SEC filings were corporate acts, not fiduciary acts; plaintiffs failed to plead reliance | Court holds SPD incorporation turns SEC statements into fiduciary communications and fraud‑on‑the‑market applies; claim plausibly pleaded |
| Whether prohibited transaction claim under §1106(a) is pleaded where plan bought employer stock from a party‑in‑interest | Plaintiffs allege Amgen/AML (parties‑in‑interest) inflated stock and caused plan to buy overpriced stock | Defendants invoke statutory exemption §1108(e) for purchases of employer stock by EIAPs at market price | Court finds §1108(e) is an affirmative defense that must appear on the face of the complaint to warrant dismissal; cannot dismiss Count VI at this stage |
| Whether Amgen itself is an ERISA fiduciary for the Amgen Plan | Amgen named in plan instrument and retained authority; plan language does not clearly delegate exclusive authority away from Amgen | Amgen argues it delegated discretionary authority to trustees/investment managers and thus is not a fiduciary | Plan language does not show clear, exclusive delegation; Amgen can be a fiduciary — dismissal of Amgen reversed |
Key Cases Cited
- Fifth Third Bancorp v. Dudenhoeffer, 134 S. Ct. 2459 (2014) (no special presumption of prudence for ESOP/EIAP fiduciaries; context‑specific prudence inquiry)
- Quan v. Computer Sciences Corp., 623 F.3d 870 (9th Cir. 2010) (prior Ninth Circuit articulation of presumption of prudence; discussed and distinguished)
- In re Syncor ERISA Litigation, 516 F.3d 1095 (9th Cir. 2008) (fiduciary duty may be breached where fiduciaries knew of illegal scheme inflating stock yet continued purchases)
- Varity Corp. v. Howe, 516 U.S. 489 (1996) (ERISA fiduciary duties informed by trust law; corporate communications can have dual capacities)
- Conn. Ret. Plans & Trust Funds v. Amgen, Inc., 660 F.3d 1170 (9th Cir. 2011) (securities‑law class action alleging materially false statements and omissions based on same facts; used to contrast pleading sufficiency)