717 F.3d 1042
9th Cir.2013Background
- Plaintiffs are current/former Amgen and AML plan participants in EIAPs that offer the Amgen Common Stock Fund (only Amgen stock).
- The Amgen Plan and AML Plan were EIAPs; Amgen Common Stock Fund constituted the largest asset in 2004–2005.
- The class period runs May 4, 2005 to March 9, 2007, during which Amgen stock declined amid safety concerns and investigative/market scrutiny.
- District court dismissed Amgen as a non-fiduciary and dismissed other fiduciaries under a presumption of prudence; the Ninth Circuit reversed, holding the presumption does not apply and Amgen is a fiduciary.
- The court addresses ERISA fiduciary duties, distinguishing between the presumption of prudence and the ordinary prudent man standard, and analyzes whether the Plans’ terms required or encouraged holding Amgen stock.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Quan create a presumption of prudence for EIAP fiduciaries? | Quan applies; fiduciaries are presumed prudent when plan terms require/encourage employer stock. | Plan terms may encourage, not require, stock; presumption should apply. | No; presumption does not apply. |
| Did the Plan terms require or encourage investment in Amgen stock? | Plan terms effectively mandated/required Amgen stock as an investment option. | Plan merely authorized/allowed Amgen stock; no requirement/encouragement. | The terms did not require or encourage investment; normal prudent-man standard applies. |
| Do Counts II and III state plausible ERISA fiduciary-duty claims for imprudence and loyalty/care? | Fiduciaries knew/is supposed to know stock was artificially inflated yet continued to offer it. | Prudence and disclosure duties limited; reliance, materiality, and fiduciary scope argued otherwise. | Counts II and III sufficiently plead breach under ERISA. |
| Are Counts IV and V derivative of II and III and require reversal if II/III survive? | Yes, they depend on II/III findings. | Dismiss as derivative. | Yes; they are derivative and follow once II/III survive. |
| Is Amgen a fiduciary under the Amgen Plan despite delegation? | Plan delegates exclusive authority to others, excusing Amgen from fiduciary status. | Amgen retains fiduciary duties; delegation is not exclusive. | Amgen is a properly pled fiduciary; no clear exclusive delegation. |
Key Cases Cited
- Quan v. Computer Sciences Corp., 623 F.3d 870 (9th Cir. 2010) (presumption of prudence for EIAP stock plans (Moench framework))
- In re Syncor ERISA Litig., 516 F.3d 1094 (9th Cir. 2008) (breach of prudence when stock was artificially inflated and later deflated)
- Kirschbaum v. Reliant Energy, Inc., 526 F.3d 243 (5th Cir. 2008) (plan documents and discretion; limits of fiduciary prudence in stock plans)
- Cal. Ironworkers Field Pension Trust v. Loomis Sayles & Co., 259 F.3d 1036 (9th Cir. 2001) (ERISA fiduciary disclosure obligations and principal-agent concerns)
- Basic, Inc. v. Levinson, 485 U.S. 224 (U.S. 1988) (fraud-on-the-market theory for reliance in securities claims)
- Erica P. John Fund, Inc. v. Halliburton Co., 131 S. Ct. 2179 (U.S. 2011) (reliance presumption under fraud-on-the-market theory)
- Amgen Inc. v. Conn. Ret. Plans & Trust Funds, 133 S. Ct. 1184 (U.S. 2013) (SCOTUS affirming class-action considerations involving ERISA/ securities claims)