Tatum v. R.J. Reynolds Tobacco Co., 926 F. Supp. 2d 648

Tatum sued RJR Tobacco for ERISA fiduciary breach arising from removing Nabisco stock from the Tobacco Plan after the 1999 spin-off, seeking relief for a class of over 3,500 participants.
The spin-off created Nabisco Group Holdings (NGH) and Nabisco (NA) as separate stocks; Nabisco funds were frozen and then eliminated from the Tobacco Plan in 2000.
A March 1999 working group decided to freeze and eliminate Nabisco funds with little documented analysis; the plan administrator disseminated notices to participants.
October 1999 meetings discussed the transition and potential liabilities, but no independent, external analysis or adequate investigation was pursued; communications to participants contained erroneous legal statements about regulations.
The court ultimately held the removal was a fiduciary act governed by prudence and that the decision was not imprudent under the circumstances; the key question became whether the procedural failure caused losses to the plan and, following Plasterer’s logic, the burden shifted to RJR to prove prudence.
The court concluded that a hypothetical prudent fiduciary could have eliminated the Nabisco Funds, meaning the plaintiffs failed to show causation for damages.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Did removing Nabisco Funds from the Plan constitute a fiduciary act subject to prudence?	Tatum: removal was a fiduciary decision breached by failure to investigate.	RJR: removal was discretionary settlor-like action not subject to prudence.	Yes, it was a fiduciary act but prudence did not require misstep.
Was the removal process conduct a thorough procedural investigation as ERISA requires?	Tatum: inadequate, rushed spring 1999 process showed procedural breach.	RJR: investigation was sufficient under the circumstances.	No; the process fell well short of thorough investigation required.
Did the alleged breach cause losses to the Plan, requiring relief?	Tatum: losses resulted from imprudent divestment.	RJR: loss would have occurred regardless; prudent fiduciary could have decided to divest.	RJR met burden to show removal could be objectively prudent; no causal link established.
Should the invalid November Amendment be considered, or did it moot the claims?	Tatum: amendment improperly restricted discretion and causation.	RJR: amendment ultimately invalid; no need to reform plan.	Moot; not decided as a merits issue.

DiFelice v. U.S. Airways, Inc., 497 F.3d 410 (4th Cir. 2007) (thorough investigation required for prudence; procedural prudence matters)
Bunch v. W.R. Grace & Co., 555 F.3d 1 (1st Cir. 2009) (external advisors and detailed analysis support prudent decisions)
Noa v. Keyset, 519 F.Supp.2d 481 (D.N.J. 2007) (formal process with counsel supports prudence)
Plasterer’s Local Union No. 96 Pension Plan v. Pepper, 663 F.3d 210 (4th Cir. 2011) (burden-shifting on causation after breach)