Taveras Ex Rel. McKevitt v. UBS AG
708 F.3d 436
2d Cir.2013Background
- Four UBS/UBSFS employees sue ERISA fiduciaries for alleged prudence breaches related to UBS Stock Fund in SIP and Plus Plan.
- Plus Plan required offering the UBS Stock Fund as an investment option; SIP did not require or strongly encourage it.
- UBS stock fell ~74% during class period, forming the gist of alleged losses and fiduciary duty breaches.
- District Court dismissed Counts 1–6; later denied alteration and amendment; court concluded presumption of prudence applied to both plans.
- Court of appeals holds presumption applies to Plus Plan but not SIP; remands for further proceedings consistent with this opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether presumption of prudence applies to Plus Plan. | Plus Plan mandated offering UBS Stock Fund. | Plan allowed but did not mandate; prudent review governs. | Presumption applies to Plus Plan. |
| Whether presumption of prudence applies to SIP. | SIP strongly encouraged UBS Stock Fund. | SIP merely allowed offering, not required; presumption not triggered. | Presumption does not apply to SIP. |
| Whether dismissal of Counts 3, 5, 6 was proper given SIP ruling. | Secondary liability survives if prudence claim survives. | Counts rest on dismissed prudence claim; should be dismissed. | Reinstates Counts 3, 5, 6 based on SIP ruling. |
Key Cases Cited
- In re CitiGroup ERISA Litig., 662 F.3d 128 (2d Cir. 2011) (adopts Moench presumption for EIAPs and ESOPs)
- Gearren II, 660 F.3d 605 (2d Cir. 2011) (presumption when plan requires offering employer stock)
- Moench v. Robertson, 62 F.3d 553 (3d Cir. 1995) (origin of presumption of prudence for employer stock)
- Edgar v. Avaya, 503 F.3d 340 (3d Cir. 2007) (EIAP treatment and ERISA fiduciary duties context)