Amgen, Inc. v. Harris

PETITIONER: Amgen Inc., et al.
RESPONDENT: Steve Harris
LOCATION: Amgen Corporate Headquarters

DOCKET NO.: 15-278
DECIDED BY: Roberts Court (2010-2016)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 577 US (2016)
GRANTED: Jan 25, 2016
DECIDED: Jan 25, 2016

Facts of the case

Current and former employees of Amgen, Inc. (Amgen) and Amgen Manufacturing, Limited (AML) participated in two employer-sponsored pension plans (the Plans). The Plans included holdings in the Amgen Common Stock Fund which held only Amgen common stock. The plaintiffs were a group of employees who filed a class action suit under the Employee Retirement Income Security Act (ERISA) against Amgen, AML, Amgen’s board of directors, and the Fiduciary Committees of the Plans when the value of the Amgen common stock fell. The plaintiffs alleged that the defendants breached their fiduciary duties under ERISA by allowing the participants to purchase and hold Amgen stock while knowing its price was artificially inflated. The district court granted the defendants’ motion to dismiss, and the plaintiffs appealed. The United States Court of Appeals for the Ninth Circuit reversed and remanded on the grounds that the district court did not properly apply the “presumption of prudence” as illustrated in Quan v. Computer Science Corp. The presumption of prudence explains that the fiduciary who invests assets in the employer’s stock is entitled to a presumption that they acted consistently with ERISA. The court found that even if the presumption of prudence did apply, the plaintiffs had sufficiently argued a violation of the defendant’s fiduciary duty. On remand, the district court again dismissed the action and the Court of Appeals again reversed. The Supreme Court granted certiorari and vacated and remanded the case in light of its decision in Fifth Third Bancorp v. Dudenhoeffer, which held that ERISA fiduciaries who administer employee stock ownership plans are not entitled to a presumption of prudence but are “subject to the same duty of prudence that applies to ERISA fiduciaries in general, except that they need not diversify the fund’s assets.” The appellate court again reversed the dismissal of the complaint on the same grounds.

Question

Did the plaintiffs in this case “plausibly allege” a breach of the duty of prudence?

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