Company stock in retirement plans
Fifth Third Bancorp v. Dudenhoeffer
In brief
The Supreme Court sent the case back for another look but did not decide whether the participants' complaint can proceed.
- Where it stands
- Decided
Decided 9-0 · June 25, 2014 · Opinion by Justice Breyer
- What it’s about
- John Dudenhoeffer and Alireza Partivopanah disputed whether they had to allege Fifth Third abused its discretion to overcome a presumption that its stock investment was reasonable.
- Who it affects
- The participants did not get a final answer on whether their complaint can proceed.
Summary: written with AI from the case record.
What it's about
The Supreme Court wiped out the Sixth Circuit ruling (vacated it) and sent the case back (remanded it) to reconsider whether the complaint states a claim under pleading rules.
John Dudenhoeffer and Alireza Partivopanah challenged Fifth Third's continued investment in company shares through its employee stock plan.
The dispute centered on whether participants had to plausibly allege that Fifth Third abused its discretion to overcome a presumption that investing in company stock was reasonable.
Question presented
Did the U.S. Court of Appeals for the Sixth Circuit err by holding that the respondents were not required to plausibly allege that Fifth Third abused its discretion by remaining invested in the employer stock in order to overcome the presumption that the decision to invest in the stock was reasonable?
What the Court decided
Holding
1. ESOP fiduciaries are not entitled to any special presumption of prudence. Rather, they are subject to the same duty of prudence that applies to ERISA fiduciaries in general, §1104(a)(1)(B), except that they need not diversify the fund’s assets, §1104(a)(2). This conclusion follows from the relevant provisions of ERISA. Section 1104(a)(1)(B) “imposes a ‘prudent person’ standard by which to measure fiduciaries’ investment decisions and disposition of assets.” Massachusetts Mut. Life Ins. Co. v. Russell, 473 U. S. 134, 143, n. 10. Section 1104(a)(1)(C) requires ERISA fiduciaries to diversify plan assets. 2. On remand, the Sixth Circuit should reconsider whether the complaint states a claim by applying the pleading standard as discussed in Ashcroft v. Iqbal, 556 U. S. 662, 677–680, and Bell Atlantic Corp. v. Twombly, 550 U. S. 544, 554–563, in light of the following considerations. 692 F. 3d 410, vacated and remanded.
- Result
- Vacated
The vote
What's next
The Sixth Circuit will reconsider whether the complaint states a claim under the pleading standards the Supreme Court cited.
Documents
Opinions
Docket activity
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AI analysis generated: Impact Analysis
AI analysis generated: Opinion Summary
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AI analysis generated: Decision Record
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Opinion added: Fifth Third
Sources
Primary materials plus reporting. Best-effort analysis: this explainer relies on a mix of primary materials and trusted secondary sources. Official filings and opinions remain authoritative.