July 22, 2016 Articles

SCOTUS v. the Ninth Circuit on Failure to Enforce ERISA Stock-Drop Pleading Standard

The Court makes its opinion clear in Amgen vs. Harris

by Michael A. Valerio

In a terse per curiam opinion, the U.S. Supreme Court in Amgen Inc. v. Harris, No. 15-278 (U.S. Jan. 25, 2016), made clear that it expects lower courts to faithfully apply the pleading requirements for “stock-drop” cases under the Employee Retirement Income Security Act (ERISA) outlined in the Court’s earlier opinion in Fifth Third Bancorp v. Dudenhoeffer, 134 S. Ct. 2459 (2014). In Amgen, the Supreme Court simultaneously granted the Amgen stock plan fiduciaries’ petition for a writ of certiorari and reversed the U.S. Court of Appeals for the Ninth Circuit for its failure to adhere to the Court’s Fifth Third pleading guidance. Only time will tell how rigorously the lower courts will apply the Fifth Third pleading strictures following the Supreme Court’s admonition to the Ninth Circuit in Amgen. Nevertheless, the Amgen opinion is encouraging news for stock-drop defendants, who should continue to have a meaningful opportunity to defeat specious cases at the motion-to-dismiss stage.

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