The document summarizes several recent appellate court rulings on issues relating to ERISA litigation and identifies potential circuit splits that could warrant Supreme Court review. Specifically, it discusses: 1) A Second Circuit ruling allowing plaintiffs to state an imprudence claim regarding company stock by alleging an earlier disclosure would not have caused more harm; this conflicts with other circuits. 2) A Ninth Circuit ruling on the statute of limitations requiring actual knowledge of a breach, not just transactional knowledge; this conflicts with the Sixth Circuit. 3) An Eighth Circuit ruling on standing requiring a showing of individual loss for injunctive relief claims; this may conflict with the Third Circuit. 4) A First Circuit ruling placing the

1. AT THE U.S. SUPREME
COURT
Russell L. Hirschhorn
Proskauer Rose LLP
Eleven Times Square
New York, NY 10036
Tel: 212.969.3286
rhirschhorn@proskauer.co
m
David S. Preminger
Keller Rohrback LLP
1140 Avenue of the
Americas
New York, NY 10036
Tel: 646.380.6690
dpreminger@kellerrohrback
.com

2. AGENDA
1.Are the sheep and goats reuniting?
2.What do you actually know?
3.Where do you stand?
4.Whose burden is it anyway?
5.Can you get out of my way?
2

3. 3
Are the sheep and goats reuniting?

4. COMPANY STOCK FUND LITIGATION
•ERISA Section 404(a)(1)(B) requires fiduciaries of
retirement plans to manage a plan’s assets prudently.
•U.S. Supreme Court Rulings
• Fifth Third Bancorp v. Dudenhoeffer, 134 S. Ct. 2459 (2014)
• To plead an “inside information” breach of duty of prudence
claim, a participant must plausibly allege an alternative action
that the defendant could have taken that a prudent fiduciary in
the same circumstances could not have viewed as more likely to
harm the fund than to help it.
• Amgen v. Harris, 136 S. Ct. 758 (2016)
•Subsequently, all courts have dismissed such claims,
until . . . .
4

5. COMPANY STOCK FUND LITIGATION CONT’D
•Jander v. Retirement Plans Committee of IBM, 910 F.3d
620
(2d Cir. 2018)
• Plaintiffs stated a plausible claim by alleging that a prudent
fiduciary in the defendants’ position could not have concluded
that an earlier corrective disclosure about value of the business
would do more harm than good.
• A stock-drop following early disclosure would be no more
harmful than the inevitable stock drop that would occur
following a later disclosure.
• Plaintiffs’ citations to general economic studies showing that the
longer a fraud continues, the more damage is done, supported
plaintiffs’ imprudence claim and were not merely theoretical.
5

6. COMPANY STOCK FUND LITIGATION CONT’D
•Conflict with Fifth, Sixth, and Ninth Circuits.
• Same allegations, same plaintiffs’ lawyers in Sixth Circuit case.
•IBM’s Petition For Certiorari
• Whether the “more harm than good” pleading standard set forth
in Fifth Third Bancorp v. Dudenhoeffer can be satisfied by
generalized allegations that the harm of an inevitable disclosure
of an alleged fraud generally increases over time?
•Certworthy?
• Opens a circuit split and opens the floodgates to litigation
• Second Circuit’s decision does not adhere to Dudenhoeffer’s
mandate
• Stakes are extraordinarily high given that the Second Circuit is
home to significant litigation6

7. 7
What do you actually know?

8. STATUTE OF LIMITATIONS
•Sulyma v. Intel Corp. Investment Policy Committee,
909 F.3d 1069 (9th Cir. 2018)
•ERISA Section 413(2) provides that an action under
Section 404 may not be commenced more than
“three years after the earliest date on which the
plaintiff had actual knowledge of the breach or
violation.”
• Actual knowledge means more than bare knowledge of the
underlying transaction, but less than actual legal knowledge.
• The exact knowledge required will vary depending on the
claim.
• Sulyma testified that he was unaware that he had been
invested in alternative investments and didn’t recall seeing8

9. STATUTE OF LIMITATIONS CONT’D
•Conflict with Sixth Circuit
• Furnishing plan documents creates actual knowledge; failure to
read plan documents is no excuse. Brown v. Owens Corning
Investment Review Committee, 622 F.3d 564 (6th Cir. 2010).
•Intel’s Petition For Certiorari
• Whether the three-year limitations period in 29 U.S.C. §
1113(2) bars suit where all of the plan documents and relevant
information was disclosed to the plaintiff more than three years
before plaintiff filed the complaint, but plaintiff chose not to
read the information?
•Certworthy?
• Opens a circuit split
• Lack of uniformity and creates opportunities for forum
shopping9

10. 10
Where do you stand?

11. STANDING
•Interplay of Article III Standing and ERISA Sections
502(a)(2)
and (3)
• Article III: Plaintiff must show an injury-in-fact, a causal
connection between the injury and the misconduct, and a
likelihood that the injury will be redressed by a favorable
decision in the plaintiff’s favor. Lujan v. Defenders of Wildlife,
504 U.S. 555 (1992).
• Section 502(a)(2): Authorizes participants to commence suit for
appropriate relief under Section 409, which in turn provides
that plan fiduciaries are personally liable to the plan for any
losses to the plan resulting from fiduciary breaches.
• Section 502(a)(3): Authorizes participants to commence suit to
enjoin any violation of ERISA or to obtain other appropriate
equitable relief that Section 502 does not elsewhere adequately
11

12. STANDING CONT’D
•Thole v. U.S. Bank, NA, 873 F.3d 617 (8th Cir. 2017)
• Plaintiffs did not have statutory standing to seek restoration of
plan losses under (a)(2) or injunctive relief under (a)(3).
• Plaintiffs failed to show actual injury because the defined
benefit plan was overfunded, meaning that there was no actual
or imminent injury to the plan that caused injury to the
plaintiffs’ interests.
• Plaintiffs did not fall within the class of plaintiffs authorized to
bring suit.
• Dissenting Judge Kelly would have held that participants may
seek injunctive relief under (a)(3) against fiduciaries of
overfunded plans.
12

13. STANDING CONT’D
•Conflict with Third Circuit?
• According to plaintiffs, the Third Circuit held that participants
may seek injunctive relief under Section 502(a)(3) against
fiduciaries without showing actual injury. Horvath v. Keystone
Health Plan E. Inc., 333 F.3d 450 (3d Cir. 2003).
•Thole’s petition for certiorari
• May an ERISA plan participant seek restoration of plan losses
caused by fiduciary breach under § 29 U.S.C 1132(a)(2) without
demonstrating individual financial loss or imminent risk
thereof?
• May an ERISA plan participant seek injunctive relief against
fiduciary misconduct under § 29 U.S.C 1132(a)(3) without
demonstrating individual financial loss or imminent risk
thereof?13

14. 14
Whose burden is it anyway?

15. BURDEN OF PROVING LOSS
•Brotherston v. Putnam Investments, LLC, 907 F.3d 17
(1st Cir. 2018)
• Section 409: A fiduciary who breaches its fiduciary duty must
“make good” to the plan “any losses to the plan resulting from
such breach.”
• Three elements to an imprudence claim: breach, loss, and
causation.
• Rejected the “ordinary default rule,” which presumes the burden
rests with plaintiffs
• Adopted burden-shifting rule
• Upon plaintiff’s proof of a breach/loss, burden shifts to
defendants to disprove loss resulting from the breach.
• Borrowed trust law principles given ERISA’s silence on the issue.15

16. BURDEN OF PROVING LOSS CONT’D
• Deep Circuit Conflict
• First Circuit aligned itself with the Fourth, Fifth and Eighth Circuits
• Conflict with Second, Sixth, Seventh, Ninth, Tenth and Eleventh Circuits
• Putnam’s Petition For Certiorari
• Whether plaintiff has the burden of proving that losses to the plan
resulted from a fiduciary breach under 29 U.S.C. § 1109 or whether the
defendant bears the burden of disproving loss causation?
• Certworthy?
• Knowing who bears burden of persuasion on a given element is crucial
• Nationwide uniformity is at the very heart of ERISA’s purpose
• ERISA permits venue anywhere and should avoid forum-shopping
16

17. 17
Can you get out of my
way?

18. PREEMPTION
•PCMA v. Rutledge, 891 F.3d 1109 (8th Cir. 2018)
• ERISA Section 514(a) preempts “any and all State laws insofar as
they may now or hereafter relate to any employee benefit
plans.”
• Arkansas attempted to address the trend of having significantly
fewer independent and rural-serving pharmacies in the state by
mandating that pharmacies be reimbursed for generic drugs at
a price equal to or higher than the pharmacies’ cost for the
drug.
• PMCA brought action on behalf of its members arguing that the
statute was preempted by ERISA.
• Eighth Circuit aligned itself with D.C. Circuit and held that the
state statute was preempted because it regulated the conduct
of PBMs.18

19. PREEMPTION CONT’D
•Conflict with First Circuit
• State law not preempted because PBMs are not ERISA fiduciaries
and thus “outside of the intricate web of relationships among
the principal players in the ERISA scenario.” PCMA v. Rowe, 429
F.3d 294 (1st Cir. 2005).
•Arkansas’ Petition For Certiorari
• Whether the Arkansas statute regulating pharmacy benefits
managers’ drug-reimbursement rates is preempted by ERISA?
•Certworthy?
• Arkansas contends that ERISA does not preempt state
regulation of rates
• Deepens a circuit split
• SCOTUS invited the Solicitor to express the views of the U.S.19

20. QUESTIONS?