The Eleventh Circuit court affirmed its original dismissal of a participant’s fiduciary claims against Delta Air Lines and other alleged plan fiduciaries concerning Delta Air Lines stock offered within the Delta Family-Care Savings Plan. The plaintiff’s account value decreased when the price of Delta stock dropped between 2000 and 2004. The participant filed suit in 2005, alleging that plan fiduciaries “imprudently continued to permit participants to invest in Delta stock” regardless of the company’s financial underperformance and concerns about its ability to remain solvent. The complaint was originally dismissed by the district court for failure to state a claim, and was affirmed by the Eleventh Court.
Post-verdict in the Fifth Third Bancorp v. Dudenhoeffer Supreme Court case (see 2nd quarter 2014 Prudent Press), the participant in this case filed a petition for the court to deliver its ruling (writ of certiorari) to the U.S. Supreme Court for review. The Supreme Court vacated and remanded for further consideration given the Dudenhoeffer decision. On remand, the district court again dismissed the claims, and the Eleventh Circuit affirmed once again, as the plaintiff failed to allege that fiduciaries had material inside information about Delta’s financial condition or prove the existence of special circumstances (fraud for example) that would cause the reliance on the stock’s market price to be imprudent.
www.erisapracticecenter.com; July 31, 2015.