sufficient proof to maintain a breach of duty claim grounded in a failure to sell employer securities plaintiffs contend that the decision is erroneous with three reasons first because the district court held the plaintiff to a pleading standard which violated the federal rules of civil procedure the applicable case precedent of this circuit in concho and the congressional purpose of arista secondly that the plaintiffs in fact did plead sufficient  meet even this this high standard and thirdly that the presumption of reasonable ness which was the predicate for the decision of the court based upon the mention cooper line of cases should not have applied because this  ask me a question one card i don't know i didn't look at that because we're we're dealing with the period through two thousand and one and i didn't want to inject into the record that's what you want me to do what the court didn't recognize is there are very specific reasons why you suffered so all these securities employers securities after a merger expert testimony would that was the event called the transformation and under the transformation date both the plan and the trust the stiffly stated that the plan was not to be primarily invested in employer security so it basically took away that requirement that it be primarily invested what possible for the appellate employees of referred to as a provision in the diversification section that applies only to the employees which calls for the employees to keep fifteen percent of their assets skin employer securities but that says no the thing about what the fiduciary responsibility was to sell the securities in the event that prudence should require us now you're either going to my first argument and this is really the key of why i'm here i'm a reserve practitioner the decision that holds and aesop the participants to this high standard of pleading is so damaging to the congressional purpose i thought i had to be here and take this appeal that congress has specifically stated that it is a number one priority of arista that the participants recover the full extent of their damages where there have be violations the high standard of pleading requires participants to allege facts which are so great at such an early point before discovery that claims could be lost that exist and for those reasons the if the pleading some cases do some cases do but of course this court is the your car got the decision this probably the most important decision the united states on this issue because your case is cited by courts is a very big distinction between an east op and i at the aesop must be primarily invested in employer security and i am it can be invested over the fifteen percent level under certain circumstances but because it can be invested doesn't mean that there should be a presumption that they must hold those shares why they are because the purposes of an aesop are to fall on the one hand it's to permit the employers to be a part of the company a shareholder in the company but if the same time another critical issue is that the fiduciary smushed assure that the assets are protected so that the retirement will exist as these people retire and that's why the most important of then in the history of any swap is the sale of a company when that when a company is ful because i'm trying to show the distinction and what i'm trying to say is that the reasonable presumption shouldn't apply for simply and i ask unless it's a nice op and i'm saying that because and i'm using that situation of a merger which is the key point here you know merger the retirees are going to capture the benefit of a transaction that can be a once in a lifetime transaction  that decision and determine whether it's in the best interest of the participants to proceed with that sale of their shares once they do what the apple these are suggesting is they don't have any responsibility if it's a stock for stock transaction to capture the premium and that's a devastating failure on the part of the fiduciary not to at least investigate that issue after the premium premium doesn't go away he's captured the premium your honor would trustees are expected to know that and i just don't understand where that that premium is from your honor i must respectfully disagree with you because any time a person serves as a fiduciary with respect to a stock transaction they must make a judgment if we were to sleep to accept the position that the stock may go up or it may go down then the fiduciary would have any responsibility at all because they could just say well you know i don't care it's you know i'm holding employer securities if it goes down and the retirement is lost then that's too bad but that the fiduciary has the responsibility to protect those assets for the retirees that's an empty phrase what does it mean what is it that is your response to look at it means to your honor that they must look at the conditions of the company in light of their presen circumstances they must look at the benefit that they've already realised from a particular transaction and they have to consider the likelihood of as to whether that benefits going to be lost in the future and i'm sure that you can understand that sometimes acquisitions occur with highly leveraged companies that put themselves in a position through those acquisitions where the value of that company may be eroding in the short term and all are saying here is that these produce trees had a duty once they made the decision to sell their shares to make a decision as to whether to sell the stock that they got or that for the sale of their or much stock in determine whether it was in the best interest and prudent to continue to hold  contending that that there should have been a sale i'm sorry we're not contending that there should have been an amendment because of the fact that the amendment constitutes plan design and so there is in fact a part of this this plan document that says that the fiduciary use can have the participants make amendments to the trust instrument if it's going to affect the whole me let me raise spicey bank your honor let me raise a very important point i mean we we've talked about this distinction between a nice stop and a and not any stop and even some of the cases that have been decided by the courts have recognized there's a question as to whether this reasonable snus presumption should apply when it's not an isa and the recent case of duke energy that which was cited by the apple least raises that very point so there's clearly a question today in america as to whether the mention cooper doctrine should be applied when it's not a nice stop and that's clearly the case here where the plan itself says that on the transformation date it's no longer to be eyes a public company so normally when you have these a private company that does the acquisition they may have those requirements that you hold the stock in compliance with the federal securities laws but this was a public company the last point i really would like to make and there's just simply no way to understate the importance of this concert case you know the cartridge case makes it very clear that there is a serious distinction between fraud and breach of fiduciary duty and that the participants must be entitled to obtain their discovery and present their case and ink if we were to extend or create an exception for caution by by saying that the men for reasonable miss restricted in what sense where the plan says that it no longer needs to be primarily invested in employer she curates it's not restricted at that point and that's the point the transformation of data is the key because i would agree with you that prior to that transformation date that argument might work but both the plan and the trust it which is in the record stayed very specifically after that transformation date after the plan no longer has a majority of its assets primarily invested in puerto securities it is not any stock and is not to be primarily invested and that basically opens the whole thing up to the fiduciary exercising its proper fiduciary duty to decide what's in the best interest of please the court mining this brian earlier and i represent the apple in the oregon metallurgical along with the individual athletes on the porch and i should note that i plan to use no more than seven and a half minutes of my time and will seed the balance is whether the plaintiffs effectively pled themselves out of court asking or admitting in the district court that allegheny technologies was a sound and viable company at all relevant times once the plane i but when the plaintiffs go beyond and submit and i commend to the court the scrutiny of the complaint along with its accompany exhibits is a couple hundred pages long but once the plaintiffs go down that path they stand the risk of offering up plants of which stock bonus plans and aesop's are but two examples you can also have thrift plans and savings plans so that's really no consequences and further the trust agreement specifically again you have to examine the plan document against the backdrop of the congressional goal of facilitating employee ownership and then what you have is this acquisition by allegheny technology of war and if you look at that particular language the trust agreement it's the substitution of one plan sponsor for another so i don't think it's particularly remarkable that here there was an acquisition and it doesn't trigger these exceptional circumstances  sponsor for another in the event of an acquisition and again the plaintiff's argument really as your honor points out is that the price of the stock went up at that given point in time there are no allegations of any nothing to trigger a duty along with a spiking of the price of the stock i submit that presents a hobson's choice that congress didn't anticipate when it adopted these plans with the cash in other words allegheny technology simply and there's of swap stock seeing results well again your honor i can see no reason why it judy would be triggered in the circumstances where there's suggested that in the end the plan documents really didn't require this minimum fifteen percent holding and there's no basis for that argument i think it's crystal clear that the starting point of this case is that we have a plan that in the provisions and i think it's section twelve on participant diversification unfortunately a couple of the key pages were left out of the original record so we put in our supplemental excerpts of record that have  circumstances they claim are here but at least they're clearly not there seems to be a suggestion that the fiduciaries could have got together one day and said forget the fifteen percent let's sell all of this we think it's a good time to sell there's not there's not there's not a single word of the plan document that would transformation date occur which they allegedly did so that's just one of the many points that they made very quickly in their reply brief about what the plan means that it's contrary to through a careful reading of the plan so when you start with the premise that the plan required the holding of fifteen percent what you do have here is you have exactly the case that i think judge clifton identified you have a case that can only succeed in the following legal proposition is true the price of the stock is sufficient information to lead to some kind of duty to consider whether or not to depart from the plan his terms are from the aesop are eligible i p purpose of a plan and we talked about rule exceptions swallowing rules we don't want the rule to swallow here we don't want the rule to swallow a very carefully designed exception to the diversification requirement congress clearly wanted and intended and sought to encourage be very careful not to allow the munch doctrine to kind of expand to become to swallow up the rule that eligible ips are perfectly proper and and but it still kind of creeps in the back door in the union claim because there are allegations for why the union is a producer here rests on honest notion of de facto control and the only place that the defacto control comes from in the complaint is an allegation that there was this to amend the plan and you're refusing plan along with the employers making that's right and what i'm saying is the full consequences of the concession that they're not pursuing that theory is one the courts should appreciate which is that the union shouldn't be in the case i don't think that they conceded received in this merger transaction so as to capture the premium in light of subsequent substantial decrease in value and the the public reports that were saying that eighty i was a struggling company a poor performer and its future was not real good in that in the near term because of their industry and their ability to compete in that industry that's what those documents say you don't look at it from the standpoint it's part of a company in bankruptcy or are they a sound company the issue is whether it was prudent to remain invested in the securities or to protect the participants safeguard their their retirement and to cash it out the second  good point but after trying to stretch this point to you but maybe i'm not making myself clear the merger is an independent they says for the reasonable presumption if you believe that it applies and we contend  doesn't but if you look at the case we've cited to you in our recent additional case law precedent the palko case is an amazing case and that case while it doesn't come directly down to this issue that is a case involving a merger where what the court did was the court said that the company was a fiduciary because it adopted any amendment to the plan after a merger which prevented the company from selling the shares and required the company to keep the shares it received in the merger in the buyer company and the court said that that raises a serious question as to whether they were  breach of fiduciary duty and and what that court realized is the same thing i'm trying to say to you and that is that a merger transaction is such a unique and important transaction in the context of the life of any stop that it provides a basis a compelling circumstance and by the way if we were to have gotten past this pleading stage we would have had expert witnesses to testify that it was a compelling circumstance that would require sale because of the fact that that well your honor what you would in other words what i'd be arguing the other way of course not that but but the thing is that the merger is such an important transaction i'm sure that you can understand that i believe the evidence would show that the management members of this company cashed out and in fact a number of the cases point out that one of the big issues is if you can show that the management members were cashing out that that's evidence of crudeness that supports the sale but we were able to prove that because we were not able to get to the point of discovery and that's why we you may feel as though we're a long shot and of course the courts that talk about these cases talk about it that way but without being given the opportunity to conduct that discovery this aesop was effectively denied an opportunity to prove its case just one last point done and that was with respect to mr di and i just want to clear our claim against the union is it arises from the fact that the but do sharif's indicated that they would not take any action to sell the shares nor investigate because they felt that they were duty bound by the side agreement and that they couldn't go against the union and that's the basis for our argument that the amendment thank you so much for your time i have to ask one question because i'm not sure i understand you referred heatedly to a premium i thought i knew what you are referring to now i'm not so sure ok what you mean by the premium has to be captured the premium is the the difference in the amount the aesop received over the value that the merger was announced that upward that increase represented forty five percent of the value of the shares before the merger was announced and it is that