Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-10-56014/USCOURTS-ca9-10-56014-2/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

STEVE HARRIS; DENNIS F. RAMOS,

AKA Dennis Ramos; DONALD

HANKS; JORGE TORRES; ALBERT

CAPPA, On Behalf of Themselves

and All Others Similarly Situated,

Plaintiffs-Appellants,

v.

AMGEN, INC.; AMGEN

MANUFACTURING, LIMITED; FRANK

J. BIONDI, JR.; JERRY D. CHOATE;

FRANK C. HERRINGER; GILBERT S.

OMENN; DAVID BALTIMORE; JUDITH

C. PELHAM; KEVIN W. SHARER;

FREDERICK W. GLUCK; LEONARD D.

SCHAEFFER; CHARLES BELL;

JACQUELINE ALLRED; AMGEN PLAN

FIDUCIARY COMMITTEE; RAUL

CERMENO; JACKIE CROUSE;

FIDUCIARY COMMITTEE OF THE

AMGEN MANUFACTURING LIMITED

PLAN; LORIJOHNSTON; MICHAEL

KELLY,

Defendants-Appellees,

DENNIS M. FENTON; RICHARD

NANULA; THE FIDUCIARY

COMMITTEE; AMGEN GLOBAL

No. 10-56014

D.C. No.

2:07-cv-05442-

PSG-PLA

OPINION

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2 HARRIS V. AMGEN

BENEFITS COMMITTEE; AMGEN

FIDUCIARY COMMITTEE,

Defendants.

On Remand From The United States Supreme Court

Filed October 30, 2014

Before: Jerome Farris and William A. Fletcher, Circuit

Judges, and Edward R. Korman, Senior District Judge.*

Opinion by Judge W. Fletcher

SUMMARY**

ERISA

On remand from the United States Supreme Court for

reconsideration in light of Fifth Third Bancorp v.

Dudenhoeffer, 134 S. Ct. 2459 (2014), the panel reversed the

district court’s dismissal of a class action brought by current

and former employees of Amgen, Inc., and an Amgen

subsidiary under the Employee Retirement Income Security

* The Honorable Edward R. Korman, Senior United States District Judge

for the Eastern District of New York, sitting by designation.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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HARRIS V. AMGEN 3

Act, alleging breach of fiduciary duties regarding two

employer-sponsored pension plans.

The plans were employee stock ownership plans that

qualified as “eligible individual account plans,” or “EIAPs.” 

All of the plaintiffs’ EIAPs included holdings in the Amgen

Common Stock Fund, which held only Amgen common

stock.

The Supreme Court held in Fifth Third that there is no

presumption of prudence for employee stock ownership plan

fiduciaries beyond the statutory exemption from the

otherwise applicable duty to diversify. The panel held,

therefore, that the plaintiffs were not required to satisfy the

criteria of Quan v. Computer Sci. Corp., 623 F.3d 870 (9th

Cir. 2010), in order to show that no presumption of prudence

applied.

The panel held that the plaintiffs stated a claim that the

defendants acted imprudently, and thereby violated their duty

of care, by continuing to provide Amgen common stock as an

investment alternative when they knew or should have known

that the stock was being sold at an artificially inflated price. 

The panel held that the plaintiffs sufficiently alleged that

the defendants violated their duty of loyalty and care by

failing to provide material information to plan participants

about investment of the Amgen Common Stock Fund. 

Agreeing with the Sixth Circuit, the panel held that the

defendants’ preparation and distribution of summary plan

distributions, including their incorporation of Amgen’s SEC

filings by reference, were acts performed in their fiduciary

capacity. 

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4 HARRIS V. AMGEN

The panel also reversed the dismissal of derivative claims,

as well as a claim that the defendants caused the plans

directly or indirectly to sell or exchange property with a

party-in-interest. Because the Amgen Plan contained no clear

delegation of executive authority, the panel reversed the

district court’s dismissal of Amgen from the case as a nonfiduciary. The panel remanded for further proceedings

consistent with its opinion.

COUNSEL

Stephen J. Fearon, Jr. and Garry T. Stevens, Jr., Squitieri &

Fearon, LLP, New York, New York; Stephen M. Fishback

and Daniel L. Keller, Keller, Fishback & Jackson, LLP,

Tarzana, California; Francis M. Gregorek, BetsyC. Manifold,

and Rachele R. Rickert, Wolf Haldenstein Adler Freeman &

Herz, LLP, San Diego, California, Mark C. Rifkin (argued),

Wolf Haldenstein Adler Freeman & Herz, LLP, New York,

New York; and Thomas James McKenna, Gainey &

McKenna, New York, New York, for Appellants.

EmilySeymour Costin, Sheppard Mullin Richter &Hampton,

LLP, Washington, D.C.; Steven Oliver Kramer and Jonathan

David Moss, Sheppard Mullin Richter & Hampton, LLP, Los

Angeles, California; Jonathan Rose, Alston & Bird, LLP,

Washington, D.C.; John Nadolenco, Mayer Brown, LLP, Los

Angeles, California; Brian David Netter, Mayer Brown, LLP,

Washington, D.C.; and Robert P. Davis (argued), Mayer

Brown, LLP, New York, New York, for Appellees.

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HARRIS V. AMGEN 5

OPINION

W. FLETCHER, Circuit Judge:

Plaintiffs, current and former employees of Amgen, Inc.

(“Amgen”) and its subsidiaryAmgenManufacturing, Limited

(“AML”), participated in two employer-sponsored pension

plans, the Amgen Retirement and Savings Plan (the “Amgen

Plan”) and the Retirement and Savings Plan for Amgen

Manufacturing, Limited (the “AML Plan”) (collectively, “the

Plans”). The Plans were employee stock-ownership plans

that qualified as “eligible individual account plans”

(“EIAPs”) under 29 U.S.C. § 1107(d)(3)(A). All of the

plaintiffs’ EIAPs included holdings in the Amgen Common

Stock Fund, one of the investments available to plan

participants. The Amgen Common Stock Fund held only

Amgen common stock.

After the value of Amgen common stock fell, plaintiffs

filed a class action under the Employee Retirement Income

Security Act (“ERISA”) against Amgen, AML, Amgen’s

board of directors, and the FiduciaryCommittees of the Plans

(collectively, “defendants”), alleging that defendants

breached their fiduciary duties under ERISA. The district

court dismissed the complaint against Amgen under Federal

Rule of Civil Procedure 12(b)(6) on the ground that Amgen

was not a fiduciary. It dismissed the complaint against the

other defendants, who were fiduciaries, after applying the

“presumption of prudence” articulated in Quan v. Computer

Sciences Corp., 623 F.3d 870 (9th Cir. 2010). Alternatively,

even assuming the absence of the presumption, the district

court dismissed the complaint on the ground that defendants

had not violated their fiduciary duties.

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6 HARRIS V. AMGEN

In an earlier opinion, we reversed the district court’s

dismissal of the complaint. Harris v. Amgen, Inc., 738 F.3d

1026 (9th Cir. 2013). Applying Quan, we held that the

presumption of prudence did not apply. We held, further,

that, in the absence of the presumption, plaintiffs had

sufficiently alleged violation of the defendants’ fiduciary

duties. Finally, we held that Amgen was an adequately

alleged fiduciary of the Amgen Plan.

Defendants petitioned for a writ of certiorari. The

Supreme Court deferred ruling on the petition while it

considered Fifth Third Bancorp v. Dudenhoeffer, 134 S. Ct.

2459 (2014), another ERISA case in which the presumption

of prudence was at issue. In Quan, we had held that the

presumption of prudence was available to ERISA fiduciaries

for both EIAPs and employee stock ownership plans

(“ESOPs”) “when the plan terms require or encourage the

fiduciary to invest primarily in employer stock.” Quan,

623 F.3d at 881. Overruling Quan and similar decisions by

our sister circuits, the Supreme Court held in Fifth Third that

there was no presumption of prudence for ESOP fiduciaries

beyond the statutoryexemption from the otherwise applicable

duty to diversify. Fifth Third, 134 S. Ct. at 2467; 29 U.S.C.

§ 1104(a)(2). After deciding Fifth Third, the Court granted

certiorari, and vacated and remanded for reconsideration in

light of its decision. Amgen, Inc. v. Harris, 134 S. Ct. 2870

(2014).

On reconsideration in light of Fifth Third, we again

reverse the district court’s dismissal.

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HARRIS V. AMGEN 7

I. Background

The following narrative is taken from the complaint and

documents that provide uncontested facts. On a motion to

dismiss, we assume the allegations of the complaint to be

true. See Tellabs, Inc. v. Makor Issues & Rights, Ltd.,

551 U.S. 308, 322 (2007).

Amgen is a global biotechnology company that develops

and markets pharmaceutical drugs. AML, a wholly owned

subsidiary of Amgen, operates a manufacturing facility in

Puerto Rico. To provide retirement benefits to their

employees, Amgen set up the Amgen Plan on April 1, 1985. 

AML set up the AML Plan in 2002 and it became effective on

January 1, 2006.

The Plans are covered by the Employee Retirement

Income Security Act (“ERISA”). Both qualify as “individual

account plans.” See 29 U.S.C. § 1002(34). Plan participants

contribute a portion of their pre-tax compensation to

individual investment accounts. They receive benefits based

solely upon their contributions, adjusted for any gains and

losses in assets held by the Plans. Participants may contribute

up to thirty percent of their pre-tax compensation. They may

select from a number of investment funds offered by the

Plans. One of those is the Amgen Common Stock Fund,

which holds only Amgen stock. Amgen stock constituted the

largest single asset of both Plans in 2004 and 2005.

This litigation arises out of a controversy concerning

Amgen drugs used for the treatment of anemia. Anemia is a

condition in which blood is deficient in red blood cells or

hemoglobin. Causes of anemia include an iron-deficient diet,

excessive bleeding, certain cancers and cancer treatments,

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8 HARRIS V. AMGEN

and kidney or liver failure. In the early 1980s, Amgen

scientists discovered how to make artificial erythropoietin, a

protein formed in the kidneys that stimulates erythropoiesis,

the formation of red blood cells. After this discovery, Amgen

commercialized the manufacture of a class of drugs known as

erythropoiesis-stimulating agents (“ESAs”) to treat anemia.

 In 1989, the Federal Drug Administration (“FDA”)

approved Amgen’s first commercial ESA, epoetin alfa, for

the treatment of anemia associated with chronic kidney

failure. Amgen marketed epoetin alfa for approved uses

under the brand name EPOGEN (“Epogen”), and licensed

patents to Johnson & Johnson (“J&J”) to develop additional

marketable uses. J&J obtained FDA approval between 1991

and 1996 to market epoetin alfa under the brand name

PROCRIT (“Procrit”) for anemia associated with

chemotherapy and HIV therapies, for chronic kidney

diseases, and for pre-surgery support of anemic patients. J&J

had exclusive marketing rights for Procrit under its licensing

agreement with Amgen.

Sometime before 2001, Amgen developed a new ESA,

darbepoetin alfa, whose sales by Amgen were not restricted

by J&J’s exclusive marketing rights for Procrit. Darbepoetin

alfa, marketed as Aranesp, lasts longer in the bloodstream

than epoetin alfa. The FDA approved Aranesp for treatment

of anemia associated with chronic kidney failure and cancer

chemotherapy. Aranesp has taken significant market share

from J&J’s Procrit. At the time the complaint was filed,

Aranesp “control[led] half the market” for non-dialysis ESA. 

Sales of EPOGEN and Aranesp have been “core to

[Amgen’s] survival and success,” making up roughly half of

Amgen’s $14.3 billion in revenue in 2006.

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HARRIS V. AMGEN 9

In the late 1990s and early 2000s, several clinical trials

raised safety concerns regarding the use of ESAs for

particular anemic populations. In 1998, the Normal

Hematocrit Study tested the efficacy of ESAs on anemia

patients with pre-existing heart disease. The study was

terminated because the test group experienced statistically

significant higher rates of blood clotting. In 2003 and early

2004, two trials — ENHANCE and BEST — tested ESAs on

cancer patients in Europe. The ENHANCE trial showed

shorter progression-free survival and shorter overall survival

of head and neck cancer patients for the ESA group than the

placebo group. The BEST trial was terminated after four

months because breast cancer patients in the group taking

epoetin alfa had a higher rate of death than those in the

placebo group.

ENHANCE and BEST did not test the safety of ESAs for

the specific uses and doses for which they had been approved

in the United States. In March 2004, the FDA published

notice in the Federal Register that the Oncology Drug

AdvisoryCommittee (“ODAC”), an FDA-sponsored group of

oncology experts, would convene in May 2004 to discuss

safety concerns about Aranesp. In April, before the ODAC

meeting, an Amgen spokesperson stated during a conference

call with investors, analysts, and plan participants that “the

focus [of the ODAC meeting] was not on Aranesp” and that

“the safety for Aranesp has been comparable to placebo.”

During its two-day meeting with ODAC, the FDA urged

Amgen to conduct further clinical trials to test the safety of

ESAs for uses that had already been approved by the FDA. 

Amgen made a presentation at the meeting outlining what it

called the “Amgen Pharmacovigilance Program,” consisting

of five ongoing or planned clinical trials testing Aranesp “in

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10 HARRIS V. AMGEN

different tumor treatment settings.” Amgen’s Vice President

for Oncology Clinical Development described the Amgen

program as the “responsible and credible approach to

definitively resolv[e] the questions raise[d]” by the FDA.

One of the trials under Amgen’s program was the Danish

Head and Neck Cancer Group (“DAHANCA”) 10 Trial. The

DAHANCA 10 Trial tested whether high doses of Aranesp

could help shrink tumors in patients receiving radiation

therapy for head and neck cancer. On October 18, 2006,

DAHANCA investigators temporarily halted the study “due

to information about potential unexpected negative effects.” 

Amgen was informed of the temporary halt of the study on or

near that day. Amgen did not disclose that the DAHANCA

10 Trial had been temporarily halted.

An analysis of the halted DAHANCA 10 Trial was

completed on November 28, 2006. The principal investigator

reported that “[b]ased on these outcome results the

DAHANCA group concluded that the likelihood of a reverse

outcome, i.e. that Aranesp would be significantly better than

in control[,] was almost non-existing.” The DAHANCA 10

Trial was permanently terminated on December 1, 2006. 

DAHANCA investigators concluded that “there is a small but

significant poor outcome in the patients treated with Aranesp”

in that tumor growth was worse for patients who took

Aranesp compared to patients who did not. Amgen was

informed in December 2006 that the study had been

permanently terminated.

Another clinical trial, CHOIR, raised additional safety

concerns about ESAs. The CHOIR trial investigated the

safety of epoetin alfa (EPOGEN) when used to treat chronic

kidney disease patients. The safety monitoring board for

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HARRIS V. AMGEN 11

CHOIR terminated the trial when a higher incidence of death

and cardiovascular hospitalization was observed among

epoetin alfa users. Yet another clinical trial, CREATE, tested

the benefit provided by Roche Pharmaceuticals’s ESA in

raising hemoglobin levels in patients with chronic kidney

disease. On November 16, 2006, Roche announced that the

results of the CREATE trial “clearly show that there is no

additional cardiovascular benefit from treating to higher

hemoglobin levels in this patient group.”

On November 20, Amgen posted a public statement

responding to the CHOIR and CREATE trials. Amgen wrote,

“A very substantial body of evidence, developed over the past

17 years, demonstrates that anemia associated with chronic

kidney disease can be treated safely and effectively with

EPOGEN and Aranesp when administered according to the

Food and Drug Administration (FDA)-approved dosing

guidelines.” Two weeks later, Amgen issued a press release

to correct “what the company believes are misleading and

inaccurate news reports regarding the use of its drugs.” 

Amgen reiterated, “EPOGEN and Aranesp are effective and

safe medicines when administered according to the Food and

Drug Administration (FDA) label.”

Amgen also conducted its own clinical trial, the “103

Study.” The 103 Study tested Aranesp in 939 patients with

anemia secondary to cancer. The FDA later described the

103 Study as “demonstrat[ing] significantly shorter survival

rate[s] in cancer patients receiving ESAs as compared to

th[o]se receiving transfusion support.” However, during a

January 2007 conference call, an Amgen representative

described the 103 Study as not demonstrating a “statistically

significant adverse [e]ffect of Aranesp on overall mortality in

this patient population.” He said that “the risk benefit ratio

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12 HARRIS V. AMGEN

for Aranesp in these extremely ill patients with anemia

secondary to malignancy is, at best, neutral and perhaps

negative.” During what may have been the same conference

call, discussing Amgen’s fourth-quarter earnings on January

25, an Amgen representative stated, in response to concerns

expressed about the 103 Study, that “we have a well

established risk benefit profile.”

During a February 16, 2007, investor conference call,

defendant Kevin Sharer, Amgen’s President, Chief Executive

Officer, and Chairman of the Board, stated, “We strongly

believe, as we have consistently stated, that Aranesp and

EPOGEN are safe and effective medicines when used in

accordance with label indications.” During a March

conference call, defendant Sharer reiterated, “When we look

at the totality of data, we believe our products are safe and

effective when used on-label.” On March 9, 2007, Amgen

posted a statement on the company website available to plan

participants under the title “Amgen’s Statement on the Safety

of Aranesp (darbepoetin alfa) and EPOGEN (Epoetin alfa)”:

Aranesp (darbepoetin alfa) and EPOGEN

(Epoetin alfa) have favorable risk/benefit

profiles in approximatelyfour million patients

with chemotherapy-induced anemia or CKD

when administered according to the FDAapproved dosing guidelines.

Amgen engaged in extensivemarketing, encouraging both

on- and off-label uses of its ESAs. Amgen trained its sales

representatives to ask questions that steered doctors to

discussions about off-label uses. In an Amgen sales

personnel manual, Amgen gave an “expanded list” of

“excellent questions” to ask doctors in order to move the

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HARRIS V. AMGEN 13

discussions toward off-label uses. Examples include, “What

is keeping you from using Aranesp in all your MDS/HIV/CIA

patients?” MDS is myelodysplastic syndrome, an illness

often resulting in anemia. The FDA has never approved

Aranesp to treat MDS or HIV patients.

Amgen created a speakers program in which Amgen paid

for dinners at which “expert” speakers talked to physicians

and other providers about off-label uses for Aranesp. 

Speakers program events were not accredited as continuing

medical education seminars conducted by an independent

medical association. Amgen paid not only the speakers but

also the doctors and other medical providers who attended the

events. The $1,000 payments to physician attendees were

“paid from [Amgen’s] marketing budget.”

Amgen educated medical providers about the profit they

could obtain by prescribing its ESAs. Before January 1,

2005, Medicare calculated drug reimbursementrates based on

the average wholesale price (“AWP”) of drugs. Medical

providers could purchase Amgen’s ESAs at a price lower

than the AWP, but could charge Medicare the AWP. Amgen

created spreadsheets and other tools to help providers

calculate the profit. Amgen also encouraged doctors to use

its ESAs inefficiently. For example, it encouraged doctors to

deliver Epogen intravenously rather than subcutaneously,

because an intravenous delivery of the drug requires a

substantially larger dose to achieve the same effect.

Amgen marketing efforts were successful. For example,

Amgen’s worldwide sales of Aranesp increased fourteen

percent during the first quarter of 2007 compared to the same

quarter in 2006. Amgen told investors on several occasions

that its marketing practices were proper. In public SEC

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14 HARRIS V. AMGEN

filings, Amgen stated that it marketed its products only for

on-label uses. In December 2006, in response to negative

publicity about off-label uses, Amgen issued a press release

“intended to clarifyAmgen’s position on the use of EPOGEN

and Aranesp and to correct what the company believes are

misleading and inaccurate news reports regarding the use of

its drugs.” The company clarified that “Amgen only

promotes the use of EPOGEN and Aranesp consistent with

the FDA label.” On a January 2007 conference call, Amgen

stated that “our promotion [of EPOGEN] has always been

strictly according to our label, we do not anticipate a major

shift in clinical practice.”

In February 2007, The Cancer Letter published an article

entitled “Amgen Didn’t Tell Wall Street About Results of

[DAHANCA] Study.” The article reported that the

DAHANCA trial had been temporarily halted due to the

“significantly inferior therapeutic outcome from adding

Aranesp to radiation treatment of patients with head and neck

cancer.” On February 23, the Associated Press announced

that the USP DI, an influential drug reference guide, had

delisted Aranesp as a treatment for anemia in cancer patients

not undergoing chemotherapy. On February 27, the New

York Times published an article stating:

New studies are raising questions about

whether drugs that have been used bymillions

of cancer patients might actually be harming

them. The drugs, sold by Amgen, Roche, and

Johnson & Johnson, are used to treat anemia

caused by chemotherapy and meant to reduce

the need for blood transfusions and give

patients more energy. But the new results

suggest that the drugs may make the cancer

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HARRIS V. AMGEN 15

itself worse. . . . [S]ome cancer specialists and

securities analysts say the new information

may make doctors more cautious in using the

drugs, which have combined sales for the

three companies exceeding $11 billion and

have been heavily promoted through efforts

that include television commercials.

On March 9, the FDA mandated a “black box” warning

for off-label use of Aranesp and Epogen. A black box

warning is the strongest warning the FDA can require. Cf. 21

C.F.R. § 201.57(c)(1) (2012). The black box warning read:

Recently completed studies describe an

increased risk of death, blood clots, strokes,

and heart attacks in patients with kidney

failure where ESAs were given at higher than

recommended doses. In other studies, more

rapid tumor growth occurred in patients with

head and neck cancer who received these

higher doses. In studies where ESAs were

given at recommended doses, an increased

risk of death was reported in patients with

cancer who were not receiving chemotherapy

and an increased risk of blood clots was

observed in patients following orthopedic

surgery.

On March 21, 2007, two House of Representatives

subcommittees opened an investigation into the safety profile

of Aranesp and EPOGEN as well as into Amgen’s off-label

marketing practices. The Chairs of those two subcommittees

“ordered” Amgen to halt direct-to-consumer advertising and

physician incentives pending further FDA action. On May 8,

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16 HARRIS V. AMGEN

the FDA noted on its website that Aranesp and EPOGEN

“were clearly demonstrated to be unacceptable” in high

doses. On May 10, ODAC reconvened and voted to restrict

the use of ESAs, to expand existing warnings, and to require

ESA manufacturers to conduct further studies.

Defendant Sharer, Amgen’s President and CEO, told a

Wall Street Journal reporter in an interview that 2007 was the

“most difficult [year] in [Amgen’s] history.” According to

Sharer, there was an “unexpected $800 million to $1 billion

hit to operating income due to safety concerns” about

Aranesp. Sales of Aranesp decreased by fifty percent.

Amgen stock, and thus the Amgen Common Stock Fund,

lost significant value as a result of these safety concerns. The

class period runs from May 4, 2005, to March 9, 2007. 

Amgen common stock was at its high of $86.17 on

September 19, 2005. On February 16, 2007, when The

Cancer Letter published its article revealing that Amgen had

not been forthcoming about the result of the DAHANCA 10

Trial, Amgen stock sold for $66.73. When ODAC voted to

restrict the use of ESA drugs, on or shortly after May 10, the

price of Amgen stock dropped to $57.33, the class period

low. Between September 19, 2005 and the ODAC vote, the

price of Amgen stock dropped $28.83, or thirty-three percent.

On August 20, 2007, plaintiffs Steve Harris, a participant

in the Amgen Plan, and Dennis Ramos, a participant in the

AML Plan, filed a complaint alleging that defendants

breached their fiduciary duties under ERISA. The district

court dismissed Harris’s claims for lack of standing, on the

ground that Harris no longer owned assets in the Amgen Plan

on the date he filed his complaint. Harris v. Amgen, Inc.,

573 F.3d 728, 731 (9th Cir. 2009). The court dismissed

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HARRIS V. AMGEN 17

Ramos’s claims without leave to amend on the ground that he

had failed to identify the proper fiduciaries of the AML Plan. 

Id. We reversed, holding that Harris had standing as a

“participant” of the Amgen Plan during the Class Period, and

that Ramos should have been allowed to amend the

complaint. Id.

The complaint now at issue is the First Amended Class

Action Consolidated Complaint (“FAC”), filed on March 23,

2010, by five plaintiffs, including Harris and Ramos. The

FAC alleges six counts of violation of fiduciary duty under

ERISA against Amgen, AML, nine Directors of the Amgen

Board (“the Directors”), and the Plans’ FiduciaryCommittees

and their members. The district court dismissed the FAC

against Amgen on the ground that it was not a fiduciary. It

dismissed the FAC against the remaining defendants under

Rule 12(b)(6) for failure to state a claim.

In a separate class action simultaneously pending before

the same district judge, investors in Amgen common stock

claimed violations of federal securities laws based on the

same alleged facts as in the ERISA action now before us. In

a careful thirty-five page order, the district court concluded

that the investors had sufficiently alleged material

misrepresentations and omissions, scienter, reliance, and

resulting economic loss to state claims under Sections 10(b)

and 20(a) of the 1934 Exchange Act. See 15 U.S.C.

§§ 78j(b), 78t(a). The district court certified a class based on

the facts alleged in the complaint. We affirmed the district

court’s class certification in Conn. Ret. Plans & Trust Funds

v. Amgen, Inc., 660 F.3d 1170 (9th Cir. 2011). The Supreme

Court affirmed in Amgen, Inc. v. Conn. Ret. Plans & Trust

Funds, 133 S. Ct. 1184 (2013).

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18 HARRIS V. AMGEN

For the reasons that follow, we reverse the district court’s

decision in the ERISA case before us.

II. Standard of Review

“We review de novo the district court’s grant of a motion

to dismiss under Rule 12(b)(6), accepting all factual

allegations in the complaint as true and construing them in

the light most favorable to the nonmoving party.” Skilstaf,

Inc. v. CVS Caremark Corp., 669 F.3d 1005, 1014 (9th Cir.

2012). “[C]ourts must consider the complaint in its entirety,

as well as other sources courts ordinarily examine when

ruling on Rule 12(b)(6) motions to dismiss, in particular,

documents incorporated into the complaint by reference, and

matters of which a court may take judicial notice.” Tellabs,

Inc., 551 U.S. at 322. We then determine whether the

allegations in the complaint and information from other

permissible sources “plausibly suggest an entitlement to

relief.” Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009); Starr v.

Baca, 652 F.3d 1202, 1216 (9th Cir. 2011) (quoting Iqbal).

III. Discussion

Congress enacted ERISA to provide “minimum standards

. . . assuring the equitable character of [employee benefit]

plans and their financial soundness.” 29 U.S.C. § 1001(a). 

These minimum standards regulate the “conduct,

responsibility, and obligation for fiduciaries of employee

benefit plans . . . .” Id. § 1001(b). “Congress painted with a

broad brush, expecting the federal courts to develop a ‘federal

common law of rights and obligations’ interpreting ERISA’s

fiduciary standards.” Bins v. Exxon Co. U.S.A., 220 F.3d

1042, 1047 (9th Cir. 2000) (en banc) (citation omitted).

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HARRIS V. AMGEN 19

The Supreme Court has established certain interpretive

rules specific to ERISA’s fiduciary duties. These duties,

including those governing fiduciary status, “draw much of

their content from the common law of trusts, the law that

governed most benefit plans before ERISA’s enactment.” 

Varity Corp. v. Howe, 516 U.S. 489, 496 (1996). ERISA

reflects a “congressional determination that the common law

of trusts did not offer completely satisfactory protection.” Id.

at 497. The law of trusts “often . . . inform[s]” but does “not

necessarily determine the outcome of” an interpretation of

ERISA’s fiduciary duties. Id. The common law of trusts

offers “only a starting point” that must yield to the “language

of the statute, its structure, or its purposes,” if necessary. Id.

We first address the sufficiency of the FAC against each

properly named fiduciary. We then address whether the

plaintiffs have adequately alleged that Amgen is a fiduciary.

A. Sufficiency of the FAC

The district court dismissed all six counts of the FAC

under Rule 12(b)(6). Plaintiffs have appealed only the

dismissal of Counts II through VI.

1. Count II

Plaintiffs allege in Count II that defendants acted

imprudently, and thereby violated their duty of care under

29 U.S.C. § 1104(a)(1)(B), by continuing to provide Amgen

common stock as an investment alternative when they knew

or should have known that the stock was being sold at an

artificially inflated price. Defendants originally contended

that they were entitled to a “presumption of prudence” under

Quan v. Computer Sci. Corp., 623 F.3d 870 (9th Cir. 2010). 

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20 HARRIS V. AMGEN

In our earlier opinion, we held that plaintiffs had satisfied the

criteria of Quan, such that the presumption of prudence did

not apply. The Supreme Court’s opinion in Fifth Third has

now made clear that an ERISA plaintiff does not need to

satisfy the criteria we articulated in Quan. The Court wrote

in Fifth Third:

[T]he law does not create a special

presumption favoring ESOP fiduciaries. 

Rather, the same standard of prudence applies

to all ERISA fiduciaries, except that an ESOP

fiduciary is under no duty to diversify the

ESOP’s holdings.

134 S. Ct. at 2467. Defendants are EAIP fiduciaries rather

than ESOP fiduciaries, but they do not dispute that Fifth

Third applies equally to them, and they do not contend that

they enjoy a presumption of prudence. However, defendants

contend that their actions were prudent even if the

presumption of prudence does not apply.

ERISA requires that a fiduciary perform duties under a

plan “with the care, skill, prudence, and diligence under the

circumstances then prevailing that a prudent man acting in a

like capacity and familiar with such matters would use in the

conduct of an enterprise of a like character and with like

aims.” 29 U.S.C. § 1104(a)(1)(B). This standard governs a

fiduciary’s decision to allow investment of plan assets in

employer stock. Quan, 623 F.3d at 878–79. “This is true,

even though the duty of prudence may be in tension with

Congress’s expressed preference for plan investment in the

employer’s stock.” Id. at 879 (internal quotation marks

omitted). A “myriad of circumstances” surrounding

investments in companystock could support a violation of the

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HARRIS V. AMGEN 21

prudence requirement. In re Syncor, 516 F.3d at 1102. “‘A

court’s task in evaluating a fiduciary’s compliance with this

standard is to inquire whether the individual trustees, at the

time they engaged in the challenged transactions, employed

the appropriate methods to investigate the merits of the

investment and to structure the investment.’” Quan, 623 F.3d

at 879 (quoting Wright, 360 F.3d at 1097) (alterations and

quotation marks omitted).

Count II alleges that defendants knew or should have

known about material omissions and misrepresentations, as

well as illegal off-label sales, that artificially inflated the

price of the stock while, at the same time, they continued to

offer the Amgen Common Stock Fund as an investment

alternative to plan participants. The district court held that,

even without the assistance of the presumption of prudence,

defendants were entitled to dismissal of Count II under Rule

12(b)(6). We disagree.

We begin by noting that we held in Syncor that “[a]

violation [of the prudent man standard] may occur where a

company’s stock . . . was artificially inflated during that time

by an illegal scheme in which the fiduciaries knew or should

have known, and then suddenly declined when the scheme

was exposed.” In re Syncor, 516 F.3d at 1102. In Syncor, the

company was a fiduciary that knowingly made cash bribes to

doctors in Taiwan in violation of the Foreign Corrupt

Practices Act. Upon disclosure of these illegal payments,

Syncor’s stock price lost nearly half its value. “Despite these

illegal practices, the [fiduciaries] allowed the Plan to hold and

acquire Syncor stock when they knew or had reason to know

of Syncor’s foreign bribery scheme.” Id. at 1098. We held

on appeal from summary judgment that “there is a genuine

issue whether the fiduciaries breached the prudent man

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22 HARRIS V. AMGEN

standard by knowing of, and/or participating in, the illegal

scheme while continuing to hold and purchase artificially

inflated Syncor stock for the ERISA Plan.” Id. at 1103.

In their original briefing, filed before the Court decided

Fifth Third, defendants make five arguments in favor of

dismissal of Count II. None is persuasive. First, defendants

argue that investments in Amgen stock during the class

period were not imprudent “because Amgen was not even

remotelyexperiencingsevere financial difficulties during that

time, and remains a strong, viable, and profitable company

today.” This argument is beside the point. Amgen was not

“experiencing severe financial difficulties” during the

relevant time period in part because of the very actions about

which plaintiffs are now complaining. That is, Amgen was

earning large but unsustainable profits based on improper and

unsustainable sales of EPOGEN and Aranesp. Further,

Amgen may have been, and may now be, a “strong, viable,

and profitable company,” but that does not mean that the

price of Amgen stock was not artificially inflated during the

class period.

Second, defendants argue that the decline in price in

Amgen stock was insufficient to show an imprudent

investment by the fiduciaries. They write, “[A]s the District

Court correctly held, this ‘relatively modest and gradual

decline in the stock price’ does not render the investment

imprudent.” As an initial matter, we note that the proper

question is not whether the investment results were

unfavorable, but whether the fiduciary used “‘appropriate

methods’” to investigate the merits of the transaction. Quan,

623 F.3d at 879 (quoting Wright, 360 F.3d at 1097); see also

Kirschbaum, 526 F.3d at 254 (explaining that the “test of

prudence is one of conduct, not results”); Bunch v. W.R.

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HARRIS V. AMGEN 23

Grace & Co., 555 F.3d 1, 7 (1st Cir. 2009) (same). But

defendants’ argument fails even on its own terms. Their

argument is foreclosed by the district court’s decision in the

federal securities class action against Amgen based on the

same alleged sequence of events. See Conn. Ret. Plans &

Trust Funds v. Amgen, Inc., 660 F.3d 1170 (9th Cir. 2011),

aff’d Amgen Inc. v. Conn. Ret. Plans & Trust Funds, __

U.S.__, 133 S. Ct. 1184 (2013). If the alleged

misrepresentations and omissions, scienter, and resulting

decline in share price in Connecticut Retirement Plans were

sufficient to state a claim that defendants violated their duties

under Section 10(b), the alleged misrepresentations and

omissions, scienter, and resulting decline in share price in this

case are sufficient to state a claim that defendants violated

their more stringent duty of care under ERISA.

Third, quoting Kirschbaum, 526 F.3d at 253, 256,

defendants argue that

[w]hen, like here, retirement plans are at

issue, courts must be mindful of “the longterm horizon of retirement investing, as well

as the favored status Congress has granted to

employee stock investments in their own

companies.” . . . [H]olding fiduciaries liable

for continuing to offer the option to invest in

declining stock would place them in an

“untenable position of having to predict the

future of the company stock’s performance. 

In such a case, [a fiduciary] could be sued for

not selling if he adhered to the plan, but also

sued for deviating from the plan if the stock

rebounded.”

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24 HARRIS V. AMGEN

Defendants’ reliance on Kirschbaum is misplaced. The court

wrote in that case, “The Plan documents, considered as a

whole, compel that the Common Stock Fund be available as

an investment option for employee-participants.” 

Kirschbaum, 526 F.3d at 249. The concerns expressed in

Kirschbaum have little bearing on the case before us. Here,

unlike in Kirschbaum, the fiduciaries of the Amgen and AML

Plans were under no such compulsion. They knew or should

have known that the Amgen Common Stock Fund was

purchasing stock at an artificially inflated price due to

material misrepresentations and omissions by company

officers, as well as by illegal off-label marketing, but they

nevertheless continued to allow plan participants to invest in

the Fund.

Fourth, quoting In re Computer Sciences Corp., ERISA

Litig., 635 F. Supp. 2d 1128, 1136 (C.D. Cal. 2009), aff’d

623 F.3d 870 (9th Cir. 2010), defendants argue that if the

Amgen Fund had been “remove[d] . . . as an investment

option,” based on nonpublic information about the company,

this action “may have brought about ‘precisely the result

[P]laintiffs seek to avoid: a drop in the stock price.’” The

Court wrote in Fifth Third:

To state a claim for breach of the duty of

prudence on the basis of inside information, a

plaintiff must plausibly allege an alternative

action that the defendant could have taken that

would have been consistent with the securities

laws and that a prudent fiduciary would not

have viewed as more likely to harm the fund

than to help it.

134 S. Ct. at 2472. More specifically, the Court wrote:

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HARRIS V. AMGEN 25

[L]ower courts faced with such claims should

also consider whether the complaint has

plausibly alleged that a prudent fiduciary in

the defendant’s position could not have

concluded that stopping purchases — which

the market might take as a sign that insider

fiduciaries viewed the employer’s stock as a

bad investment — or publicly disclosing

negative information would do more harm

than good to the fund by causing a drop in the

stock price and a concomitant drop in the

value of the stock already held in the fund.

Id. at 2473.

Based on the allegations in the complaint, it is at least

plausible that defendants could have removed the Amgen

Stock Fund from the list of investment options available to

the plans without causing undue harm to plan participants. It

is unclear how much the price of Amgen stock would have

declined if the Amgen Common Stock Fund had been

removed as an investment option during the period when the

price was artificially inflated. Removing the Fund as an

investment option would not have meant liquidation of the

Fund. It would have meant only that while the share price

was artificially inflated, plan participants would not have

been allowed to invest additional money in the Fund, and that

the Fund would therefore not have purchased additional

shares at the inflated price. Given the relatively small

number of Amgen shares that would not have been purchased

by the Fund in comparison to the enormous number of

actively traded shares, it is extremely unlikely that this

decrease in the number of shares that would otherwise have

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26 HARRIS V. AMGEN

been purchased, considered alone, would have had an

appreciable negative impact on the share price.

It is true that removing the Amgen Common Stock Fund

as an investment option would have sent a negative signal to

investors if the fact of the removal had been made public, and

that such a signal may have caused a drop in the share price. 

But several factors would have mitigated this effect. The

efficient market hypothesis ordinarily applied in stock fraud

cases suggests that the ultimate decline in price would have

been no more than the amount by which the price was

artificially inflated. Further, once the Fund was removed as

an investment option, plan participants would have been

protected from making additional purchases of the Fund

while the price of Amgen shares remained artificially

inflated. Finally, the defendants’ fiduciary obligation to

remove the Fund as an investment option was triggered as

soon as they knew or should have known that Amgen’s share

price was artificially inflated. That is, defendants began

violating their fiduciary duties under ERISA by continuing to

authorize purchases of Amgen shares at more or less the same

time some of the defendants began violating the federal

securities laws. If defendants had acted to remove the Fund

as an investment option when Amgen’s share price began to

be artificially inflated — that is, when some of the defendants

began to violate their obligations under the securities laws —

that action may well have caused those defendants to comply

with those obligations. But defendants did not do this. 

Instead, they continued to authorize the Fund as an

investment option for a considerable period after they knew

or should have known that the share price was artificially

inflated.

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HARRIS V. AMGEN 27

Fifth, defendants argue that “theycould not have removed

the Amgen Stock Fund based on undisclosed alleged adverse

material information — a potentiallyillegal course of action.” 

(emphasis in original). Defendants misunderstand the nature

of their duties under federal law. As we noted in Quan,

“[F]iduciaries are under no obligation to violate securities

laws in order to satisfy their ERISA fiduciary duties.” Quan,

623 F.3d at 882 n.8. The central problem in this case is that

Amgen officials, many of whom are defendants here, made

material misrepresentations and omissions in violation of the

federal securities laws. Compliance with ERISA would not

have required defendants to violate those laws; indeed,

compliance with ERISA would likely have resulted in

compliance with the securities laws. If defendants had

revealed material information in a timely fashion to the

general public (including plan participants), thereby allowing

informed plan participants to decide whether to invest in the

Amgen Common Stock Fund, they would have

simultaneously satisfied their duties under both the securities

laws and ERISA. See Cal. Ironworkers Field Pension Trust

v. Loomis Sayles & Co., 259 F.3d 1036, 1045 (9th Cir. 2001)

(“ERISA imposes upon fiduciaries a general duty to disclose

facts material to investment issues.”); Acosta v. Pac. Enter.,

950 F.2d 611, 619 (9th Cir. 1991) (holding that a fiduciary is

affirmatively required to “inform beneficiaries of

circumstances that threaten the funding of benefits”). 

Alternatively, if defendants had made no disclosures but had

simply not allowed additional investments in the Fund while

the price of Amgen stock was artificially inflated, they would

not thereby have violated the prohibition against insider

trading, for there is no violation absent purchase or sale of

stock.

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28 HARRIS V. AMGEN

On remand in the wake of Fifth Third, defendants make

an additional argument to those they have already made. 

They argue on remand that Fifth Third announced “new

pleading requirements” applicable to ERISA cases such as

this one. We disagree. The Court wrote as follows:

We consider more fully one important

mechanism for weeding out meritless claims,

the motion to dismiss for failure to state a

claim. That mechanism . . . requires careful

judicial consideration of whether the

complaint states a claim that the defendant

acted imprudently. See Fed. Rule Civ. Proc.

12(b)(6); Ashcroft v. Iqbal, 556 U.S. 662,

677–680 (2009); Bell Atlantic Corp. v.

Twombly, 550 U.S. 5434, 554–563 (2007). 

Because the content of the duty of prudence

turns on “the circumstances . . . prevailing” at

the time the fiduciary acts, § 1104(a)(1)(B),

the appropriate inquiry will necessarily be

context specific.

134 S. Ct. at 2471.

To the extent defendants are arguing that Fifth Third

requires a higher pleading standard of particularity or

plausibility, this passage from the Court’s opinion makes

clear that they are mistaken. Ashcroft and Twombly had

already been decided when this case was first before us on

appeal, and the Court’s citation of those two cases indicates

that it was not articulating a new pleading standard in this

sense. To the extent defendants are arguing that the Court has

articulated new standards of liability (as opposed to a new

standard of pleading) that we had not previously applied, they

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HARRIS V. AMGEN 29

are also mistaken. It is true that the Court articulated certain

standards for ERISA liability in Fifth Third. But we had

already assumed those standards when we wrote our earlier

opinion. For example, the Court specified in Fifth Third that

a fiduciary is not required to perform an act that will do more

harm than good to plan participants. We assumed that to be

so, and we addressed precisely this point in our earlier

opinion. See Harris v. Amgen, 738 F.3d at 1041.

We therefore conclude that plaintiffs have sufficiently

alleged that defendants have violated the duty of care they

owe as fiduciaries under ERISA.

2. Count III

Plaintiffs allege in Count IIIthat defendants violated their

duty of loyalty and care under 29 U.S.C. §§ 1104(a)(1)(A)

and (B) by failing to provide material information to plan

participants about investment in the Amgen Common Stock

Fund. Defendants contend that they have limited obligations

under ERISA to disclose information to plan participants, and

that their disclosure obligations do not extend to information

that is material under the federal securities laws. Defendants

contend, further, that plaintiffs have not alleged detrimental

reliance by plan participants on defendants’ omissions and

misrepresentations. Finally, defendants contend that their

omissions and misrepresentations, if any, were not made in

their fiduciary capacity. We disagree.

To some extent, the analysis for Count II overlaps with

the analysis for Count III. We have already established that

there is no contradiction between defendants’ duty under the

federal securities laws and ERISA. Indeed, properly

understood, these laws are complementary and reinforcing.

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30 HARRIS V. AMGEN

Defendants’ first argument is that they owe no duty under

ERISA to provide material information about Amgen stock

to plan participants who must decide whether to invest in

such stock. In other words, defendants contend that their

fiduciary duties of loyalty and care to plan participants under

ERISA, with respect to company stock, are less than the duty

they owe to the general public under the securities laws. 

Defendants are wrong, as we made clear in Quan:

We have recognized [that] . . . “[a] fiduciary

has an obligation to convey complete and

accurate information material to the

beneficiary’s circumstance, even when a

beneficiary has not specifically asked for the

information.” Barker [v. Am. Mobil Power

Corp., 64 F.3d 1397, 1403 (9th Cir. 1995)]. 

“[T]he same duty applies to ‘alleged material

misrepresentations made by fiduciaries to

participants regarding the risks attendant to

fund investment.’” Edgar [v. Avaya Inc.,

503 F.3d 340, 350 (3d Cir. 2007)].

Quan, 623 F.3d at 886. We specifically endorsed the Third

Circuit’s definition of materiality in Quan. We wrote, “[A]

misrepresentation is ‘material’ if there was a substantial

likelihood that it would have misled a reasonable participant

in making an adequately informed decision about whether to

place or maintain monies in a particular fund.” Id. (quoting

Edgar, 503 F.3d at 350) (internal quotation marks omitted).

Defendants’ second argument is that plaintiffs have failed

to show that they relied on defendants’ material omissions

and misrepresentations. Defendants contend that plaintiffs

must show that they actually relied on the omissions and

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HARRIS V. AMGEN 31

misrepresentations. It is well established under Section 10(b)

that a defrauded investor need not show actual reliance on the

particular omissions or representations of the defendant. 

Instead, as the Supreme Court explained in Erica P. John

Fund, Inc. v. Halliburton Co., 131 S. Ct. 2179 (2011), the

investor can rely on a rebuttable presumption of reliance

based on the “fraud-on-the-market” theory:

According to that theory, “the market price of

shares traded on well-developed markets

reflects all publicly available information,

and, hence, any material misrepresentations.” 

[Basic, Inc. v. Levinson, 485 U.S. 224, 246

(1988)]. Because the market “transmits

information to the investor in the processed

form of a market price,” we can assume, the

Court explained [in Basic], that an investor

relies on public misstatements whenever he

“buys or sells stock at the price set by the

market.” Id.[] at 244, 247.

Erica P. John Fund, 131 S. Ct. at 2185; see also Conn. Ret.

Plans & Trust, 133 S. Ct. 1184 (2013). We see no reason

why ERISA plan participants who invested in a company

stock fund whose assets consisted solely of publicly traded

common stock should not be able to rely on the fraud-on-themarket theory in the same manner as any other investor in a

publicly traded stock.

Defendants’ final argument is that statements made to the

Securities and Exchange Commission in documents required

by the federal securities laws were not made in a fiduciary

capacity, and that these statements therefore cannot be

considered in an ERISA suit for breach of fiduciary duty. 

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32 HARRIS V. AMGEN

Although our circuit has not decided the issue, defendants

might be correct if these documents had only been filed and

distributed as required under the securities laws, for such acts

would have been performed in a corporate capacity. See

Lanfear v. Home Depot, Inc., 679 F.3d 1267, 1285 (11th Cir.

2012) (“When the defendants in this case filed the Form S-8s

and created and distributed the stock prospectuses, they were

acting in their corporate capacities and not in their capacity as

ERISA fiduciaries.”); Kirschbaum, 526 F.3d at 257 (“REI

was discharging its corporate duties under the securities laws,

and was not acting as an ERISA fiduciary.”). However,

defendants did more than merely file and distribute the

documents as required by the securities laws. See Varity

Corp., 516 U.S. at 504 (fiduciary may be “communicating

with [plan participants] both in its capacity as employer and

in its capacity as plan administrator”) (emphasis in original).

As they were required to do under ERISA, defendants

prepared and distributed summaryplan descriptions(“SPDs”)

to Plan participants. See 29 U.S.C. § 1022(a) (requiring

fiduciaries to provide a summary plan description). In the

SPDs for both the Amgen and the AML Plans, defendants

explicitly incorporated by reference Amgen’s SEC filings,

including “The Company’s Annual Report on Form 10-K for

the year ending December 31, 2006,” and “The Company’s

Current Reports on Form 8-K filed on January 19, 2007,

February 20, 2007, March 2, 2007, and March 12, 2007,

respectively.” Plaintiffs allege that the defendants knew or

should have known that statements contained in these filings,

incorporated by reference into the SPDs, were materially

false and misleading.

We hold that defendants’ preparation and distribution of

the SPDs, including their incorporation of Amgen’s SEC

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HARRIS V. AMGEN 33

filings by reference, were acts performed in their fiduciary

capacities. In so holding, we agree with the Sixth Circuit,

which has held that such incorporation by reference is an act

performed in a fiduciary capacity:

Defendants exercised discretion in choosing

to incorporate the [SEC] filings into the Plan’s

SPD as a direct source of information for Plan

participants about the financial health of [the

company] and the value of its stock, an

investment option under the plan. The SPD is

a fiduciary communication to plan

participants and selecting the information to

convey through the SPD is a fiduciary

activity. Moreover, whether the fiduciary

states information in the SPD itself or

incorporates by reference another document

containing that information is of no moment. 

To hold otherwise would authorize fiduciaries

to convey misleading or patently untrue

information through documents incorporated

by reference, all while safely insulated from

ERISA’s governing reach. Such a result is

inconsistent with the intent and stated

purposes of ERISA . . . and would create a

loophole in ERISA large enough to devour all

its protections.

Dudenhoefer v. Fifth Third Bancorp, 692 F.3 410, 423 (6th

Cir. 2012) (internal citation omitted); see also In re Citigroup

ERISA Litigation, 662 F.3d 128, 144–45 (2d Cir. 2011)

(noting that SEC filings had been incorporated in the Plans’

SPDs, but dismissing ERISA claim on the ground that

plaintiffs had not sufficiently alleged that the defendant

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34 HARRIS V. AMGEN

fiduciaries knew or should have known that the filings

contained false information); Quan, 623 F.3d at 886

(assuming, “without deciding, that alleged misrepresentations

in SEC disclosures that were incorporated into

communications about an ERISA plan are ‘fiduciary

communications’ on which an ERISA misrepresentation

claim can be based.”) (citations omitted). The statements

made in Amgen’s SEC filings and incorporated in the Plans’

SPDs may therefore be used under ERISA to show that

defendants knew or should have known that the price of

Amgen shares was artificially inflated, and to show that

plaintiffs presumptively detrimentally relied on defendants’

statements under the fraud-on-the-market theory.

We therefore conclude that plaintiffs have sufficiently

alleged that defendants have violated the duty of loyalty and

care they owe as fiduciaries under ERISA. We emphasize,

however, as to Counts II and III, that we have decided only

that the complaint contains allegations with a sufficient

degree of plausibility to survive a motion to dismiss under

Rule 12(b)(6). A determination whether defendants have

actually violated their fiduciary duties requires fact-based

determinations, such as the likely effect of the alternative

actions available to defendants, to be made by the district

court on remand, with the assistance of expert opinion as

appropriate.

3. Counts IV and V

The district court correctly concluded that Counts IV and

V are derivative of Counts II and III. Because we reverse the

district court’s dismissal of Counts II and III, we also reverse

its dismissal of Counts IV and V. See In re Gilead Sciences

Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008).

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HARRIS V. AMGEN 35

4. Count VI

Count VI alleges that defendants caused the Plans directly

or indirectly to sell or exchange property with a party-ininterest, in violation of 29 U.S.C. § 1106(a). Specifically,

Count VI alleges that Amgen and AML are parties-in-interest

that concealed material information in order to inflate the

price of Amgen stock sold to the Plans. In relevant part,

29 U.S.C. § 1106(a)(1) provides,

A fiduciary with respect to a plan shall not

cause the plan to engage in a transaction, if he

knows or should know that such transaction

constitutes a direct or indirect –

(A) sale or exchange, or leasing, of any

property between the plan and a party in

interest; . . .

(D) transfer to, or use by or for the

benefit of a party in interest, of any assets

of the plan[.]

A party in interest includes “any fiduciary” of a plan or “an

employer” of the plan beneficiaries. 29 U.S.C. § 1002(14).

Defendants did not argue in the district court that Count

VI fails to state a prohibited transaction claim under

§ 1106(a)(1). Nor do they raise this argument on appeal. 

Instead, defendants argue that 29 U.S.C. § 1108(e) exempts

the sale of employer stock from the restrictions of

§ 1106(a)(1).

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36 HARRIS V. AMGEN

Section 1108(e) specifies that § 1106 does not prohibit the

purchase or sale of employer stock if, as relevant here, (1) the

sale price was the “price . . . prevailing on a national

securities exchange”; (2) no commission is charged for the

transaction, and (3) the plan is an EIAP. 29 U.S.C.

§§ 1107(d)(5), (e)(1), 1108(e).

In Howard v. Shay, 100 F.3d 1484, 1488 (9th Cir. 1996),

we held that because § 1108(e) is an affirmative defense, a

defendant has the burden to prove its applicability. We

explained, “A fiduciary who engages in a self-dealing

transaction pursuant to 29 U.S.C. § [1106(a)] has the burden

of proving that he fulfilled his duties of care and loyalty and

that the ESOP received adequate consideration [under

§ 1108(e)].” Id.; see also Marshall v. Snyder, 572 F.2d 894,

900 (2d Cir. 1978) (“The settled law is that in [prohibited

self-dealing transactions] the burden of proof is always on the

party to the self-dealing transaction to justify its fairness

[under a statutory exception].”). Citing Howard, the Eighth

Circuit has held that a plaintiff need not plead in his

complaint that a transaction was not exempt under § 1108(e). 

See Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 600–01

(8th Cir. 2009); see also Jones v. Bock, 549 U.S. 199, 211–12

(2007) (holding that a plaintiff need not plead the absence of

an affirmative defense, even a defense like exhaustion of

remedies, which is “mandatory”).

Because the existence of an exemption under § 1108(e) is

an affirmative defense, we can dismiss Count VI based on the

§ 1108(e) exemption only if the defense is “clearly indicated”

and “appear[s] on the face of the pleading.” 5B Charles Alan

Wright & Arthur R. Miller, Federal Practice & Procedure

§ 1357 (3d ed. 2004); see also Jones, 549 U.S. at 215 (citing

Wright & Miller for rule that affirmative defense must appear

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HARRIS V. AMGEN 37

on the face of the complaint). Here, we cannot say that the

face of the complaint clearly indicates the availability of a

§ 1108(e) defense.

B. Amgen as Properly Named Fiduciary

Amgen argues that it is not a fiduciary under the Plan

because it has delegated its discretionary authority. “To be

found liable under ERISA for breach of the duty of prudence

and for participation in a breach of fiduciary duty, an

individual or entity must be a ‘fiduciary.’” Wright v. Or.

Metallurgical Corp., 360 F.3d 1090, 1101 (9th Cir. 2004). In

defining a fiduciary, ERISA says,

a person is a fiduciary with respect to a plan to

the extent (i) he exercises any discretionary

authority or discretionary control respecting

management of such plan or exercises any

authorityor control respectingmanagement or

disposition of its assets . . . or (iii) he has any

discretionary authority or discretionary

responsibility in the administration of such

plan.

29 U.S.C. § 1002(21)(A). “We construe ERISA fiduciary

status ‘liberally, consistent with ERISA’s policies and

objectives.’” Johnson v. Couturier, 572 F.3d 1067, 1076 (9th

Cir. 2009) (quoting Ariz. State Carpenters Pension Trust

Fund v. Citibank, 125 F.3d 715, 720 (9th Cir. 1997)). 

Whether a defendant is a fiduciary is a question of law we

review de novo. See Varity Corp. v. Howe, 516 U.S. 489, 498

(1996).

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38 HARRIS V. AMGEN

Under ERISA, a “named fiduciary” is “a fiduciary who is

named in the plan instrument.” 29 U.S.C. § 1102(a)(2). The

Amgen Plan provides that Amgen is “the ‘named fiduciary,’

‘administrator[,]’ and ‘plan sponsor’ of the Plan (as such

terms are used in ERISA).” ERISA grants a named fiduciary

broad authority to “control and manage the operation and

administration of the plan.” 29 U.S.C. § 1102(a)(1). 

“Generally, if an ERISA plan expressly provides for a

procedure allocating fiduciary responsibilities to persons

other than named fiduciaries under the plan, the named

fiduciary is not liable for an act or omission of such person in

carrying out such responsibility.” Ariz. State Carpenters,

125 F.3d at 719–20 (citing 29 U.S.C. § 1105(c)(2)).

Amgen argues that it delegated authority to trustees and

investment managers. Section 15.1 of the Plan provides, “To

the extent that the Plan requires an action under the Plan to be

taken by the Company [Amgen], the party specified in this

Section 15.1 shall be authorized to act on behalf of the

Company.” Section 15.1 says nothing about delegation to

trustees and investment managers. Rather, it explains that the

Fiduciary Committee has the authority, on behalf of the

Company, to “review the performance of the Investment

Funds . . . and make recommendations” and to “otherwise

control and manage the Plan’s assets.” In the absence of a

Fiduciary Committee, the Global Benefits Committee will

perform these tasks. Section 14.2 of the Plan governs the

relationship between Amgen (“the Company”) and the

trustees and managers. It provides:

The Trustee shall have the exclusive

authorityand discretion to control and manage

assets of the Plan it holds in trust, except to

the extent that . . . the Company directs how

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HARRIS V. AMGEN 39

such assets shall be invested [or] the

Company allocates the authority to manage

such assets to one or more Investment

Managers. Each Investment Manager shall

have the exclusive authority to manage,

including the authority to acquire and dispose

of, the assets of the Plan assigned to it by the

Company, except to the extent that the Plan

prescribes or the Company directs how such

assets shall be invested. Each Trustee and

Investment Manager shall be solely

responsible for diversifying, in accordance

with Section 404(a)(1)(C) of ERISA, the

investment of the assets of the Plan assigned

to it by the Committee, except to the extent

that the plan prescribes or the Committee

directs how such assets shall be invested.

ERISA requires that a trustee hold plan assets in trust for

plan participants. 29 U.S.C. § 1103(a). A trustee has

“exclusive authority and discretion to manage and control the

assets of the plan” subject to two exceptions. Id. The first

exception is that a plan may “expressly provide[] that the

trustee or trustees are subject to the direction of a named

fiduciary who is not a trustee.” Id. § 1103(a)(1). Under this

exception, a named fiduciarywith the power to direct trustees

is a fiduciary with authority to manage plan assets. The

second exception is that an “investment manager,” duly

licensed as an investment adviser under federal or state law,

may also be appointed to manage plan assets in lieu of the

trustee. Id. §§ 1002(38)(B), 1103(a)(2).

There is no question that Amgen appointed a trustee. 

However, nothing in the record indicates that Amgen

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40 HARRIS V. AMGEN

appointed an investment manager. Neither ERISA nor the

Plan requires that an investment manager be appointed. Even

if Amgen had appointed an investment manager, the Plan

makes clear that the trustee and any investment manager do

not have complete control over investment decisions. See

29 U.S.C. § 1002(21)(A)(i) (defining a person with “any

authority or control” over plan assets to be a fiduciary)

(emphasis added); cf. Gelardi v. Pertec Comp. Corp.,

761 F.2d 1323, 1325 (9th Cir. 1985) (finding delegation

where defendant “retained no discretionary control”)

(emphasis added), overruled on other grounds in Cyr v.

Reliance Standard Life Ins. Co., 642 F.3d 1202, 1207 (9th

Cir. 2011).

Section 15.1 of the Plan, which authorizes the Fiduciary

Committee to take action on behalf of Amgen, does not

preclude fiduciary status for Amgen. In Madden v. ITT Long

Term Disability Plan for Salaried Empl., 914 F.2d 1279, 1284

(9th Cir. 1990), we held that the company had delegated

authority to an administration committee where the plan

provided that the Committee had “‘responsibility for carrying

out all phases of the administration of the Plan’” and had the

“‘exclusive right . . . to interpret the Plan and to decide any

and all matters arising hereunder.’” (emphasis omitted). This

language contains two features absent from the language in

the Amgen Plan. First, it delegates responsibility for all

phases of administering the plan, rather than responsibility

“to the extent that the Plan requires an action . . . to be taken

by the Company.” Second, and more important, it provides

the Committee the exclusive right to make decisions under

the plan. The Amgen Plan merely authorizes the Fiduciary

Committee to act on behalf of Amgen. It neither provides

exclusive authority to the Committee, nor precludes Amgen

from acting on its own behalf.

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HARRIS V. AMGEN 41

Other courts have found a company’s grant of exclusive

authority to a delegate and an express disclaimer of authority

to be critical. In Maher v. Massachusetts General Hospital

Long Term Disability Plan, 665 F.3d 289 (1st Cir. 2011), the

First Circuit held that a hospital had delegated its fiduciary

duties when the plan stated, “‘The Hospital shall be fully

protected in acting upon the advice of any such agent . . . and

shall not be liable for any act or omission of any such agent,

the Hospital’s only duty being to use reasonable care in the

selection of any such agent.’” Id. at 292. In Costantino v.

Washington Post Multi-Option Benefits Plan, 404 F. Supp. 2d

31 (D.D.C. 2005), the district court for the District of

Columbia found delegation when the plan granted the plan

administrator “‘sole and absolute discretion’” to carry out

various Plan duties. Id. at 39 n.8. Given that ERISA allows

fiduciaries to have overlapping responsibilities under a plan,

a clear grant of exclusive authority is necessary for proper

delegation by a fiduciary. See 29 U.S.C. § 1102(a)(1)

(“[O]ne or more named fiduciaries . . . jointly or severally . . .

have authority to control and manage the operation and

administration of the plan”); see also 1 ERISA Practice and

Litigation § 6:5 (“Those who wish to avoid liability exposure

through allocation of plan responsibilities to others must

therefore take pains to ensure that their documents fully

authorize the contemplated delegation.”).

Because the Plan contains no clear delegation of exclusive

authority, we reverse the district court’s dismissal of Amgen

from the case as a non-fiduciary.

Conclusion

We conclude that defendants are not entitled to a

presumption of prudence, that plaintiffs have stated claims

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42 HARRIS V. AMGEN

under ERISA in Counts II through VI, and that Amgen is a

properly named fiduciary under the Amgen Plan. We

therefore reverse the decision of the district court and remand

for further proceedings consistent with this opinion.

REVERSED and REMANDED.

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