Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-10-56014/USCOURTS-ca9-10-56014-3/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

ORDER AND

AMENDED

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

Amended May 26, 2015

Before: Jerome Farris and William A. Fletcher, Circuit

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

Order;

Concurrence to Order by Judge W. Fletcher;

Dissent to Order by Judge Kozinski;

Opinion by Judge W. Fletcher

SUMMARY**

ERISA

The panel filed (1) an order amending and replacing its

prior opinion and denying, on behalf of the court, a petition

for rehearing en banc, and (2) an amended opinion.

* 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

In the amended opinion, 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 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 including 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 concluded that there was no contradiction between

defendants’ duty under the federal securities laws and

ERISA.

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4 HARRIS V. AMGEN

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 in the Amgen Common Stock Fund. 

Agreeing with the Sixth Circuit, the panel held that the

defendants’ preparation and distribution of summary plan

descriptions, including their incorporation of Amgen’s SEC

filings by reference, were acts performed in their fiduciary

duty.

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 the case for further

proceedings consistent with its opinion.

Concurring in the denial of rehearing en banc, Judge W.

Fletcher wrote that, contrary to the dissent from the denial of

rehearing en banc, the panel’s opinion did not hold that as a

general matter, when previously concealed material

information about a companyis eventuallyrevealed, the stock

price will inevitably decline by more than the amount it

would have declined as a result of merely withdrawing the

fund as an investment option. The opinion also did not

impose on fiduciaries an obligation to act when they only

suspect that there has been a violation of the federal securities

laws. Finally, the opinion did not impose on ERISA

fiduciaries greater disclosure obligations than those imposed

under the federal securities laws.

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HARRIS V. AMGEN 5

Dissenting from the denial of rehearing en banc, Judge

Kozinski, joined by Judges O’Scannlain, Callahan, and Bea,

wrote that the opinion failed to give effect to the creation in

Fifth Third of stringent new requirements for plaintiffs who

sue fiduciaries under ERISA for imprudent investment in an

employer’s stock. Judge Kozinski wrote that the opinion

created almost unbounded liability for ERISA fiduciaries and

subjected corporations to novel, judicially-fashioned

disclosure requirements that conflict with those of the

securities laws.

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.

EmilySeymourCostin, 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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6 HARRIS V. AMGEN

ORDER

The opinion filed on October 30, 2014, and published at

770 F.3d 865, is hereby amended and replaced by the

amended opinion filed concurrently with this order. With

these amendments, Judge W. Fletcher has voted to deny the

petition for rehearing en banc and Judges Farris and Korman

so recommend.

The full court was advised of the petition for rehearing en

banc. A judge requested a vote on whether to rehear the

matter en banc. The matter failed to receive a majority of the

votes of the nonrecused active judges in favor of en banc

reconsideration. Fed. R. App. P. 35.

The petition for rehearing en banc is DENIED. No

further petitions for rehearing or rehearing en banc will be

entertained.

Judge W. Fletcher’s concurrence in the denial of

rehearing en banc and Judge Kozinski’s dissent from the

denial of rehearing en banc are filed concurrently with this

order.

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HARRIS V. AMGEN 7

W. FLETCHER, Circuit Judge, concurring in the denial of

rehearing en banc:1

The panel’s opinion speaks for itself, and I will not repeat

our analysis, much of which is directly responsive to concerns

expressed by the Supreme Court in Fifth Third Bancorp v.

Dudenhoeffer, 134 S. Ct. 2459 (2014).

I write only to correct three ways in which the dissent

misrepresents what is in our opinion.

1. Impact of Withdrawal

The dissent characterizes our opinion as holding that

withdrawing a fund as an investment option is appropriate

because, “as a general matter, ‘when the previously

concealed material information about [a] company is

eventually revealed . . . the stock price will inevitably decline,

almost certainly by more than the amount it would have

declined as a result of merely withdrawing the [f]und as an

investment option.’” Dissent at 20 (emphasis in original)

(quoting Opinion at 46). Based on that characterization, the

dissent claims that we ignore the Court’s instruction in Fifth

Third to consider whether there will be a net harm to plan

participants resulting from withdrawal of a fund. The dissent

contends that our reasoning is circular because, under the

reasoning it ascribes to us, “withdrawing the fund will always

be the better option, because any stock price decline it may

1 Senior Circuit Judge Farris and Senior District Judge Korman were not

eligible to vote on whether the appeal in this case should have been

reheard en banc, and therefore cannot concur in the denial of rehearing en

banc. However, Judge Farris and Judge Korman both agree with what is

written here.

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8 HARRIS V. AMGEN

precipitate will be deemed ‘inevitable.’” Dissent at 20.

(emphasis in original).

Our opinion contains no such general, all-purpose

holding. We addressed only the situation where “the

previouslyconcealed material information about the company

is eventually revealed as required by the securities laws.” 

Opinion at 46 (emphasis added). As we wrote in the opinion:

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).

Opinion at 37. We therefore assumed, under Federal Rule of

Civil Procedure 8(a) and Ashcroft v. Iqbal, 556 U.S. 662

(2009), that there was material information that had been

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HARRIS V. AMGEN 9

withheld in violation of the securities laws. Our analysis is

based on that assumption.

Withdrawal of the fund as an investment option might

indeed “do more harm than good to the fund,” Fifth Third,

134 S. Ct. at 2473, where the securities laws do not

independently require disclosure. But where the securities

laws do require disclosure of previously withheld material

information, as in this case, the impact of the eventual

disclosure of that information must be taken into account in

assessing the net harm that will result from the withdrawal of

the fund. In such a case, as we wrote in our opinion, it is

plausible to conclude that the withdrawal of the fund will

result in a net benefit, rather than a net harm, to plan

participants.

2. Knowledge of Fiduciaries

The dissent contends that we impose on fiduciaries an

obligation to act when they “only . . . suspect” there has been

a violation of the federal securities laws, and that under our

opinion a fiduciary would have an obligation to act whenever

there is “any arguable violation” of those laws. Dissent at 21

(emphasis in original). That is not what we wrote. Our

opinion nowhere requires a fiduciary to act based on mere

suspicion or arguable violation of the federal securities laws. 

Under well-established circuit precedent, “[a] violation [of

ERISA’s prudent person standard] may occur where a

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

by an illegal scheme about which the fiduciaries knew or

should have known, and then suddenly declined when the

scheme was exposed.” In re Syncor ERISA Litig., 516 F.3d

1095, 1102 (9th Cir. 2008) (emphasis added); see also

29 U.S.C. § 1105(a)(3) (imposing liability on a plan fiduciary

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10 HARRIS V. AMGEN

for another fiduciary’s breach of fiduciary responsibility “if

he has knowledge of a breach by such other fiduciary, unless

he makes reasonable efforts under the circumstances to

remedy the breach”). We wrote repeatedly and consistently

that a fiduciary’s obligation to act is triggered only when he

or she “knew or should have known” of a violation of the

securities laws.

For example, we wrote that the fiduciaries in this case

were obliged to act only when they “knew or should have

known that material information was being withheld from the

public.” Opinion at 46 (emphasis added). We concluded that

the plaintiffs in this case had shown that it was “plausible,”

under Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), that at

least some fiduciaries “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.” Opinion at 44

(emphasis added). And we held that, on remand, the

defendants were entitled to argue “that their liability, or the

extent of their liability, should depend upon the extent to

which they knew, or should have known, that material

information was being withheld from the public in violation

of the federal securities laws.” Opinion at 49 (emphasis

added). See also id. at 39, 41, 54, 55, 56.

3. Disclosure Obligations Under ERISA

Finally, the dissent contends that our opinion imposes on

ERISA fiduciaries greater disclosure obligations than those

imposed under the federal securities laws. It writes:

The panel also disregards the Court’s

second key instruction, that we carefully

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HARRIS V. AMGEN 11

consider how ERISA-based obligations may

conflict with disclosure requirements under

the securities laws. The panel reasons that

such a conflict simply can’t occur because “if

defendants had revealed material information

in a timely fashion to the general public . . .

theywould have simultaneouslysatisfied their

duties under both the securities laws and

ERISA.” But the panel fails to appreciate the

Court’s concerns in Fifth Third. The Court

was not only concerned that fiduciaries would

be forced to violate the securities laws to

comply with ERISA, it was also worried that

“ERISA-based obligations” would be broader

than the disclosure requirements under the

securities law and would therefore interfere

with the compromise Congress struck when

enacting those laws.

The securities laws do not require

continuous disclosure of all information that

may bear on a stock price. Congress . . .

enacted a comprehensive and tessellated

statutory scheme for corporate disclosure that

imposes obligations on certain corporate

officers to reveal information at specific

times. See, e.g., 15 U.S.C. §§ 78m, 78o(d). 

There is no allegation that 17 of the 19

defendants here violated the securities laws,

or that they even had disclosure obligations

under those laws. Yet under the panel’s

holding, they are liable under ERISA for

failing to do precisely what the securities law

do not require of them: immediately disclose

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12 HARRIS V. AMGEN

inside information at the moment they

“should have known” it was material.

Dissent at 22–23 (emphases in original).

The dissent is mistaken. We nowhere wrote that ERISA

fiduciaries, including defendants in this case, have broader

disclosure obligations than those imposed under the federal

securities law. In response to Fifth Third (and to arguments

made by defendants before Fifth Third was decided), we

carefully considered whether “ERISA-based obligations may

conflict with disclosure obligations under the securities

laws.” We also carefully restricted our description of

defendants’ disclosure duties under ERISA to those

disclosure obligations that complied with, but did not exceed,

obligations under the securities laws. We agree with the

dissent that “the securities laws do not require continuous

disclosure of all information that may bear on a stock price,”

and we nowhere wrote that ERISA requires any such

“continuous disclosure.”

We wrote:

Compliance with ERISA would not have

required defendants to violate [federal

securities] laws; indeed, we interpret ERISA

to require first and foremost that defendants

not violate those laws. That is, 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

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HARRIS V. AMGEN 13

under both the securities laws and ERISA. . . .

Alternatively, if defendants had made no

disclosures but had simply not allowed

additional investments in the Fund with 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.

Opinion at 48–49 (emphasis in original).

In response to defendants’ argument 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,” we wrote that defendants’ “fiduciary

duties of loyalty and care to plan participants under ERISA,

with respect to company stock, are [not] less than the duty

they owe to the general public under the securities laws.” Id.

at 51 (emphasis added). But we never wrote, or even

suggested, that defendants owe a greater disclosure duty than

that imposed under the securities laws. We summarized,

“[T]here is no contradiction between defendants’ duty under

the federal securities laws and ERISA. Indeed, properly

understood, these laws are complementary and reinforcing.” 

Id. 

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14 HARRIS V. AMGEN

Judge KOZINSKI, with whom Judges O’SCANNLAIN,

CALLAHAN and BEA join, dissenting from the denial of

rehearing en banc:

The Supreme Court has previously admonished us for

ignoring a grant, vacate and remand (GVR) order and

“reinstating [our] judgment without seriously confronting the

significance of the cases called to [our] attention.” Cavazos

v. Smith, 132 S. Ct. 2, 7 (2011). We’re at it again. In Fifth

Third Bancorp v. Dudenhoeffer, 134 S. Ct. 2459 (2014), the

Supreme Court created stringent new requirements for

plaintiffs who sue fiduciaries under ERISA for imprudent

investment in an employer’s stock. Here, in response to a

GVR, the panel not only fails to give effect to those

requirements, but also insulates our circuit law from

important aspects of the Supreme Court’s holding.

The panel’s decision creates almost unbounded liability

for ERISA fiduciaries, plainly at odds with what the Court

instructed. Worse still, the panel’s rule will have grave

consequences for corporations across America, leaving them

acutely vulnerable to meritless lawsuits and subjecting them

to novel, judicially-fashioned disclosure requirements that

conflict with those of the securities laws. I sincerely regret

that a majority of our court did not see fit to take this case en

banc. I expect the Supreme Court will promptly correct our

error.

1. Congress has long viewed employee ownership of

employer stock as “a goal in and of itself.” Moench v.

Robertson, 62 F.3d 553, 568 (3d Cir. 1995). To further this

goal, Congress has given companies numerous incentives to

create retirement plans that permit investment in their own

stock. Under such plans, employees choose the proportion of

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HARRIS V. AMGEN 15

their retirement savings to be placed in a “fund” consisting

entirely of company stock, and the proportion to be placed

into other funds that contain a more diversified portfolio. 

Corporate officers typically administer these plans and serve

as fiduciaries with certain obligations under ERISA. 

However, plan fiduciaries typically don’t have discretion to

decide how an employee’s savings are to be apportioned

between the funds in a plan. So, for example, when an

employee says he wants 25% of his monthly retirement

savings placed in the employer-stock fund, 25% of those

savings are invested in employer stock. The fiduciary is

effectively an intermediary: He must take the savings the

employee apportions to the employer fund and buy the

company’s stock with it.

So far, so good. The trouble occurs when a fiduciary has

reason to believe that employer stock might be overvalued. 

Though a fiduciary can’t elect to diversify employee savings

of his own accord, he can remove company stock as an

investment option by withdrawing the fund, thereby

preventing employees from continuing to invest in what he

suspects might be overpriced shares. But removing company

stock as an investment option is a radical step. It may violate

the terms of a plan’s written instruments, it can send a signal

to the market that something is seriously wrong with the

company and it certainly undermines employees’ investment

autonomy. Therefore, whenever a fiduciary fears an

employer’s stock is overvalued, he is, in the Supreme Court’s

words, “between a rock and a hard place: If he keeps

investing and the stock goes down he may be sued for acting

imprudently . . . but if he stops investing and the stock goes

up he may be sued for disobeying the plan documents” or

otherwise harming the fund. Fifth Third, 134 S. Ct. at 2470.

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16 HARRIS V. AMGEN

Recognizing the uniquely vulnerable position of ERISA

fiduciaries, many courts, including ours, had previously held

that a fiduciary’s investment in employer stock should be

given a “presumption of prudence.” See, e.g., Quan v.

Computer Scis. Corp., 623 F.3d 870, 881 (9th Cir. 2010). 

Under this presumption, a fiduciary was liable only if he

continued to invest in employer stock when the company was

facing collapse or catastrophic decline. In Fifth Third, the

Supreme Court considered whether fiduciaries are owed such

a presumption. The plaintiffs there argued that, far from

being presumed prudent, fiduciaries should be liable 

whenever they possessed inside information suggesting

company stock was overvalued, and failed to either publicly

disclose that information or remove the stock as an

investment option. Id. at 2464.

The Court’s decision in Fifth Third was a compromise. 

While the Court rejected the presumption of prudence as

inconsistent with ERISA’s text, it recognized that, without

such a presumption, fiduciaries were at acute risk of liability. 

The Court therefore stressed the special importance of the

motion to dismiss to “weed out meritless lawsuits.” Id. at

2470. To facilitate a rigorous 12(b)(6) inquiry, the Court

crafted new and daunting liability requirements that plaintiffs

must plausibly allege are met in order to state a claim. Two

of them are relevant to this case. First, the Court held that

there is no liability if any “prudent fiduciary in the

defendant’s position could [] have concluded that stopping

purchases . . . 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 by the fund.” Id. at 2473. Second, the

Court stated that lower courts should carefully “consider the

extent to which an ERISA-based obligation either to refrain

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HARRIS V. AMGEN 17

on the basis of inside information from making a planned

trade or to disclose inside information to the public could

conflict with the complex insider trading and corporate

disclosure requirements imposed by the federal securities

laws or with the objectives of those laws.” Id.

2. Plaintiffs’ underlying legal theory in this case is

functionally identical to that in Fifth Third. Plaintiffs allege

that Amgen, a large pharmaceutical company, concealed the

negative results of a clinical trial for an anemia drug and also

marketed a risky off-label use for that drug. After the results

of the trial came to light and the off-label use of the drug was

restricted by the FDA, Amgen’s stock dropped by

approximately 30%. Plaintiffs claim that fiduciaries of

Amgen’s stock-ownership plans knew or should have known

that the stock was overvalued based on inside information,

and should have either removed the Amgen stock as an

investment option or revealed to the general public the test

results and the alleged riskiness of the off-label use.

The panel initially decided this case before Fifth Third

and reversed the district court’s dismissal. Harris v. Amgen,

Inc., 738 F.3d 1026 (9th Cir. 2013). Amgen supplemented its

petition for certiorari after Fifth Third was decided,

specifically pointing out the panel’s inconsistency with the

two requirements discussed above. The Court vacated the

panel’s decision and remanded for reconsideration in light of

Fifth Third, obviously expecting the panel would impose the

two new liability requirements relevant to this case.

Unsurprisingly, given that it was filed before Fifth Third

was decided, the existing complaint fails to adequately plead

those two requirements. A complaint may survive a motion

to dismiss only “when the plaintiff pleads factual content that

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18 HARRIS V. AMGEN

allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 556 (2007)). The Supreme Court

held in Fifth Third that a defendant is only “liable for the

misconduct alleged” if no reasonable fiduciary in his position

could conclude that withdrawing the fund or disclosing inside

information would do more harm than good to the fund. 

When, as here, the Supreme Court changes—or more

precisely defines—what constitutes “misconduct,” it

inescapably follows that the “factual content” that must be

pled also changes. Yet, the panel holds the complaint here

survives simply because it recites the conclusion that

fiduciaries could have withdrawn the fund or disclosed inside

information. Nowhere does the complaint even allege that

defendants could have done so without doing more harm than

good to the fund, let alone plead sufficient facts to make such

an allegation plausible. Nor do plaintiffs allege that

defendants could have disclosed inside information without

conflictingwith the securities laws—Fifth Third’s other novel

liability requirement.

Sure, the complaint is long and contains plenty of

background information regarding the alleged inflation of

Amgen stock. But a complaint’s sufficiency no longer

depends merely on its length or level of detail. In the

Twiqbal era, plaintiffs must state facts that “plausibly suggest

an entitlement to relief.” Iqbal, 556 U.S. at 681. A complaint

that fails to state sufficient facts to plausibly suggest how

Fifth Third’s new requirements have been met must be

dismissed, no matter how extensive its other allegations

may be.

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HARRIS V. AMGEN 19

After all, how can meritless ERISA fiduciary suits be

“weeded out” at the motion to dismiss stage, if a complaint

can survive through no more than an unadorned conclusion

that fiduciaries could have withdrawn the fund or disclosed

information? Any complaint filed by minimally competent

counsel will surely do that. By “unlock[ing] the doors of

discovery for [those] armed with nothing more than

conclusions,” Iqbal, 556 U.S. at 678–79, the panel’s holding

not only conflicts with Fifth Third’s special emphasis on Rule

12(b)(6), it fundamentally undermines Iqbal and Twombly in

our circuit. Future litigants in our court will now be able to

inflict massive discovery costs on defendants by reciting

liability requirements, without furnishing any of the facts

necessary for us to plausibly infer that those requirements

have been met.

3. It’s not just the panel’s failure to remand that’s

suspect, it’s the reasoning it employs to get there. Quite aside

from its ramifications for pleading standards, the panel’s

reasoning renders meaningless crucial language in Fifth

Third, in open disregard for the intent behind the Supreme

Court’s GVR order.

Let’s start with the Court’s requirement that liability will

attach only if no “prudent fiduciary” could “conclude[] that

stopping purchases . . . or publicly disclosing negative

information would do more harm than good to the fund.” The

panel first asserts that, “given the relatively small number of

Amgen shares that would not be purchased by the Fund in

comparison to the enormous number of actively traded

shares, it is unlikely that the decrease in the number of shares

that would otherwise have been purchased, considered alone,

would have an appreciable negative impact on the share

price.” How does the panel know that, you ask? I’m not

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20 HARRIS V. AMGEN

sure—it’s not an allegation that was pled in the complaint. 

So, the panel’s view can only be based on some extra-record

speculation, the sort of thing we are neither permitted nor

equipped to engage in.

What the complaint does allege is that, “If Company

Stock were eliminated as an investment option under the

Plan, [it] would have sent a negative signal to Wall Street

analysts, which in turn would result in reduced demand for

Amgen Stock and a drop in the stock price.” First Amended

Complaint ¶ 330. As the complaint appears to acknowledge,

withdrawal of the fund as an investment option is the worst

type of disclosure: It signals that something may be deeply

wrong inside a company but doesn’t provide the market with

information to gauge the stock’s true value. Of course, there

may be exceptional circumstances where such extreme action

is compelled by ERISA, and Fifth Third calls for a careful

parsing of the particular allegations in a complaint to decide

when that is so. But, instead of engaging in that fact-sensitive

inquiry, the panel holds that withdrawing the fund was

appropriate because, as a general matter, “when the

previouslyconcealed material information about [a] company

is eventually revealed . . . the stock price will inevitably

decline, almost certainly by more than the amount it would

have declined as a result of merely withdrawing the [f]und as

an investment option.”

Under that theory, withdrawing the fund will always be

the better option, because any stock price decline it may

precipitate will be deemed “inevitable.” But, for Fifth

Third’s requirement to mean anything at all, the Supreme

Court must have contemplated situations where a fiduciary

could permissibly balance the long and short run effects of

withdrawal on the share price, or account for the fact that a

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HARRIS V. AMGEN 21

badly timed withdrawal could cause the stock value to drop

below its efficient-market level. The panel’s holding washes

those possibilities away. It blesses a complaint that does

nothing more than allege the hypothetical capability of

withdrawing the fund, without requiring a single allegation

regarding the probable effects of that withdrawal. In our

circuit, a fiduciary now can never be safe from a lawsuit if he

fails to withdraw the fund based on the reasonable belief that

it will “do more harm than good to the fund by causing a drop

in the stock price.” Fifth Third, 134 S. Ct. at 2473. The

panel’s reasoning renders that crucial language in Fifth Third

utterly without meaning.

That holding implicates a far broader range of situations

than just those in which an actual securities violation has

occurred. Remember, at the time of acting, a fiduciary won’t

know whether there was a securities violation; he’ll only have

reason to suspect there was one. Under conditions of

uncertainty, the only way a fiduciary can avoid the risk of

liability is by disclosing any arguable violation. For

example, a fiduciarymight believe that a company’s financial

performance is being overstated by senior officials. Or he

might believe that a piece of information needs to be

disclosed immediately under the securities laws, when senior

officials think only periodic disclosure is required. Such

differences of opinion are a common occurrence in most

corporations. A fiduciary—often a mid-level administrator

with no independent legal counsel and limited information

about the company’s overall situation—may well be

egregiously wrong in his assessment. Yet, under the panel’s

holding, he risks liability every time he fails to act on his

impulses, even when any proposed course of action would

have disastrous consequences for the share price. And, don’t

forget, such share-price drops—when theyinevitablyresult—

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22 HARRIS V. AMGEN

will punish all those employees who had previously chosen

to invest in the company.

The panel also disregards the Court’s second key

instruction, that we carefully consider how ERISA-based

obligations may conflict with disclosure requirements under

the securities laws. The panel reasons that such a conflict

simply can’t occur because “if defendants had revealed

material information in a timely fashion to the general public

. . . they would have simultaneously satisfied their duties

under both the securities laws and ERISA.” But the panel

fails to appreciate the Court’s concerns in Fifth Third. The

Court was not only concerned that fiduciaries would be

forced to violate the securities laws to comply with ERISA,

it was also worried that “ERISA-based obligations” would be

broaderthan the disclosure requirements under the securities

laws and would therefore interfere with the compromise

Congress struck when enacting those laws. Fifth Third,

134 S. Ct. at 2473.

The securities laws do not require continuous disclosure

of all information that may bear on a stock price. Congress

specifically rejected that route because of the enormous

transaction costs and inefficiencies such disclosures would

create. Instead, it enacted a comprehensive and tessellated

statutory scheme for corporate disclosure that imposes

obligations on certain corporate officers to reveal information

at specific times. See, e.g., 15 U.S.C. §§ 78m, 78o(d). There

is no allegation that 17 of the 19 defendants here violated the

securities laws, or that they even had disclosure obligations

under those laws. Yet, under the panel’s holding, they are

liable under ERISA for failing to do precisely what the 

securities laws do not require of them: immediately disclose

inside information at the moment they “should have known”

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HARRIS V. AMGEN 23

it was material. The panel has a duty, following Fifth Third,

to assess whether compelling such disclosures might conflict

with the securities laws. Instead, the panel acts as if the

Supreme Court hadn’t spoken.

4. It makes matters worse that the panel’s adventurism

occurs in a matter of exceptional importance that drastically

impacts thousands of companies and millions of employees

who participate in stock-ownership plans. Every company

that offers such a plan now faces the chaotic prospect of its

plan fiduciaries releasing a disparate array of half-truths and

incomplete data to the market; or worse, the incessant

withdrawal and reinstatement of its fund as fiduciaries are

forced to act upon every tidbit of inside information they fear

might make them the target of a lawsuit. What conceivable

benefit flows from having a company’s “VP of human

resources” publicly explain that he disagrees with a CEO’s

financial projection? What virtue is there in triggering a

stock price collapse by withdrawing the fund, simply because

the “director of benefits” is worried that an erroneous

statement was made? I understand the impulse to deter

securities fraud. But it’s hardly rational to require every blind

man to report on the shape of the whole elephant.

Let’s also not forget that many ERISA fiduciary suits are

as bad for employees as they are for companies. Settling

meritless lawsuits is a costly endeavor and the money will no

doubt come out of workers’ pockets sooner or later, whether

that be through diminished salaries, layoffs or reductions in

employer benefit contributions.

And a proliferation of ERISA fiduciary suits will surely

have the long-term effect of forcing companies to

permanently withdraw company stock as an investment

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24 HARRIS V. AMGEN

option, even though the presence of such an option has been

shown to enhance employee satisfaction, reduce the

propensity for layoffs and increase an employer’s likelihood

to directly contribute to its employees’ retirement benefits. 

Even if none of that were so, Congress has made the

considered policy judgment to encourage the creation of

employee stock-ownership plans and has specifically

instructed courts to refrain from “regulations and rulings

[that] block the establishment and success of [such] plans.” 

See Tax Reform Act of 1976, Pub. L. No. 94–455, § 803(h),

90 Stat. 1590 (1976). Leaving aside the litany of practical

problems the panel opinion creates, its promiscuous liability

standard flies in the face of Congress’s unmistakable will.

* * *

As an intermediate court, our role is to faithfully apply the

law as announced by the Supreme Court. The Court in Fifth

Third plainly intended to offer fiduciaries robust protection

against litigation at the motion to dismiss stage. The Court

devoted multiple pages of its opinion to liability requirements

that are genuinely novel. The Court then granted a petition

for certiorari that specifically directed us to re-examine our

prior holding in light of those new liability requirements. 

Eschewing the simple and expedient solution of a remand, the

panel substituted its own judgment for that of the Supreme

Court. That decision evinces an impermissible disregard for

controlling authority and will have dire consequences for

corporations and employees alike. It’s a decision we will

come to regret.

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HARRIS V. AMGEN 25

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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26 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 27

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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28 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 29

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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30 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 31

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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32 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 33

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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34 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 35

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

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36 HARRIS V. AMGEN

physician incentives pending further FDA action. On May 8,

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.,

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HARRIS V. AMGEN 37

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

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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38 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 39

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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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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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 about 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

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42 HARRIS V. AMGEN

prudent man 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 made 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

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HARRIS V. AMGEN 43

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

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, 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 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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44 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 45

[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.

Defendants’ argument does not take into account the fact

that, quite independently of any obligation under ERISA, the

federal securities laws require disclosure of material

information. Consider, first, a situation in which the Fund is

not removed as an investment option until after the material

information has been concealed from the public for a

substantial period of time, and the stock price has been

substantially inflated as a result. In this situation, the adverse

consequences of the removal of the Fund would be no greater

than, and probably substantially less than, the consequences

of the disclosure required by the securities laws. This is so

for several reasons. First, removing the Fund as an

investment option would not mean liquidation of the Fund. 

It would mean only that while the share price is artificially

inflated, plan participants would not be allowed to invest

additional money in the Fund, and that the Fund would

therefore not purchase additional shares at the inflated price. 

Second, given the relatively small number of Amgen shares

that would not be purchased by the Fund in comparison to the

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46 HARRIS V. AMGEN

enormous number of actively traded shares, it is unlikely that

the decrease in the number of shares that would otherwise

have been purchased, considered alone, would have an

appreciable negative impact on the share price. Finally, if the

investing public were to take the removal of the Fund as a

negative signal about the value of Amgen stock, any

reduction in the stock price would anticipate (and only

partially) the inevitable result of Amgen’s eventual

compliance with the federal securities laws. That is, when the

previouslyconcealedmaterial information about the company

is eventually revealed as required by the securities laws, the

stock price will inevitably decline, almost certainly by more

than the amount it would have declined as a result of merely

withdrawing the Fund as an investment option. It is thus

quite plausible, in this situation, that defendants could remove

the Fund from the list of investment options without causing

undue harm to plan participants.

Next, consider a situation in which the Fund is removed

as an investment option as soon as the fiduciaries —

including fiduciaries without disclosure obligations under the

federal securities laws — knew or should have known that

material information was being withheld from the public. If

the fiduciaries with inside knowledge but without disclosure

obligations act to remove the Fund as an investment option as

soon as Amgen’s share price begins to be artificially inflated

— that is, as soon as those fiduciaries with disclosure

obligations begin to violate the securities laws — that action

may cause those fiduciaries to comply with their obligations

under the securities laws. In that event, there will be no

artificial increase in the share price, and no corresponding

decline at a later time. Even if removal of the Fund as an

investment opinion does not cause those defendants with

disclosure obligations to comply with the securities laws, its

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HARRIS V. AMGEN 47

removal will at least protect plan participants from investing

in Amgen stock as artificially inflated prices. Removal of the

Fund as an investment option might cause a drop in the share

price, perhaps slightly more than the amount of any initial

artificial inflation. This very drop in stock price might cause

the insider fiduciaries with disclosure obligations to comply

with the securities laws. But even if the drop in stock price

does not cause these fiduciaries to comply, removal of the

Fund as an investment option will prevent the greater harm to

plan participants that would result if no disclosure is made, if

the stock price continues to inflate artificially, and if plan

participants are allowed to make continued investments in the

Fund at increasingly inflated prices. In other words, it is

quite plausible that in this situation, too, defendants could

remove the Fund as an investment option without causing

undue harm to plan participants.

We emphasize that any problem created by allowing plan

participants to invest in the Fund as it purchased Amgen stock

at artificially inflated prices is a problem of the defendants’

own making. Both the insider fiduciaries without disclosure

obligations under the federal securities laws and those with

such obligations have it within their power to prevent harmful

investments by plan participants. Insider fiduciaries without

disclosure obligations should act to protect plan participants

as soon as they know or should know that information of the

kind for which disclosure is required under the securities laws

is not being released to the public. Insider fiduciaries with

disclosure obligations should act to protect plan participants

under ERISA as soon as the federal securities laws require

disclosure. The fact that the fiduciaries decide not to act at

this early stage does not mean that their ERISA fiduciary

duties do not apply thereafter. Quite the opposite. It means

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48 HARRIS V. AMGEN

that they are continuing to violate their fiduciary duties by not

acting.

Fifth, defendants argue that “theycould not have removed

the Amgen Stock Fund based on undisclosed alleged adverse

material information — a potentially illegal 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, we

interpret ERISA to require first and foremost that defendants

not violate those laws. That is, 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

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HARRIS V. AMGEN 49

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

stock.

We note that the foregoing analysis presumes that at least

some defendants were subject both to ERISA’s duty of

prudence and to the requirements of the securities laws. On

remand from the Supreme Court, defendants assert for the

first time that this is not so for all of the defendants. But no

defendant made an argument in the district court based on this

ground, and nothing in our opinion forecloses a defendant

from making such an argument on remand from this court. 

That is, nothing in our opinion prevents defendants from

arguing on remand from this court that their liability, or the

extent of their liability, should depend upon the extent to

which they knew, or should have known, that material

information was being withheld from the public in violation

of the federal securities laws, and the extent that they had, or

did not have, an obligation under the those laws to reveal

such information to the public.

Finally, defendants argue 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). 

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50 HARRIS V. AMGEN

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

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 had assumed that to

be so, and had 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.

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HARRIS V. AMGEN 51

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.

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

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52 HARRIS V. AMGEN

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

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.” 

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[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. 

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

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54 HARRIS V. AMGEN

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

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

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HARRIS V. AMGEN 55

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

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

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56 HARRIS V. AMGEN

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).

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,

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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).

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

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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

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,

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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).

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)).

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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

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

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HARRIS V. AMGEN 61

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

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).

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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.

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

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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

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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