NOT RECOMMENDED F OR F ULL-TEXT PUBLICATION File Na me: 12a0793n.06
No. 11-1497
UNITED STAT ES COURT OF AP P EALS F OR THE S IXTH CIRCUIT
DEB RA GRI FF I

N and JOY GARDNER, Plaintiffs-Appellants,

v.
FL AGSTAR BA

NCORP, I

NC., REBECCA A. L UCCI , ERI

N ENGL AND a

nd J OHN DO E, 1-10,
Def endants-A

ppellees. ) ) ) ) ) ) ) ) ) ) ON APPEAL FROM THE U N I T ED STATES DI STRI CT COURT FOR THE EASTERN DI STRI CT OF MI CHI GAN

BEF ORE: SUTTON, McKEA GUE, a nd RI PPL E, Circuit J udg es.

*
RIP P LE, Circuit Judge

. Debr a Griff in and J oy Gard n er ea ch initiated a putative class action, later consolidated, on behalf of themselves and other participa nts in and benef

iciarie s of the Flag star Bank 401(k) Plan (the “ Plan”). The y alleg ed that F lag star Banc orp, I nc. (“Fla g star”) and

cer tain officia ls had brea ched their fiduciar y duties in violation of the Employ ee Retirement I ncome Security Act of 1974 (“ERI SA”), 29 U.S.C. § 1001 et seq . At the core of their c omplaint was the 1

asser tion that it wa s imprudent for the Plan to have offe red, during a define d class period, Flag star stock as an investment option to Plan participa nts. The defe ndants moved to dismiss the complaint
for failure to state a claim upon which relief could be gra nted. See Fe d. R. Civ. P

. 1 2 (b )( 6 ). T h e

T h e H o n o r a b l e K e n n e t h F

. R i p p l e , U n i t e d S t a t e s C o u r t o f A p p e a l s f o r t h e S e v e n t h C i r c u i t , s i t t i n g b y * d e s i g n a t i o n
.

T h e d i s t r i c t c o u r t ’ s j u r i s d i c t i o n i s p r e d i c a t e d o n 2 8 U

. S

. C

. § 1 3 3 1 a n d 2 9 U

. S

. C

. § 1 1 3 2 ( e )

. 1No. 11-1497

Griffin v. Flagstar Bancorp, Inc. d i s t ri ct court deter

mined that dismiss al was war rante d beca

use the plaintiffs had not overc ome a presumption of prudenc e established by circ uit prec edent. See Kuper v. Iove nko , 6 6 F. 3 d 1447,
1458-59 (6t h Cir. 1995). The district court further found that, even in the absenc e of the presumption, the plaintiffs had not me t the pleading standard e stablished by the Supreme Court in
Bell Atlantic Corp. v. Twombly , 550 U.S. 544 (2007), and Ashcroft v. Iqbal , 556 U.S. 662 (2009). Consequently , the district court dismissed the ca se, and the plaintiffs timely appea led. 2
We have clar ified, in an intervening case , the role of the presumption of prudenc e by holding
that it does not apply at the pleading stag e. Fur ther, we must conclude that the p l ai n t i ff s have pleade d sufficie nt fac ts to raise a plausible claim that the defe ndants brea ched their fiduciar y duties.
For these rea sons, the complaint should not have been dismiss ed under Rule 12(b)( 6). Acc ording ly , the judg ment of the district cour t is rever sed and the case is remande d for f urther pr ocee dings.

I
BACK GR OUND
A.
At this stag e of the proce eding s, we must construe the plaintiffs’ complaint in the light most favor able to them and acc ept the complaint’s fac tual alleg ations as true. McLem ore v. Regions Bank , 682 F.3d 414, 419-20 (6th Cir. 2012). T h e complaint alleg es that Flag star maintained the Plan,

T h i s c o u r t ’ s j u r i s d i c t i o n i s p r e d i c a t e d o n 2 8 U

. S

. C

. § 1 2 9 1

. 2
-2-No. 11-1497

Griffin v. Flagstar Bancorp, Inc. which provided p a

r ti cipants with individual retire ment acc ounts. Under the Plan, participa nts could 3
choose the amount of their contributions to their individual acc ounts, up to a define d maxi mum, and
could allocate their contributions and pension assets among the investment options provided by the
Plan. During the class period, which beg an on Dec ember 31, 2006, the P lan offere d twenty -three

to twenty -five investment options. One of those options was the Employ er Stock I nvestment Option,
which allowe d Plan participants to invest their asse ts in Flag star stock.
On J anuar

y 3, 2007--near the beg inning of the class period-- Flag star stock was trading at $14.95 per share

. L ater that month, Flag star announced a decr ease in annual and fourth-qua rter

ear nings. This announce ment was the advent of a prolong ed slump for Flag star; the price of Flag star stock dropped prec ipitousl y over the next two-and-a- h alf y ear s as the bank repe atedly announce d losses, lower than expected ear nings and reduc ed or suspended dividend pay ments. For most of the class per iod, analy sts did not paint a bright futur e for Flag star.
I n October 2007, financ ial analy sts at Oppenhe imer & Co. rec ommended ag ainst purcha sing Flag star stock, and analy sts at Fr iedman Billing s Ramsey reduc ed their targ et price for Flags t ar stock. I n J anuar

y 2008, Flag star announce d that it would be reduc ing the siz e of its mortg ag e loan orig ination busine ss. A fe w day s later, Moody ’s I nvestors Service downg rade d the bank’s rating

. I n May , Flag star soug ht to raise funds by selling c ommon stock and conve rtible pref err ed stock a t

a discount. I n J uly , analy sts at Fr ied m an Billing s Ramsey ag ain reduc ed their targ et price for

T h e p a r t i e s a g r e e t h a t t h e P l a n i s a n “ i n d i v i d u a l a c c o u n t p l a n ” o r a “ d e f i n e d c o n t r i b u t i o n p l a n
. ” S e e 2 9 U

. S

. C

. 3 § 1 0 0 2 ( 3 4 ) ( d e f

i n i n g t h o s e t e r m s )

. -3-No. 11-1497

Griffin v. Flagstar Bancorp, Inc. Flag star stock. I n October , Me rrill L y nch reduc ed Flag star’s rating from “B uy ” to “Unde rper form.” 4
I n N ovember , Morning star Financ ial published an article repor ting conce rns with Flag s ta r ’ s b u s in e s s and finances. I n Dec ember , Flag star’s request t o p ar t i cipate in the Feder al Troubled Asset R elief Prog ram was approve d. During the same month, Flag star announce d t h at i t would be selling a seventy -per cent stake in the company t o a d i s t ressed-debt specia list. Although New York Stock
Ex chang e rules normally would have require d share hol d er ap p ro val, the sale fell within an

eme rg ency provision that obviated the approva l require ment beca use any delay could have jeopar dized seriously the financ ial viability of the company
. Acc ording to the complaint, when the
sale was announce d, an analy st repor ted that “investors [were] no longe r questioning whether Flag star [would] survive.” 5
Over the next few months, Flag star arr ang ed for an injection of $522 milli on in capital from
various source s. Neve rtheless, repor ts about Flag star wer e far from positive. I n Aug ust 2009,
Bloomber g News published an article about banks with non-per forming loans, indicating that rate s of non-per forming loans of over five perc ent wer e “unsaf e and unsound.” The article repor ted that 6 Flag star was the bigg est bank in the United States with more than ten perc ent non-per forming loans.
A bi t of good news came i n No v em b er 2 009, when analy sts at Friedman Billings R amsey projec ted that losses would continue only until 2010; t hey

expected positive ea

rning s-per -shar e to beg in in 2011. At the same time, howeve r, Fr iedman Billing s Ramsey reduc ed their 2009 and 2010

R

. 1 6 a t 1 9 ¶ 6 1

. 4

I d

. a t 2 2 ¶ 7 2

. 5

I d

. a t 2 4 ¶ 7 9 ( i n t e r n a l q u o t a t i o n m a r k s o m i t t e d )

. 6
-4-No. 11-1497

Griffin v. Flagstar Bancorp, Inc.

ear nings- per- share projec tions and reduc ed their targ et price for Flag star stock by half. I n Dec ember 2009, Americ an B anker

and the De troit Fre e Press publi shed articles sug g esting that Flag star was
in a prec arious financ ial position, including one economist’s descr i p t i o n o f Flag star as “a black
h o l e. ” That same month, Flag star announce d that it was short on funds and would h av e t o s el l

7 704,000,000 share s of common stock to raise mone y . On April 28, 2010, F lag star stock closed at $0.681 per sha

re.

B.
Debr a Griffin initiated a lawsuit ag ainst the defendants on Fe bruar y 2, 2010. J oy Gar dner
filed a separ ate action that was later consolidated with Ms. Griff in’s lawsuit. On J une 4, 2010, the plaintiffs filed a consolidated amende d complaint setting forth three cause s of action ag ainst Flag star and ce rtain name d and unname d officia ls. Count I alleg ed that the defe ndants had bre ache d their 8
fi d u ci ary duties of prudenc e and loy alty by continuing to make Flag star stock available as an i n v es t m en t option despite knowing that it was imprudent to do so and by conce aling the risk o f investing in Flag star stock. Count I I alleg ed that the defe ndants had brea ched thei r d u t y t o avoid
conflicts of interest by failing to eng age independe nt fiduciar ies. Count I I I alleg ed that the
defe ndants had fa iled to monitor each othe r for violations of their respe ctive fiduc iary duties.

I d

. a t 2 8 ¶ 8 4 ( i n t e r n a l q u o t a t i o n m a r k s o m i t t e d )

. 7

T h e t w o n a m e d d e f

e n d a n t s w e r e R e b e c c a A

. L u c c i , i d e n t i f i e d i n t h e c o m p l a i n t a s t h e “ F i r s t V i c e P r e s i d e n t 8 D i r e c t o r H u m a n R e s o u r c e s , ” a n d E r i n E n g l a n d , s i m i l a r l y i d e n t i f i e d a s t h e “ f

i r s t v i c e p r e s i d e n t , h u m a n r e s o u r c e s , e m p l o y e e b e n e f

i t s m a n a g e r
. ” I

d

. a t 6

- 7 ¶ ¶ 1 4 , 1 5

. T h e u n n a m e d d e f e n d a n t s i n c l u d e m e m b e r s o f a n y c o m m i t t e e t h a t a d m i n i s t e r e d t h e P l a n a s w e l l a s t h e “ p e r s o n s w h o h a d t h e d u t y a n d r e s p o n s i b i l i t y t o p r o p e r l y a p p o i n t , m o n i t o r a n d i n f o r m t h e ” c o m m i t t e e m e m b e r s
. I d

. a t 7 ¶ ¶ 1 6

- 1 7

. -5-No. 11-1497

Griffin v. Flagstar Bancorp, Inc. The defe ndants moved to dismiss the complaint. First, they contende d that the district court lacke d jurisdiction beca

use the plaintiffs lacke d standing

. Second, they arg ued that a statutory safe
harbor prec luded liability beca use the plaintiffs exercised independe nt control over their individual

acc ounts. Finally , they asser ted that t h e co m p l ai n t did not state a claim for a brea ch of fiduciar y duty , for a

brea ch of the duty

to monitor or for a c onflict of intere st. After a hear ing, the district court g rante d the defe ndants’ motion to dismiss

. I n a written
order , the court addre ssed the arg uments of the parties. First, the court deter mined that the plaintiffs
had standing

. I t then turned to the alleg ed brea ch o f fi d u ci ar y d uties and addre ssed whether a presumption of prude nce a pplied at t he pleading stag e and, if so, whether the plaintiffs’ plea dings
h ad overc ome the presumption. The court conclude d that the presumption did apply and that t h e fa ct s alleg ed by the plaintiffs wer e insufficient to state a claim in light of the presumpti o n
. T h e distr ict court further conclude d that, even if the presumption did not apply , dismiss al was appropr iate
beca use the Plan participa

nts had control over their investments and Flag star had rema ined a viable banking instit ution despite the drop in its share price

. There fore , in the district court’s view, the complaint did not state a claim for a b re ac h of fiduciary duty

. The dist rict court further held t hat,
without such a claim, t h er e wa s n o proper predic ate for t he failure-to-monitor claim. The dist rict
court ther efor e g rante d the def endants’ motion to dismiss the complaint. The plaintiffs timely

appea led. 9

S t a n d i n g h a s n o t b e e n r a i s e d o n a p p e a l a n d , a f t e r r e v i e w i n g t h e i s s u e i n d e p e n d e n t l y , w e a r e s a t i s f i e d t h a t 9 j u r i s d i c t i o n i n t h i s c a s e i s p r o p e r
. -6-No. 11-1497

Griffin v. Flagstar Bancorp, Inc.

II
DISCUSSIO N
We revie w de novo a district court’s dismiss al under Fed era l Rule of Civil Procedur e 12(b)( 6). Pfeil v. State St. Bank & Trust Co. , 671 F.3d 585, 590 (6 t h C i r. 2012). On appea l, the plaintiffs’ speci fi c contentions all cente r on the allege d brea ch of the defendants’ duty to exercise prudenc e in the sele ction and monitoring of the investments off ere d by the Plan. 1 0

A. The plainti ffs first contend that the di str i ct court erre d in holding that the defendants were protec ted by a presumption that investment in the stock of the employ er corpor ation is prudent and
in acc ordanc e with ERI SA require ments. See Kuper , 66 F.3d at 1459 (citing Moenc h v. Robertson , 62 F.3d 553, 571 (3d Cir. 1995)). I nterve ning circ ui t law resolves this question. I n Pfeil v. State
Street Bank & Trust Co. , 671 F.3d 585 (6th Cir. 2 0 1 2 ), a ca s e decide d afte r the district court dismiss ed this case , we held that the Kuper presumption of prudenc e is evidentiar y in nature and thus does not apply

at the plea ding sta g e. Id . at 592-93.
The second issue c o n c e r

n s th e a p p lic ability of a statutory safe harbor that insulates fiduciar ies

T h e p l a i n t i f

f s c o n t e n d o n a p p e a l o n l y t h a t t h e d i s t r i c t c o u r t e r r e d b y d i s m i s s i n g t h e i r c l a i m f o r b r e a c h o f t h e 1 0 f i d u c i a r y d u t y o f

p r u d e n c e
. T h e y a r e e n t i r e l y s i l e n t a s t o t h e o t h e r c l a i m s t h e y r a i s e d i n t h e d i s t r i c t c o u r t

– - b r e a c h o f t h e f i d u c i a r y d u t y o f

l o y a l t y , b r e a c h o f

t h e f i d u c i a r y d u t y o f

h o n e s t y a n d f

a i l u r e t o m o n i t o r
. W e t h e r e f o r e a d d r e s s o n l y t h e d u t y o f p r u d e n c e c l a i m
. -7-No. 11-1497

Griffin v. Flagstar Bancorp, Inc. from liability for damag es occa sioned by plan participa nts’ exercise of control over their individual

acc ounts. See 29 U.S.C. § 1104(c) ; 29 C.F.R. § 2550.404c-1. T h e p ar t i es dispute the scope and applicability of the safe harbor provision, but, as with the presum p t i o n o f prudenc e, intervening
circ uit prec edent resolves this inquiry in favor of the plaintiffs. I n Pfeil , we held that, even when plan participa

nts control the allocation of their pension assets among an arr ay of investment options
offe red by

their plan, the sa fe ha

rbor doe s not ex empt fiduciar ies from their duty to use “prude nce when desig nating and monitoring the menu of differ ent investment options that [are] offe red.” 671
F.3d at 597. Be cause the defe ndants in this case decide d to offe r Flag star stock to Plan participa nts, Pfeil require s the conc lusion that ERI SA’s safe harbor provision is not a vailable to the defe ndants
and ther efor e ca

nnot support dismi ssal for f ailure to state a

claim.

B.
There rema ins but one conte n t i o n that is not settled by intervening prec edent. We must decide whether the district court applied proper ly the pleading standards articula ted by the Supreme
Court in Twombly and Iqbal

. “To survive a motion to dismiss , a complaint must contain sufficie nt fac tual matter, acc epted

as t rue, to ‘state a claim to relief that is plausible on its fac e.’” Iqbal , 556 U.S. at 678 (quoting Twombly , 550 U.S. at 570). A fac ially plausible claim exis ts “whe n the plai n t i ff p l eads fac tual

content that allows the court to draw the rea sonable infere nce that the defe ndant is liable for the
misconduct alleg ed.” Id

. The plausible claim s tandar d is less than “a ‘prob ab i lity require ment,’”
but require s more than pleading fac ts that are “‘me rely consistent with’ a defe ndant’s liability .” Id

. -8-No. 11-1497

Griffin v. Flagstar Bancorp, Inc. (quoting Twombly , 550 U.S. at 556-57). I n short, the “alleg ati o n s must be enough to raise a right

to r elief above the specula tive level, on the assumption that all the alleg ations in the complaint are true (e ven if doubtful in fa ct).” Twombly , 550 U.S. at 555 (citations omitted).
ERI SA, of course , imposes on the fiduciar y of an e mploy ee be nefit plan the oblig ation to discharg e his duties with respe ct to a plan solely in t h e i n t er est of the participa nts and
benef iciarie s and--
(A) f or the e x clusive purpose of: (i) providing benef

its to participa

nts and th ei r benef iciarie s; and
(ii) d e f

r a y i n g r e a s o n a b l e e x p e n s e s o f administering the plan.

29 U.S.C. § 1104(a) (1). These manag ement responsibilities must be conducte d “with the car e, skill, prudenc e, and diligenc e under the circ umstances then preva iling that a prudent man acting in a like
capa city and familiar with such m atters would use.” § 1104(a) (1) (B). The fiduciary duties under
ERI SA “ar e the highe st known to the law,” Chao v. Hall Holding Co., Inc. , 285 F.3d 415, 426 (6th
Cir. 2002) (interna l quotation marks omitted), and “[i] f a fiduciar y fails to meet these high standards,
h e m ay b e h el d persona lly liable for any losses to the plan that result from his brea ch of du t y , ” Kuper , 66 F.3d a t 1458 (citing 29 U.S.C. § 1109(a)).
I n this case , the plaintiffs must aver a plausible claim that the defe ndants brea ch ed t h eir
fiduciar y duty of prudenc e. As we have descr ibed it, the duty of prudenc e “imposes an unwave ring

-9-No. 11-1497

Griffin v. Flagstar Bancorp, Inc. duty to act both as a prudent person would act in a simil ar situation and with single -minded devotion

to [t he] plan participants and beneficia ries.” Id. (interna l quotation marks omi tted). To survive a
motion to di smiss, then, the amende d complaint in this case must plea d fac tual content that would
allow the court rea sonably to infer that, by continuing to offe r Flag star stock as an investment option throug hout the class period, the defe ndants did not ac t as a p ru d ent person would have acte d in a simil ar situation. I n other wor ds, we shall re verse if the pl aintiffs presented a plausible claim that

a prudent person would have discontinued offe ring Flag star stock as an investment option at some point during the class per iod.
I n approa ching this question, our discussion of the fac ts in Pfeil is instructive. I n that case , we summarized the r eleva nt fac ts as follows:
State Street beca

me fiduciar

y for the plans on J une 30, 2006, at a time, as the plaintiffs alleg e, when Gene ral Motors was alre ady in serious financ ial trouble. The complaint alleg es that Gene ral Motors’ troubles wer e well-docu mented and that commentato rs i ncre asing ly opined that bankruptc y protec tion was “virtually a cer tai n t y ” fo r the company
. On J uly 15, 2008, GM Chief Ex ecutive Offic er Rick Wagne r announce d that the compa n y n ee ded to implement a restruc turing plan to combat second quarte r 2008 losses, which he descr ibed as “sig nificant.” As part of the plan, Gene ral Motors eliminated its dividend, reduc ed its sala ried workfor ce by twenty p er ce n t , and curta iled truck and larg e vehicle production, all signs of what plaintiff[s] contend was a “potential disaster for share holders.” The com p laint alleg es that on Aug ust 1, 2008, Gene ral Motors announce d a third quarte r net loss of $15.5 billion. These bleak repor ts forc ed the company to acknow ledg e in its November 7, 2008 third-quart er fi n ancials that it would exhaust cash rese rves by m i d –2009. Three day s later, Gener al M otors filed i ts For m 10–Q for third q u ar t er 2008, disclosing that its auditors had “s u b s t anti al doubt” reg arding the company ’s “ability to continue as a g oing conce rn.” The plaintiffs alleg e th at under these circ umstances, State Street s h o u l d h av e rec og nized as ear ly as J uly 15, 2008, that Gene ral Motors was b o und for bankruptc y and that GM stock was no longe r a prudent investment for

the plans.
671 F.3d at 589. Simi larly , albeit in the context of d et ermining whether the plaintiffs could
-10-No. 11-1497

Griffin v. Flagstar Bancorp, Inc.

overc ome the presumption of rea sonablene ss, we e mp h a s iz e d in P fe il th a t th e complaint “suff

iciently pleade d that a prudent fiduciar y acting under simil ar circ umst an ces would have made a differ ent investment decision.” Id

. at 592 (interna l quotation marks omit te d )

. T h e “numer ous, detailed fac tual

aver ments in the complaint” in that case established a plausible claim “that Gene ral Motors was on the roa d to bankruptcy

and thus had c ease d to be a pr udent investment.” Id . at 593. Turning to the amende d complaint filed i n this case , we see a chronolog y of eve nts during
the class period laid out in some forty -s even separ ate para g raphs sprea d over six teen pag es. The complaint ref

ers to at least ten statements by Flag star announcing losses or declining profits, at least
three announcing a reduc tion or suspension of dividend pay ments and one announcing that Flag star would be shrinking its mortg ag e loan orig ination business. The complaint also ref ers to at least ten
neg ative repor

ts offe red by analy sts or published by the financ ial media. Those repor ts include,
among other matters: a J anuar y 2008 repor t fr o m M oody ’s I nvestors Service indicating “that
continued los s es wo uld likely lead [Flag star’s] rating to junk status”; an October 2008 1 1
deter mination by Merr ill L y

nch to lower Flag star’s rating fr o m “B uy ” to “Unde rper form”; a 1 2
November 2008 Morning star Financ ial article repor ting conce rns with “F lag star’s business and
financ es”; and an article in late 2009 or ear ly 2010 that descr ibed Flag star as “a black hole.” As

1 3 1 4
l at e as Aug ust 2009, the complaint alleg es, Flag star was known to have a rate of non-per fo rm i n g

R

. 1 6 a t 1 7 ¶ 5 0

. 1 1

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. 1 2

I d

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. 1 3

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. a t 2 8 ¶ 8 4 ( i n t e r n a l q u o t a t i o n m a r k s o m i t t e d )

. 1 4
-11-No. 11-1497

Griffin v. Flagstar Bancorp, Inc. loans that was more than double the five perc ent ra t e co n s i d ered “unsaf e and unsound.” The 1 5 complaint also alleg es that Flag star later a cknowledg ed, pursua nt to an ag ree ment with the United
States Offic e of Thrift Supervision, that it had “eng ag ed in unsafe or unsound prac tices in conducting
its opera tions.” The complaint details the Dec ember 2008 agre ement in which a private equity 1 6
distressed-de bt spe cialist purcha sed a seventy -per cent stake in F lag star. Notably , it did so under a New York Stock Ex chang e emer g ency provision that permitted the sale to by pass a s h ar eh older
approva l require ment beca use any delay was expected to “ser iously jeopar dize the financ ial viability
of the . . . c ompany .” 1 7 1 8
Our task a t this st ag e of the proce eding is to determine whe ther the pla intiffs have raised a plausible cl ai m t h at a prudent fiduciar y would have discontinued offe ring Flag star stock at some point during the class period. Af t er revie wing the fac tual alleg ations in the complaint--which go

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. 1 5

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. 1 6

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. 1 7

T h e d e f

e n d a n t s d o n o t c o n t e n d s e r i o u s l y t h a t F l a g s t a r ’ s f u t u r e w a s b r i g h t t h r o u g h o u t t h e c l a s s p e r i o d

. I n d e e d , 1 8 t h e y c o n c e d e t h a t t h e f

a c t s i n t h e c o m p l a i n t s u g g e s t t h a t i t w a s r e a s o n a b l e t o v i e w F l a g s t a r ’ s v i a b i l i t y a s u n c e r t a i n
. S e e , e
. g
. , A p p e l l e e s ’ B r
. 4 6 ( “ W h i l e t h e r e q u e s t [ f o r a n e m e r g e n c y e x e m p t i o n f r o m t h e N e w Y o r k S t o c k E x c h a n g e r e g u l a t i o n s r e g a r d i n g s h a r e h o l d e r a p p r o v a l ] m a y p l a u s i b l y s u g g e s t t h a t F l a g s t a r w a s i n f i n a n c i a l j e o p a r d y a t t h a t p o i n t , f i d u c i a r i e s a r e n o t r e q u i r e d t o d i v e s t a c o m p a n y ’ s s t o c k s i m p l y b e c a u s e t h e c o m p a n y m a y b e c l o s e t o b a n k r u p t c y
. ” ) ; i d

. a t 4 7 ( “ I n t h e r e s t o f

2 0 0 9 a n d e a r l y 2 0 1 0 , t h e r e w e r e a n u m b e r o f n e g a t i v e d e v e l o p m e n t s , s u c h a s t h e i n c r e a s e i n n o n - p e r f o r m i n g l o a n s a b o v e 1 0 % , t h e O f f i c e o f T h r i f

t S u p e r v i s i o n ’ s s u p e r v i s o r y a g r e e m e n t , a n d n e g a t i v e s t a t e m e n t s b y a n a l y s t s a n d
o t h e r s q u e s t i o n i n g F l a g s t a r ’ s v i a b i l i t y
. ” )

. D e s p i t e t h e s e c o n c e s s i o n s , t h e y i n v i t e o u r a t t e n t i o n t o f a c t s i n t h e a m e n d e d
c o m p l a i n t t h a t , t h e y p o s i t , s e r v e a s e v i d e n c e t h a t a p r u d e n t i n v e s t o r w o u l d n o t n e c e s s a r i l y h a v e s t o p p e d o f

f e r i n g F l a g s t a r s t o c k a s a n o p t i o n u n d e r t h e P l a n : “ t h a t a f i d u c i a r y c o u l d h a v e r e a s o n a b l y b e l i e v e d i t p r u d e n t t o c o n t i n u e t h e F l a g s t a r s t o c k i n v e s t m e n t o p t i o n
. ” I d

. ( e m p h a s i s a d d e d )

. H o w e v e r , a s t h e E i g h t h C i r c u i t n o t e d i n B r a d e n , “ [ j ] u s t a s a p l a i n t i f

f
c a n n o t p r o c e e d i f h i s a l l e g a t i o n s a r e m e r e l y c o n s i s t e n t w i t h a d e f e n d a n t ’ s l i a b i l i t y , s o a d e f e n d a n t i s n o t e n t i t l e d t o d i s m i s s a l i f

t h e f a c t s a r e m e r e l y c o n s i s t e n t w i t h l a w f u l c o n d u c t

. ” 5 8 8 F

. 3 d a t 5 9 7 ( c i t a t i o n o m i t t e d ) ( i n t e r n a l q u o t a t i o n m a r k s o m i t t e d )

. -12-No. 11-1497

Griffin v. Flagstar Bancorp, Inc. far bey ond documenting a simple dr op in stoc k price to r ecite announce ments from Flag star itself,

statements by analy sts and financ ial media publications, and actions taken by Flag star sug g esting a
prec arious financ ial situation--we must conclude that the complaint raises a plausible cl aim for
brea ch of f

iduciary duty

.

CONCLUSION
The district court err ed by dismiss ing this action for failure to state a claim upon which relief
can be g rante d. Acc ording ly , we REVERSE its judg ment and REMAND f or fur ther proc eeding s.

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