United States Court of Appeals

For the Eighth Circuit

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No. 18-1626

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Alexander Y. Usenko, Derivatively on Behalf of the SunEdison Semiconductor

Ltd. Retirement Savings Plan

lllllllllllllllllllllPlaintiff - Appellant

v.

MEMC LLC; The Investment Committee of the SunEdison Semiconductor Ltd.

Retirement Savings Plan, Hemant Kapadia; Penny Cutrell; Steve Edens; Karen

Steiner; Cheng Yang; Ben Llorico

lllllllllllllllllllllDefendants - Appellees

John Does 1-10

lllllllllllllllllllllDefendants

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Appeal from United States District Court 

for the Eastern District of Missouri - St. Louis

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Submitted: January 16, 2019

Filed: June 4, 2019 

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Before BENTON, MELLOY, and KELLY, Circuit Judges.

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KELLY, Circuit Judge.
Alexander Usenko is a former employee of SunEdison Semiconductor, LLC

(Semi). Semi was once a wholly owned subsidiary of SunEdison, Inc. Semi made

a defined-contribution retirement savings plan available to its employees, including

Usenko, that offered SunEdison stock as a retirement investment option. On April

21, 2016, SunEdison filed for bankruptcy. In August 2017, Usenko brought suit

derivatively on behalf of the plan and, in the alternative, as a putative class action on

behalf of plan participants. Usenko claims that Semi, the investment committee of

Semi’s retirement savings plan, and the members of the investment committee

breached their fiduciary duties under the Employee Retirement Income Security Act

of 1974 (ERISA). Usenko alleges that between July 20, 2015, and April 21, 2016,

the defendants knew or should have known that SunEdison was in poor financial

condition and faced poor long-term prospects and therefore should have removed

SunEdison stock from the plan’s assets. The district court dismissed Usenko’s 1

complaint as to all defendants for failure to state a claim—other than Penny Cutrell

and Karen Steiner, who were dismissed for lack of timely service—and denied

Usenko leave to amend his complaint. Usenko appeals the dismissal for failure to

state a claim and the denial of leave to amend. We affirm. 2

I

We draw the following background from the well-pleaded factual allegations

in Usenko’s complaint, which we accept as true for purposes of the defendants’

The Honorable Audrey G. Fleissig, United States District Judge for the

1

Eastern District of Missouri.

Usenko does not appeal the dismissal of Cutrell and Steiner. 2

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motionsto dismiss. Park Irmat Drug Corp. v. Express Scripts Holding Co., 911 F.3d

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505, 512 (8th Cir. 2018).

The plan was created in May 2014, after Semi spun off from SunEdison. The

plan made several investment options available to its participants, including a fund

that invested solely in the common stock of Semi’s former corporate parent. Usenko,

among others, elected to exercise this option and held shares of SunEdison common

stock through his individual plan account. The plan was later amended to freeze

contributions to the SunEdison stock fund. Pursuant to the amendment, effective

February 1, 2015, participants could retain their existing investments but could no

longer direct additional investments into the SunEdison stock fund.

By mid-2015, it was widely reported that SunEdison was facing liquidity

problems and was in financial distress due to an ambitious series of acquisitions. On

July 20, SunEdison issued a press release announcing that it would acquire yet

another company, Vivint Solar, Inc., for $2.2 billion. Markets reacted poorly, and

SunEdison’s stock price fell from $31.56 per share to $26.01 per share in a week. On

August 6, SunEdison issued another press release, reporting a $263 million lossin its

second quarter. That same day, the financial press warned that SunEdison had a

$10.7 billion corporate debt load and negative cash flow from operations. By the end

of the day, SunEdison’s stock closed at $17.08 per share. At the time, investor

demand for energy stocks was generally weak.

On November 10, SunEdison issued a press release reporting its third quarter

results. These results spurred more negative commentary from the financial press,

who questioned whether SunEdison would even be able to meet its existing financial

We also derive certain information from plan documents and an independent

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auditor’s report dated December 31, 2014, which Usenko’s complaint refers to

directly and whose authenticity is not in question. See Dittmer Properties L.P. v.

F.D.I.C., 708 F.3d 1011, 1021 (8th Cir. 2013).

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obligations. On November 18, SunEdison’s stock closed at $3.25 per share. On

January 7, 2016, SunEdison announced that it was restructuring $738 million of its

debt. That same day, the financial press reported that this decision had triggered a

massive sell-off because of its dilutive effect on investors, even though SunEdison’s

strategy would add an estimated $555 million to its liquidity. That week, shares of

SunEdison dropped roughly 30 percent, closing at $3.41.

By January 12, the financial press was reporting that SunEdison might not

survive the year, and SunEdison’s stock closed at $3.02 per share, hitting a low of

$2.36 during the day. Commentary suggested that SunEdison stock was risky due to

its generally disappointing historical performance and feeble growth in earnings per

share as well as the company’s high debt-management risk. SunEdison then twice

publicly delayed filing its annual report, stating that it needed additional time for its

audit committee to complete an internal investigation and otherwise confirm the

accuracy of its financial position.

In April, SunEdison and certain of its subsidiaries filed for bankruptcy. 

SunEdison’s common stock was suspended immediately from trading at the market

opening on the New York Stock Exchange on April 21, 2016. All told, between July

20, 2015, and April 21, 2016, the market price of SunEdison stock fell from $31.66

to $0.34. As a result, those who had invested in SunEdison stock through Semi’s

retirement plan effectively lost the entire value of their investment.

In his single-count complaint, Usenko alleges that the defendants breached

their fiduciary duties. He claims that they knew or should have known that

continuing to hold SunEdison stock between July 20, 2015, and April 21, 2016, was

imprudent because SunEdison’s failing business prospects dramatically altered its

suitability as a retirement investment.

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II

We review the district court’s decision granting a motion to dismiss for failure

to state a claim de novo, assuming all factual allegations as true and construing all

reasonable inferences in favor of the nonmoving party. Retro Television, Inc. v.

Luken Commc’ns, LLC, 696 F.3d 766, 768 (8th Cir. 2012). “To survive a motion to

dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state

a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009)(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Threadbare

recitals of the elements of a cause of action, supported by mere conclusory

statements, do not suffice.” Id. Rather, well-pleaded factual allegations must

“plausibly give rise to an entitlement to relief.” Id. at 679. That is, they must “raise

a right to relief above the speculative level.” Twombly, 550 U.S. at 555.

To prevail on a claim of breach of fiduciary duty under ERISA, the plaintiff

“must make a prima facie showing that [a] defendant acted as a fiduciary, breached

[his] fiduciary duties, and thereby caused a loss to the Plan.” Braden v. Wal-Mart

Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009).

ERISA imposes upon fiduciaries twin duties of loyalty and prudence,

requiring them to act solely in the interest of plan participants and

beneficiaries and to carry out their duties 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.

Id. at 595 (cleaned up). The “prudent person standard is an objective standard that

focuses on the fiduciary’s conduct preceding the challenged decision.” Roth v.

Sawyer-Cleator Lumber Co., 16 F.3d 915, 917–18 (8th Cir. 1994) (citation omitted). 

ERISA requires fiduciaries to act with prudence, not prescience, and therefore the

relevant inquiry focuses on the information available to the fiduciary at the time of

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the relevant investment decision. Pension Benefit Guar. Corp. ex rel. St. Vincent

Catholic Med. Ctrs. Ret. Plan v. Morgan Stanley Inv. Mgmt., Inc., 712 F.3d 705, 716

(2d Cir. 2013).

In Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. 409 (2014), the Supreme

Court considered how the pleading standard articulated in Iqbal and Twombly guides

the analysis of allegations that ERISA fiduciaries “knew or should have known in

light of publicly available information, such as newspaper articles, that continuing to

hold and purchase [the employer’s] stock was imprudent.” Id. at 426. In relevant

part, the complaint in Dudenhoeffer alleged that publicly available information

warned that the stock at issue was “overvalued and excessively risky” and claimed

that, under the circumstances, a prudent fiduciary would have known by July 2007

that continuing to hold the stock was imprudent. Id. at 413. Between July 2007 and

September 2009, when the complaint was filed, the stock’s price dropped by 74%,

which “eliminated a large part of the retirement savings that the participants had

invested in” the plan. Id.

The Court opined that “where a stock is publicly traded, allegations that a

fiduciary should have recognized from publicly available information alone that the

market was over- or undervaluing the stock are implausible as a general rule, at least

in the absence of special circumstances.” Id. at 426. This is because “ERISA

fiduciaries, who . . . could reasonably see little hope of outperforming the market

based solely on their analysis of publicly available information may, as a general

matter, . . . prudently rely on the market price.” Id. at 426–27 (cleaned up). In its

analysis, the Court embraced the view that a security’s price in an efficient market

reflects all publicly available information and represents the market’s best estimate

of its value in light of its riskiness and the future net income flows that those holding

it are likely to receive. See Coburn v. Evercore Trust Co., 844 F.3d 965, 969 (D.C.

Cir. 2016). Noting that the complaint at issue did not point to any special

circumstance that rendered reliance on the market price imprudent, the Court

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remanded for the lower courts to apply its guidance in the first instance. 

Dudenhoeffer, 573 U.S. at 427–30.

The similarity between Usenko’s allegations and those that the Supreme Court

deemed insufficient to plausibly state a breach of the duty of prudence in

Dudenhoeffer is undeniable. Usenko’s complaint presents a series of public

announcements by SunEdison that spurred negative commentary by the financial

press and concomitant drops in stock price. The complaint faults the defendants for

failing to act on this publicly available information and alleges that the declines in

SunEdison’s stock price and reports of SunEdison’s extraordinary debts and liquidity

problems should have prompted them to investigate and ultimately determine that

divesting from SunEdison stock would be prudent as early as July 20, 2015. It

contains no allegations that the circumstances indicated to the defendants that they

could not rely on the market’s valuation of SunEdison stock. See Singh v.

RadioShack Corp., 882 F.3d 137, 147 (5th Cir. 2018) (per curiam) (“Plaintiffs cannot

evade Dudenhoeffer’s general implausibility rule by disguising claims based on

public information asspecial circumstances.”). Indeed, Usenko’s allegations suggest

that SunEdison’s stock price did react to the company’s announcements and the

financial press’s negative commentary as to the company’s high debt load and

liquidity problems, among other concerns.

In sum, Usenko, like the plaintiffs in Dudenhoeffer, alleges that the defendants

breached their fiduciary duties because they failed to “outperform[] the market based

solely on their analysis of publicly available information” and to conclude that,

because SunEdison stock was excessively risky, the plan should divest from

SunEdison. Id. at 427 (cleaned up). As explained by the Supreme Court in

Dudenhoeffer, as well as several of our sister circuits examining similar claims, such

allegations are insufficient to plausibly allege that ERISA fiduciaries breached the

duty of prudence. See id; see also Kopp v. Klein, 894 F.3d 214, 218–21 (7th Cir.

2018) (per curiam) (dismissing a claim that defendants breached fiduciary duty “by

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allowing Plan participants to invest in Idearc stock at a time when publicly available

information revealed it was not a prudent investment”); Rinehart v. Lehman Bros.

Holding Inc., 817 F.3d 56, 61, 65–68 (2d Cir. 2016) (per curiam) (dismissing a claim

that fiduciaries “permit[ted] investment in Lehman stock in the face of circumstances

arguably foreshadowing its eventual demise”). Accordingly, Usenko fails to

plausibly allege that the defendants breached the duty of prudence and dismissal for

failure to state a claim is proper.4

Usenko’s attempts to evade Dudenhoeffer are unavailing. We reject Usenko’s

argument that Tibble v. Edison International, 135 S. Ct. 1823 (2015) saves his

deficient duty-of-prudence allegations. The Supreme Court’s acknowledgment in

Tibble that an ERISA fiduciary “has a continuing duty to monitor trust investments

and remove imprudent ones,” id. at 1828, does not exempt Usenko’s complaint from

meeting Dudenhoeffer’s pleading requirements, see, e.g., Singh, 882 F.3d at 147 (5th

Cir. 2018) (per curiam) (noting that “Tibble establishes that ERISA fiduciaries have

a continuing duty to monitor the prudence of plan investments,” but nonetheless

concluding that “[b]ecause the complaint does not plausibly identify any special

circumstances undermining the market price . . . , it does not state a duty of prudence

claim based on public information”). And Usenko cannot distinguish Dudenhoeffer

on the basis that it only applies to duty-of-prudence claims in the context of employer

securities. The Court in Dudenhoeffer explicitly rejected the contention that

fiduciaries of employee stock ownership plans are entitled to a special presumption

And Usenko’s claim that the defendants also breached their co-fiduciary 4

obligations by knowingly participating in each other’s purported breaches cannot

“survive without a sufficiently pled theory of an underlying breach.” Brown v.

Medtronic, Inc., 628 F.3d 451, 461 (8th Cir. 2010). So dismissal of that claim was

proper, too.

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of prudence. See Dudenhoeffer, 573 U.S. at 418. As such, we see no indication that

the Court intended to limit Dudenhoeffer to employer securities. See id. at 425–30.

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III

Finally, we affirm the denial of Usenko’s motion for leave to amend his

complaint because he failed to submit a proposed amended complaint with his

motion. See, e.g., In re 2007 Novastar Fin. Inc., Sec. Litig., 579 F.3d 878, 884 (8th

Cir. 2009).

Accordingly, the judgment of the district court is affirmed.

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In his reply brief, Usenko argues for the first time that his complaint survives 5

the defendants’ Rule 12(b)(6) motion because he also pleads that the defendants

breached their fiduciary duties by failing to diversify away from SunEdison common

stock. We ordinarily do not consider arguments raised for the first time in a reply

brief and decline to do so here. See, e.g., Viking Supply v. Nat’l Cart Co., 310 F.3d

1092, 1099 (8th Cir. 2002).

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