No. 16-1293

_________________________________

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

_______________________________

RICHARD G. TATUM, Individually and on behalf of a class of all other persons 

similarly situated,

Plaintiff-Appellant,

v.

R.J.R. PENSION INVESTMENT COMMITTEE, et al.,

Defendants-Appellees.

________________________________

On Appeal from the United States District Court 

for the Middle District of North Carolina

Case No. 1:02-CV-00373

________________________________

Brief of the Amicus Curiae, Thomas E. Perez, 

Secretary of Labor, United States Department of Labor, 

in Support of Appellant

________________________________

M. PATRICIA SMITH ELIZABETH HOPKINS

Solicitor of Labor Counsel for Appellate and

 Special Litigation

G. WILLIAM SCOTT

Associate Solicitor for JEFFREY M. HAHN

Plan Benefits Security Senior Trial Attorney

U.S. Department of Labor

200 Constitution Ave. N.W.

Room N-4611

Washington, D.C. 20210

 (202) 693-5695
i 

TABLE OF CONTENTS

TABLE OF AUTHORITIES .................................................................................... ii

THE SECRETARY'S INTEREST............................................................................. 1 

STATEMENT OF THE ISSUE................................................................................. 2 

STATEMENT OF THE CASE.................................................................................. 2 

SUMMARY OF THE ARGUMENT ........................................................................ 6 

ARGUMENT............................................................................................................. 7 

I. AS THIS COURT CORRECTLY RECOGNIZED, 

DUDENHOEFFER CONCERNED PLEADING STANDARDS 

UNDER RULE 12(b)(6), NOT LOSS CAUSATION AFTER A 

BREACH HAS BEEN PROVEN ......................................................... 7 

II. THE SUPREME COURT'S RECENT AMGEN DECISION WAS A 

STRAIGHTFORWARD APPLICATION OF DUDENHOEFFER'S 

PLEADING STANDARDS THAT, LIKE DUDENHOEFFER, HAS 

NOTHING TO DO WITH LOSS CAUSATION...............................12

III. AMICI'S CONCERNS WITH THE WORKABILITY OF THE 

"WOULD HAVE" STANDARD ARE OVERSTATED ...................16

CONCLUSION....................................................................................................... 18 

CERTIFICATE OF COMPLIANCE

CERTIFICATE OF SERVICE
ii

TABLE OF AUTHORITIES

Federal Cases:

Allen v. Greatbanc Trust Co.,

-- F.3d -- , No. 15-3569, 2016 WL 4474730 (7th Cir. Aug. 25, 2016)................15

Amgen, Inc. v. Harris,

136 S. Ct. 758 (2016).................................................................................... passim

Ashcroft v. Iqbal,

556 U.S. 662 (2009) .................................................................................. 8, 11, 15

Bell Atlantic Corp. v. Twombly,

550 U.S. 544 (2007) ............................................................................ 8, 10, 11, 16

Braden v. Wal-Mart Stores Inc.,

588 F.3d 585 (8th Cir. 2009)................................................................................11

Fifth Third Bancorp v. Dudenhoeffer,

134 S. Ct. 2459 (2014).................................................................................. passim

Harris v. Amgen, Inc.,

788 F.3d 916 (9th Cir. 2015), rev'd,

136 S. Ct. 758 (2016)............................................................................................13

Moench v. Robertson,

62 F.3d 553 (3d Cir. 1995).....................................................................................7

Plasterers' Local Union No. 96 Pension Plan v. Pepper,

663 F.3d 210 (4th Cir. 2011)..................................................................................4

Shaw v. Delta Air Lines, Inc.,

463 U.S. 85 (1983) .................................................................................................1

Tatum v. R.J. Reynolds Tobacco Co.,

926 F. Supp. 2d 648 (M.D.N.C. 2013)...................................................................3

Tatum v. RJR Pension Inv. Comm.,

761 F.3d 346 (4th Cir. 2014)........................................................................ passim
iii

Federal Statutes:

Employee Retirement Income Security Act of 1974 (Title I),

as amended, 29 U.S.C. § 1001 et seq.:

Section 404(a), 29 U.S.C. § 1104(a)..................................................................1

Section 407(d)(6)(A), 29 U.S.C. § 1107(d)(6)(A).............................................7

Section 504, 29 U.S.C. § 1134...........................................................................1

Section 505, 29 U.S.C. § 1135...........................................................................1

Miscellaneous:

Fed. R Civ. P.:

Rule 12(b)...........................................................................................................6

Rule 12(b)(6)..................................................................................................6, 8

Brief of the Secretary of Labor as Amicus Curiae, Tatum v. R.J. Reynolds Tobacco 

Co., No. 13-1360 (4th Cir.), https://www.dol.gov/sol/media/briefs/tatum(A)-06-

25-2013.pdf...........................................................................................................17

Brief for the United States as Amicus Curiae, RJR Pension Invest. Comm. v. 

Tatum, No. 14-656 (S. Ct.),

https://www.justice.gov/sites/default/files/osg/briefs/2015/06/01/rjrpension_invit

e_20.pdf.......................................................................................4
THE SECRETARY'S INTEREST

The Secretary of Labor is vested with primary regulatory and enforcement 

authority for Title I of the Employee Retirement Income Security Act (ERISA), see

29 U.S.C. §§ 1134, 1135, a "comprehensive statute designed to promote the 

interests of employees and their beneficiaries in employee benefit plans." Shaw v. 

Delta Air Lines, Inc., 463 U.S. 85, 90 (1983). The Secretary has a strong interest 

in ensuring that fiduciaries charged with administering employee benefit plans do 

so in a manner that is consistent with the fiduciary responsibilities set forth in 

ERISA section 404(a), 29 U.S.C. § 1104(a), and that plan participants and 

beneficiaries are able to effectively enforce these duties in federal court. In their 

response brief, Appellees raise questions concerning the standard for determining 

when participants and beneficiaries can recover losses they have incurred related to 

proven fiduciary breaches, questions that this Court conclusively answered in its 

previous decision in this case. The Secretary participated as amicus in the previous 

appeal and agrees with this Court's conclusion there that once the participants have 

proven that the fiduciaries breached their duties of procedural prudence and shown 

a related loss, as in this case, the burden is on the fiduciaries to prove that the loss 

would have occurred in any event by establishing that a prudent fiduciary who had 

investigated the matter "would have" made the same decision. The Secretary has 
2

an interest in again defending that position in order to ensure that breaching 

fiduciaries cannot easily escape liability for their breaches.

STATEMENT OF THE ISSUE

The Secretary's brief is confined to the following issue raised by Appellees 

in their response brief: 

Whether the Supreme Court's per curiam decision in Amgen, Inc. v. Harris, 

136 S. Ct. 758 (2016), abrogated this Court's previous decision in Tatum v. RJR 

Pension Inv. Comm., 761 F.3d 346 (4th Cir. 2014), which held that fiduciaries who 

have breached their duties can escape liability for losses related to their breaches 

only if they can prove that a hypothetical prudent fiduciary "would have" made the 

same decision anyway.

STATEMENT OF THE CASE

This case emanates from the spin-off in 1999 of RJR Nabisco, Inc.'s (RJR)

food business from its tobacco business. JA 606. That spin-off meant that the 

ERISA plan sponsored by the spun-off tobacco company now held stock in a food

company, Nabisco, with which it was no longer affiliated. JA 609. The plan's 

fiduciaries opted to sell off the Nabisco stock just six months after the spin-off, JA 

626, even though the governing plan documents required that participants be 

permitted to maintain their existing investments in Nabisco stock, JA 614-15, and 

even though the price of Nabisco stock had plummeted since the spin off, JA 627, 
3

which resulted in many of the plan's participants suffering large losses on their 

investments.

Plaintiff Richard Tatum, who had Nabisco stock in his individual account 

and who objected to the sell-off, brought a class action suit in May 2002 alleging 

that RJR breached its fiduciary duties under ERISA by liquidating the plan's 

Nabisco stock "on an arbitrary timeline without conducting a thorough 

investigation, thereby causing a substantial loss to the plan." Tatum v. RJR 

Pension Inv. Comm., 761 F.3d 346, 351 (4th Cir. 2014). After a bench trial, the 

district found that because the fiduciaries conducted no investigation prior to 

deciding to sell the Nabisco stock, "RJR did indeed breach its fiduciary duty of 

procedural prudence and so bore the burden of proving that this breach did not 

cause loss to the plan participants." Id. According to the district court, however, 

RJR satisfied its loss-causation burden by proving that the decision to sell off the 

Nabisco stock six months after the spin-off was "one which a reasonable and 

prudent fiduciary could have made after performing such an investigation." Tatum 

v. R.J. Reynolds Tobacco Co., 926 F. Supp. 2d 648, 651 (M.D.N.C. 2013)

(emphasis added).

This Court affirmed the district court's finding that defendants breached their 

fiduciary duties and that the defendants therefore bore the burden of disproving 

loss causation, but concluded that the district court applied the wrong loss 
4

causation standard and therefore reversed its decision that defendants were not 

responsible for the participants' losses. The Court said that the standard for loss 

causation is not whether the fiduciary "could have" made the same decision had it 

first undertaken a prudent investigation, but rather whether it "would have" done 

so. Tatum, 761 F.3d at 364.1 As the Court explained, not only is that standard 

firmly grounded in precedent, see, e.g., Plasterers' Local Union No. 96 Pension 

Plan v. Pepper, 663 F.3d 210, 218 (4th Cir. 2011), but the alternative "would 

diminish ERISA's enforcement provision to an empty shell if we permitted a 

breaching fiduciary to escape liability by showing nothing more than the mere 

possibility that a prudent fiduciary 'could have' made the same decision." Tatum, 

761 F.3d at 365. 

In its decision, this Court also directly refuted Appellees' argument that the 

Supreme Court endorsed the "could have" standard for loss causation in Fifth Third 

Bancorp v. Dudenhoeffer, 134 S. Ct. 2459 (2014). The Court distinguished the 

portion of Dudenhoeffer cited by Appellees as confined only to cases involving 

 1 In addition to framing the loss-causation inquiry in terms of what the fiduciary in 

the case at hand would have done had it acted prudently, the Court also framed it 

as asking what a "hypothetical prudent fiduciary" would have done. Tatum, 761 

F.3d at 364. The Court did not draw a distinction between these two conceptions 

of the inquiry, and the parties have not argued that there is a distinction. See Brief 

for the United States as Amicus Curiae, at 18, n. 8, RJR Pension Invest. Comm. v. 

Tatum, No. 14-656 (S. Ct.), available at 

https://www.justice.gov/sites/default/files/osg/briefs/2015/06/01/rjrpension_invite_

20.pdf.
5

inside information, and noted that the decision, in any event, concerned pleading 

standards, not loss causation. Tatum, 761 F.3d at 366, n.14.

On remand, the district court re-evaluated the evidence applying the "would 

have" standard for loss causation, and concluded that a hypothetical prudent 

fiduciary "would have" made the same decision RJR made to divest the plan of 

Nabisco stock after six months. JA 660. Appellant now appeals on the ground that 

the district court misapplied the "would have" standard. 

Although Appellees spend the bulk of their brief defending the district 

court's decision under that standard, they also argue that this Court can affirm on 

alternative grounds because of a recent Supreme Court decision, Amgen, Inc. v. 

Harris, 136 S. Ct. 758 (2016), which they read as clarifying that the district court's 

original "could have" standard was the right one all along. According to Appellees 

and their supporting amici, the U.S. Chamber of Commerce and the American 

Benefits Council, the Supreme Court's subsequent per-curiam decision in Amgen

"makes clear that [this Court] misread [Dudenhoeffer]." Appellee's Br. at 56; 

Chamber Br. at 8 ("While this Court briefly distinguished Dudenhoeffer in a 

footnote, a subsequent Supreme Court decision shows that distinction is no longer 

tenable."). Amgen, they contend, reveals that Dudenhoeffer stands for the 

proposition that "there is no causation if the choice the defendant made is one that 

a prudent fiduciary 'could have' made." Appellee's Br. at 57 (emphasis added).
6

SUMMARY OF ARGUMENT

Appellees and their supporting amici seek to resurrect an issue that this 

Court conclusively decided the last time this case was before it: the standard for 

determining when a breaching fiduciary can be held liable for losses related to its

breaches. They contend that this Court's previous decision – and, for that matter, 

the entire framework for determining loss causation in ERISA cases – has been 

upended by a most unlikely of sources, the Supreme Court's three-page per curiam 

opinion in Amgen, Inc. v. Harris, 136 S. Ct. 758 (2016). But not only is Amgen

expressly confined to a narrow category of cases involving the use of inside 

information by fiduciaries of employee stock ownership plans that has nothing to 

do with this case, it does not even concern loss causation at all. Rather, Amgen –

like its predecessor, Fifth Third Bancorp v. Dudenhoeffer, 134 S. Ct. 2459 (2014) –

was a case about pleading standards under Federal Rule of Civil Procedure 12(b), 

not "loss causation after a fiduciary breach has been established." See Tatum v. 

RJR Pension Inv. Comm., 761 F.3d 346, 366, n.14 (4th Cir. 2014) (distinguishing 

Dudenhoeffer). In short, Amgen was nothing more than a straightforward 

application of Dudenhoeffer to a case just like Dudenhoeffer. This Court's wellreasoned decision in Tatum was good law at the time, and it remains so today. 
7

ARGUMENT

I. AS THIS COURT CORRECTLY RECOGNIZED, DUDENHOEFFER

CONCERNED PLEADING STANDARDS UNDER RULE 12(b)(6), NOT 

LOSS CAUSATION AFTER A BREACH HAS BEEN PROVEN

Appellees' contention that the Supreme Court in Amgen endorsed the "could 

have" standard for loss causation is based entirely on a single quote from

Dudenhoeffer – later repeated in Amgen – that Appellees remove from its narrow

context, and to which they assign far-reaching consequences that the Supreme 

Court plainly did not intend. To understand the fallacy of Appellees' argument, 

therefore, first requires putting that quote from Dudenhoeffer back in its proper 

context. Doing so reveals that Dudenhoeffer merely established a pleading hurdle 

for a very narrow class of cases, not the substantive standard for loss causation for 

all cases thereafter arising under ERISA. 

Prior to Dudenhoeffer, a number of lower courts had applied a "presumption 

of prudence" to an ESOP fiduciary's decision to invest in employer stock. See, 

e.g., Moench v. Robertson, 62 F.3d 553, 571 (3d Cir. 1995). This presumption

sought to reconcile two seemingly competing forces facing ESOP fiduciaries: 

ERISA's stringent duty of prudence on the one hand, and ERISA's requirement that 

ESOPs invest "primarily" in employer stock on the other. See 29 U.S.C. § 

1107(d)(6)(A) (defining an ESOP as a stock bonus plan "which is designed to 

invest primarily in qualifying employer securities."). With ERISA encouraging 
8

ESOP fiduciaries to purchase employer stock, the theory went, these fiduciaries 

should be given some leeway for acting according to plan terms that required that 

such stock be offered. The Supreme Court disagreed, holding that no special

presumption applies and that ESOP fiduciaries "are subject to the duty of prudence 

just as other ERISA fiduciaries are." Dudenhoeffer, 134 S. Ct. at 2467. 

After rejecting the presumption of prudence, the Court in Dudenhoeffer went 

on to address concerns that the presumption's demise would lead inevitably to 

meritless lawsuits against ESOP fiduciaries. One way to separate the "plausible 

sheep from the meritless goats," the Court explained, is the pleading standard 

required to survive a motion to dismiss under Rule 12(b)(6), 134 S. Ct. at 2471, 

which the Supreme Court had recently explained in Bell Atlantic Corp. v. 

Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009). As 

those cases instruct, "only a complaint that states a plausible claim for relief 

survives a motion to dismiss." Iqbal, 556 U.S. at 679 (emphasis added). One 

reason a claim might be implausible, the Court said in both Twombly and Iqbal, is 

where there is "an obvious alternative explanation" for the challenged conduct that 

renders it permissible. Twombly, 550 U.S. at 567; Iqbal, 556 U.S. at 682 ("As 

between that 'obvious alternative explanation' for the arrests, and the purposeful, 

invidious discrimination respondent asks us to infer, discrimination is not a 

plausible conclusion.") (quoting Twombly, 550 U.S. at 567). 
9

The Court in Dudenhoeffer then offered guidance for how the plausibility 

standard of Rule 12(b)(6) applied to the case before it, where the plaintiffs alleged 

that defendants "behaved imprudently by failing to act on the basis of nonpublic 

information" calling into question the continued prudence of investing in employer 

stock, and should have instead stopped further purchases or disclosed the 

information to the public. Dudenhoeffer, 134 S. Ct. at 2472. The Court 

recognized that a fiduciary armed with inside information indicating that employer

stock was mispriced would face two particular impediments to deploying that 

information: (1) "the complex insider trading and corporate disclosure 

requirements imposed by the federal securities laws," and (2) the prospect that 

stopping purchases or disclosing inside information to the public could cause the 

stock price to drop, thereby harming the plan and its participants. See id. at 2473. 

Because of these likely explanations for a fiduciary's reluctance to use inside 

information, the Court said that "[t]o 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 in the same 

circumstances would not have viewed as more likely to harm the fund than to help 

it." Id. at 2472 (emphasis added).
10

The Court then offered further specificity as to what a plaintiff must plead to 

address one of these explanations in particular, namely, that stopping purchases or 

publicly disclosing inside information would have caused the stock price to 

decline. According to the Court: 

"[L]ower courts faced with such claims [i.e., that a fiduciary failed to stop 

making purchases or disclose inside information] 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 

by the fund." 

Id. at 2473 (emphasis added). It is this quote, containing the words "could not 

have" – a quote later repeated in Amgen, 136 S. Ct. at 759 – which Appellees and 

amici insist marks a new standard for loss causation in all ERISA cases. 

Appellees' Br. at 57 ("the Court held that causation requires that a prudent

fiduciary 'could not have' made the same decision."); Chamber Br. at 6-7.

But as is apparent from its context, the Supreme Court in Dudenhoeffer was 

merely issuing a pleading directive that has nothing to do with loss causation after 

a breach has been proven, and everything to do with Twombly's requirement that a 

plaintiff must, at the pleading stage, contend with "obvious alternative 

explanation[s]" for why the defendant might have acted as it did. Twombly, 550 

U.S. at 567. As explained, the Court in Dudenhoeffer was openly concerned that 
11

trading on inside information could violate the securities laws, and that disclosing 

or stopping purchases might also cause the stock price to decline. See

Dudenhoeffer, 134 S. Ct. at 2469 (describing Fifth-Third's concern about 

securities-law violations as "a legitimate one"). And it said that the way to account 

for these likely explanations for why a fiduciary might choose not to act on its 

inside information is to require plaintiffs, in their complaints, to "allege an 

alternative action" the fiduciary could have taken that would have been both legal 

and beneficial to the plan. Id. at 2472 (emphasis added). Thus, the quote that 

Appellees and amici seize upon as announcing a new and broadly applicable 

standard for loss causation in all ERISA cases is in reality a pleading requirement

specific to a narrow category of cases (those involving inside information) that 

does not even include this case.

2

 2 The narrowness of this pleading requirement is further underscored by the fact 

that "obvious alternative explanations" of the type that render a complaint 

implausible if left unaddressed, such as those identified by the Supreme Court for 

inside-information cases, are rare. As the Eighth Circuit explained in Braden v. 

Wal-Mart Stores, Inc., "[n]ot every potential lawful explanation for the defendant's 

conduct renders the plaintiff's theory implausible." 588 F.3d 585, 597 (8th Cir. 

2009). Indeed, "[r]equiring a plaintiff to rule out every possible lawful explanation 

for the conduct he challenges would invert the principle that the complaint is 

construed most favorably to the nonmoving party, and would impose the sort of 

probability requirement at the pleading stage which Iqbal and Twombly explicitly 

reject." Id. (internal citation and quotations omitted). Rather, that requirement 

applies only "where there is a concrete, 'obvious alternative explanation' for the 

defendant's conduct" that is "precisely the result one would expect from lawful 

conduct in which the defendant is known to have engaged." Id. (emphasis added).
12

That is precisely how this Court distinguished Dudenhoeffer in its previous 

decision in this case. As the Court rightly recognized, unlike this case, 

"Dudenhoeffer addressed an allegation that a fiduciary failed to act on insider

information." Tatum, 761 F.3d at 366, n.14. And this Court further pointed out 

that, in any event, Dudenhoeffer was about pleading, not about loss causation after 

a breach has been proven. See id. ("The [Supreme] Court's use of 'could not have'

in this limited context does not cast doubt on our instruction that a 'would have'

standard applies to determine loss causation after a fiduciary breach has been 

established."). The Court got it right then, and as explained below, nothing has 

changed since.

II. THE SUPREME COURT'S RECENT AMGEN DECISION WAS A 

STRAIGHTFORWARD APPLICATION OF DUDENHOEFFER'S 

PLEADING STANDARDS THAT, LIKE DUDENHOEFFER, HAS 

NOTHING TO DO WITH LOSS CAUSATION

Appellees and amici contend that the Supreme Court's subsequent per 

curiam decision in Amgen, Inc. v. Harris, 136 S. Ct. 758 (2016), laid bare this 

Court's error in distinguishing Dudenhoeffer, and clarified that Dudenhoeffer in 

fact endorsed a "could have" loss-causation standard for ERISA cases of every 

stripe. Appellee's Br. at 56; Chamber Br. at 8. Far from having the dramatic 

impact Appellees and amici ascribe to it, Amgen – befitting its "curt, per curiam" 

form, Chamber Br. at 11 – was nothing more than a straightforward application of 
13

the pleading standards announced in Dudenhoeffer to the precise type of case 

identified in Dudenhoeffer.

Appellees and amici misconstrue Amgen in two respects in their effort to

turn this molehill into a mountain. First, Appellees say that "Amgen does not rely 

on any allegations involving the use of insider information, indicating that [this 

Court's] distinction of [Dudenhoeffer] on this basis was erroneous." Appellee's Br. 

at 57. This is plainly wrong: Amgen is exactly the kind of inside-information case 

to which the Supreme Court referred in Dudenhoeffer. Indeed, the Amgen

defendants specifically argued to the Ninth Circuit that the complaint was properly 

dismissed because, "if the Amgen Fund had been removed as an investment option 

based on nonpublic information about the company, this action may have brought 

about precisely the result plaintiffs seek to avoid: a drop in the stock price." 

Harris v. Amgen, Inc., 788 F.3d 916, 937 (9th Cir. 2015), rev'd, 136 S. Ct. 758

(2016) (emphasis added). And it was the Ninth Circuit's response to this very 

argument about the perils of using inside information – namely, that without regard 

to the complaint's allegations, it was, in the Ninth Circuit's view, "quite plausible . . 

. that defendants could remove the Fund from the list of investment options 

without causing undue harm to plan participants," id. at 938 – that the Supreme 

Court said did not comport with Dudenhoeffer. Amgen, Inc. v. Harris, 136 S. Ct. 

758, 760 (2016).
14

Amici likewise argue that Amgen clarifies that Dudenhoeffer's "could not 

have" quote applies "across the board, not just in insider information cases." 

Chamber Br. at 4. They appear to base this contention on a single sentence at the 

outset of Amgen, where the Court described Dudenhoeffer as "a case which set 

forth the standards for stating a claim for breach of the duty of prudence against 

fiduciaries who manage employee stock ownership plans (ESOPs)." Amgen, 136 

S. Ct. at 758; Chamber Br. at 10. But this generic, introductory description of 

Dudenhoeffer is entirely unremarkable and proves nothing, especially when

Dudenhoeffer itself says that its pleading standards do not apply across the board. 

Instead, Dudenhoeffer makes clear that it is announcing the standard for "stat[ing] 

a claim for breach of the duty of prudence on the basis of inside information," and 

Amgen quotes this very language from Dudenhoeffer. Amgen, 136 S. Ct. at 759 

(quoting Dudenhoeffer, 134 S. Ct. at 172). Indeed, this Court in Tatum correctly 

recognized that Dudenhoeffer expressly limited to inside-information cases its 

requirement that plaintiffs plead that a prudent fiduciary "could not have" 

determined that trading on or disclosing the information would have done more 

harm than good (i.e., the quote that Appellees misconstrue as announcing a losscausation standard for every case). Tatum, 761 F.3d at 366, n.14.

And that is not the only hyper-specific pleading standard from 

Dudenhoeffer. Citing the presumption that a stock market price generally reflects 
15

all relevant publicly available information, the Supreme Court also announced 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. Dudenhoeffer, 134 S. Ct. at 2471 (emphasis added). The 

Court's specificity as to when this "special-circumstances" pleading requirement is 

triggered – public stock cases where a fiduciary has allegedly ignored publicly 

available information – further belies amici's assertion that every standard 

announced in Dudenhoeffer applies in every case. Cf. Allen v. Greatbanc Trust 

Co., -- F.3d -- , No. 15-3569, 2016 WL 4474730, at *6 (7th Cir. Aug. 25, 2016) 

(refusing to apply Dudenhoeffer's "special circumstances" test to the private stock 

context). 

Second, Appellees and amici strip all context from Amgen's quotation of 

Dudenhoeffer's pleading requirement for inside-information cases in contending

that it established a causation standard. Dudenhoeffer, 134 S. Ct. at 2473. 

According to Appellees, the Court in Amgen "held that causation requires that a 

prudent fiduciary 'could not have' made the same decision." Appellee Br. 57

(emphasis added); Chamber Br. at 11. But Amgen, like Dudenhoeffer (see Part I, 

supra) does not concern causation; it never even mentions the word. Rather, 

Amgen, like Dudenhoeffer, was a decision reviewing the adequacy of a complaint 
16

on a motion to dismiss. Amgen, 136 S. Ct. at 758 ("The Court considers for the 

second time the Ninth Circuit's determination that respondent stockholder's 

complaint states a claim"). And as the Court instructed in Dudenhoeffer, to survive 

a motion to dismiss, a complaint alleging that a fiduciary failed to act on inside

information must also allege that a prudent fiduciary "could not have concluded" 

that acting on that information would do more harm than good. Dudenhoeffer, 134 

S. Ct. at 2473. That directive is grounded squarely in Twombly and Iqbal's 

concern with overcoming "obvious alternative explanations" for the defendant's 

actions – namely, the risks of deploying inside information – not in any desire to

implicitly re-write ERISA's causation standard. See Part I, supra. All the Court 

did in Amgen, then, was to apply Dudenhoeffer's pleading requirement for insideinformation complaints to another inside-information complaint. A revelatory

decision this was not.

III. AMICI'S CONCERNS WITH THE WORKABILITY OF THE "WOULD 

HAVE" STANDARD ARE OVERSTATED

After wrongly contending that Amgen adopted a "could have" standard for 

loss causation, amici then spend the remainder of their brief explaining why that 

standard, which this Court considered and rejected, is better than the "would have" 

standard that this Court adopted. Chamber Br. at 14-28. Though it takes a variety 

of forms, amici's concerns about the "would have" standard all flow from a single 

flawed premise: that the "would have" standard requires that a "defendant must 
17

prove that a prudent fiduciary 'would have' made precisely the same choice." 

Chamber Br. at 15. Based on that assumption, amici conclude that the "would 

have" standard would be "impossible for most defendants to bear in practice" 

because "there is almost never just one prudent choice," id. at 14-15, a result that 

amici say will render loss causation a "toothless limitation on liability," id. at 18, 

and lead ultimately to the end of ERISA plans. Id. at 28.

Amici's concerns are overstated. First, some decisions are in fact "binary"

ones where there is just one prudent choice – for example, to not steal money from 

the plan. Second, and more importantly, while it is true that a prudent fiduciary 

faced with an investment or other decision often, after investigation, could 

conclude that a number of options would all be prudent, this is entirely consistent 

with requiring a fiduciary who, as here, failed to conduct an adequate investigation

to prove that his or her inaction, more likely than not, did not cause the subsequent 

loss to the plan. "Thus," as we stated in our previous brief, "the only question in 

this case involves a prediction about what would have happened if the 

investigation had been conducted in a prudent manner." See Brief of the Secretary 

of Labor as Amicus Curiae at 23, Tatum v. R.J. Reynolds Tobacco Co., No. 13-

1360 (4th Cir.), https://www.dol.gov/sol/media/briefs/tatum(A)-06-25-2013.pdf. 

Finally, amici need look no further than this case – where the district court found 

that Appellees in fact surmounted the supposedly insurmountable "would have" 
18

standard – to assuage their fears concerning the impossibility of meeting such a

standard. 

CONCLUSION

For these reasons, the Secretary requests that the Court re-affirm its holding 

in Tatum that a fiduciary that has breached its duties can escape liability only if it

proves that a prudent fiduciary "would have" made the same decision anyway.

Respectfully submitted,

PATRICIA M. SMITH

Solicitor of Labor 

G. WILLIAM SCOTT

Associate Solicitor

ELIZABETH HOPKINS

Counsel for Appellate and 

Special Litigation

/s/ Jeffrey Hahn

JEFFREY HAHN

Senior Trial Attorney

United States Department of Labor

Plan Benefits Security Division

200 Constitution Ave. N.W. 

Room N-4611

Washington, DC 20210
CERTIFICATE OF COMPLIANCE

I certify that this amicus brief complies with the type-volume limitation of Fed. R. 

App. P. 32(a)(7)(B) because it contains 4,196 words, excluding the parts of the 

brief exempted by Fed. R. App. P. 32(a)(7)(B).

I further certify that this amicus brief complies with the typeface requirements of 

Fed. R. App. P. 32(a)(5), and the type style requirements of Fed. R. App. P. 

32(a)(6), because it has been prepared in a monospaced typeface using Microsoft 

Word version 2010 in 14-point Times New Roman font.

Dated: September 9, 2016

/s/ Jeffrey Hahn

JEFFREY HAHN

Trial Attorney

United States Department of Labor

Plan Benefits Security Division

200 Constitution Ave. N.W. 

Room N-4611

Washington, DC 20210
CERTIFICATE OF SERVICE

I hereby certify that on the 9th day of September, 2016, true and correct copies of

the foregoing Brief of the Amicus Curiae Thomas E. Perez, Secretary of the United 

States Department of Labor, in Support of Appellant were served upon counsel of 

record and this Court by ECF.

/s/ Jeffrey Hahn

JEFFREY HAHN