Opinion ID: 615595
Heading Depth: 4
Heading Rank: 2

Heading: Administration Committee

Text: Plaintiffs also do not state a claim for relief based on alleged misstatements made by the Administration Committee because they have not adequately alleged that defendants made statements they knew to be false. Plaintiffs allege that both Plans' Summary Plan Descriptions (SPDs), distributed by the Administration Committee, directed the Plans' participants to rely on Citigroup's filings with the SEC ..., many of which ... were materially false and misleading. Compl. ¶ 197. Plaintiffs state that the SEC filings all failed to adequately inform participants of the true magnitude of the Company's involvement in subprime lending and other improper business practices ..., and the risks these presented to the Company. Compl. ¶ 237. A fiduciary, however, may only be held liable for misstatements when the fiduciary knows those statements are false or lack a reasonable basis in fact. See Flanigan v. Gen. Elec. Co., 242 F.3d 78, 84 (2d Cir.2001). Here, while plaintiffs conclude that the Committee members knew or should have known about Citigroup's massive subprime exposure as a result of their responsibilities as fiduciaries of the Plans, Compl. ¶ 188, they have provided no specific allegations beyond this naked assertion, Twombly, 550 U.S. at 557, 127 S.Ct. 1955. Plaintiffs are also unable to support their argument that the Administration Committee members should have known of the misstatements because they should have performed an independent investigation of the accuracy of Citigroup's SEC filings. While we cannot rule out that such an investigation may be warranted in some cases, plaintiffs have not alleged facts that, without the benefit of hindsight, show that it was warranted here. Plaintiffs have not alleged that there were any warning flags, specific to Citigroup, that triggered the need for an investigation. Rather, plaintiffs provide a list of publicly available articles and news reports that signaled potential trouble in the subprime market as a whole. We are also mindful that requiring Plan fiduciaries to perform an independent investigation of SEC filings would increase the already-substantial burden borne by ERISA fiduciaries and would arguably contravene Congress's intent to create a system that is [not] so complex that administrative costs, or litigation expenses, unduly discourage employers from offering [ERISA] plans in the first place. Conkright v. Frommert, ___ U.S. ___, 130 S.Ct. 1640, 1649, 176 L.Ed.2d 469 (2010) (quoting Varity, 516 U.S. at 497, 116 S.Ct. 1065 (alterations in original)). Furthermore, we are hesitant to run the risk of disturbing the carefully delineated corporate disclosure laws. Baker v. Kingsley, 387 F.3d 649, 662 (7th Cir.2004). While we have the authority to create a common law of rights and obligations under ERISA, the scope of permissible judicial innovation is narrower in areas where other federal actors are engaged. Black & Decker Disability Plan v. Nord, 538 U.S. 822, 831-32, 123 S.Ct. 1965, 155 L.Ed.2d 1034 (2003) (internal quotation marks and citation omitted). Accordingly, while we intimate no view as to the possible investigatory responsibilities of other fiduciaries who are privy to additional warning signs or who are operating under substantially different circumstances, in the situation presented here we decline to hold that the Plan fiduciaries were required to perform an independent investigation of SEC filings before incorporating them into the SPDs.