Court Opinion

ID: 854459
Source: CourtListenerOpinion
Date Created: 2013-03-07 01:00:52.236832+00
Date Added: 2024-06-11T13:22:27.061842
License: Public Domain

Case: 11-11607     Date Filed: 03/05/2013    Page: 1 of 4

                                                                [DO NOT PUBLISH]

                IN THE UNITED STATES COURT OF APPEALS

                         FOR THE ELEVENTH CIRCUIT
                           ________________________

                             Nos. 11-11607, 11-11608
                             Non-Argument Calendar
                           ________________________

                       D.C. Docket No. 1:08-cv-03384-RWS

WILLIAM B. FISCH,
and
SUNIL KAPILASHRIMI,
and, individually and on behalf of all others similarly situated,
DANIELLE CLAY, et al.,

                                                                    Plaintiffs-Appellees,

                                        versus

SUNTRUST BANKS, INC., Suntrust Bank,
ALSTON D. CORRELL,
DAVID H. HUGHES, et al.,

                                                              Defendants-Appellants,

                           ________________________

                   Appeals from the United States District Court
                       for the Northern District of Georgia
                          ________________________

                                   (March 5, 2013)

Before CARNES, BARKETT and FAY, Circuit Judges.
                Case: 11-11607      Date Filed: 03/05/2013      Page: 2 of 4

PER CURIAM:

       This interlocutory appeal involves a putative class action brought under the

Employee Retirement Income Security Act of 1974 (“ERISA”) alleging that

retirement plan 1 fiduciaries breached their duties by continuing to invest plan

assets into the plan sponsor’s publically traded securities. The plaintiffs’

disclosure claim alleged that the defendants breached their fiduciary duties by not

disclosing to the plan participants material, negative, nonpublic financial

information about the sponsor’s business and risks associated with investing in the

bank. The plaintiffs’ prudence claim alleged that the defendants breached their

fiduciary duties under ERISA by continuing to invest in the sponsor’s securities

when it was imprudent to do so.

       Upon motion from the defendants, the district court dismissed the prudence

claim on the grounds that it was a veiled diversification claim and barred by 29

U.S.C. § 1104(a)(2). The district court denied the defendants’ motion to dismiss as

to the disclosure claim, finding that the plaintiffs had sufficiently alleged an

obligation of the plan administrators to disclose nonpublic, negative, material

information to the plan participants.

       The district court certified two questions for interlocutory review under 28

U.S.C. § 1292(b). The first question, which relates to the disclosure claim, is:

1
 The plan in question qualifies as both an Eligible Individual Account Plan and an Employee
Stock Ownership Plan under ERISA.
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              Case: 11-11607     Date Filed: 03/05/2013   Page: 3 of 4

      Does ERISA impose upon fiduciaries of an Eligible Individual
      Account Plan that offers the plan sponsor’s publicly traded stock as an
      investment option a duty to disclose material, nonpublic financial
      information about the plan sponsor beyond the specific disclosures
      mandated by ERISA and its implementing regulations?

The second certified question relates to the prudence claim and asks:

      Does § 404(a)(2) of the Employee Retirement Income Security Act of
      1974 (“ERISA”), which exempts individual account plans (“EIAPs”)
      that acquire and hold employer securities from ERISA’s
      diversification requirement, exempt fiduciaries of EIAPs from
      exercising their overarching duty of prudence under §404(a)(1) even
      when it is imprudent to acquire or hold employer securities in an
      EIAP?

      This Court’s recent decision in Lanfear v. Home Depot, Inc., 679 F.3d 1267

(11th Cir. 2012), resolves the issues in this case. Home Depot answers the

disclosure claim question in the negative, finding that ERISA does not impose a

duty to provide plan participants with nonpublic information affecting the value of

the company’s stock. Id. at 1284. Home Depot also answers the prudence claim

question in the negative, finding that such a prudence claim was not a veiled

diversification claim, and thus does not fall within the § 404(a)(2) exemption. Id.

at 1276-77.

      Defendants argue that alternative grounds exist that would justify a dismissal

of the complaint. However, these issues were not dealt with by the district court.

Under these circumstances, we feel it best to remand this matter to the district court

so that it may proceed in the regular course.

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              Case: 11-11607     Date Filed: 03/05/2013   Page: 4 of 4

      We answer both certified questions in the negative, reverse the district

court’s order granting in part and denying in part the defendants motion to dismiss,

and remand to the district court for further proceedings consistent with this opinion

and the Home Depot decision.

REVERSED AND REMANDED

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