Court Opinion

ID: 821056
Source: CourtListenerOpinion
Date Created: 2013-02-21 20:56:44.231941+00
Date Added: 2024-06-11T09:03:10.709984
License: Public Domain

Case: 11-16145       Date Filed: 02/21/2013       Page: 1 of 4

                                                                      [DO NOT PUBLISH]

                      IN THE UNITED STATES COURT OF APPEALS

                            FOR THE ELEVENTH CIRCUIT

                                       _____________

                                        No. 11-16145
                                       _____________

                          D. C. Docket No. 1:04-cv-02592-ODE

DENNIS SMITH,
Individually and on behalf of all others
similarly situated,

                                                                   Plaintiff-Appellant,

                                             versus

DELTA AIR LINES, INC., et al.,

                                                                    Defendants-Appellees.

                                      ______________

                      Appeal from the United States District Court
                         for the Northern District of Georgia
                                   ______________
                                 (February 21, 2013)

Before DUBINA, Chief Judge, HULL and ALARCÓN, * Circuit Judges.

PER CURIAM:

       *
        Honorable Arthur L. Alarcón, United States Circuit Judge for the Ninth Circuit, sitting
by designation.
                Case: 11-16145        Date Filed: 02/21/2013       Page: 2 of 4

       This is a “stock drop” class action. Plaintiff/Appellant, Dennis Smith,

individually and on behalf of all others similarly situated (“Appellant”), appeals

two district court orders that collectively dismissed his complaint brought pursuant

to §§ 409 and 502(a)(2) of the Employee Retirement Income Security Act of 1974,

29 U.S.C. § 1001 et seq. (“ERISA”), against Defendants/Appellees Delta Air

Lines, Inc. (“Delta”), Benefit Fund Investment Committee (“Investment

Committee”), eight individual members of the Investment Committee,

Administrative Committee (“Administrative Committee”), four individual

members of the Administrative Committee, and two former Delta Directors, Leo F.

Mullin and Gerald Grinstein, for failure to state a claim under Federal Rule of Civil

Procedure 12(b)(6). The district court found that Appellant’s “imprudent

investment claim” was simply a form of a “failure to diversify claim” prohibited by

29 U.S.C. § 1104(a)(2). 1

       Following dismissal of Appellant’s complaint in the present case, this court

decided Lanfear v. Home Depot, Inc., 679 F.3d 1267 (11th Cir. 2012), where we

       1
          Ordinarily, ERISA fiduciaries have a duty to diversify plan assets to protect
participants. However, fiduciaries, like the Appellees in this case, are exempted from this duty
in their role as fiduciaries for an employee stock ownership plan (“ESOP”), which is a type of
eligible individual account plan (“EIAP”). See 29 U.S.C. § 1104(a)(2) (“In the case of an
[EIAP], the diversification requirement . . . and the prudence requirement (only to the extent that
it requires diversification) . . . is not violated by acquisition or holding of . . . qualifying
employer securities . . . .”). Appellant acknowledges that the ESOP is an EIAP. [Appellant’s Br.
at 20.]
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                Case: 11-16145      Date Filed: 02/21/2013      Page: 3 of 4

held that an “imprudent investment” claim is not prohibited by 29 U.S.C.

§ 1104(a)(2) and clarified the showing necessary to state such a claim in the

context of an EIAP. Because the district judge did not have the benefit of Lanfear

when she issued the order in this case, we vacate the order of the district court as to

Count One of the amended complaint and remand this case with instructions to

analyze Count One of the amended complaint in accordance with Lanfear. 2

       As to Count One, the district court should determine whether Appellant’s

complaint sufficiently alleges that the Investment Committee and its eight

individual members breached their fiduciary duty to prudently manage the Plan’s

assets.

       We do, however, affirm the district court’s judgment of dismissal of Counts

One and Three of the complaint as to Appellees Delta, Mullin, Grinstein, and the

Administrative Committee and its four individual members because Appellant’s

complaint failed to adequately plead their fiduciary status in the context of making

investment decisions.

       We also affirm the district court’s judgment of dismissal of Count Two as to

Appellees Delta, Mullin, and Grinstein, and Count Four as to all Appellees because

Appellant’s complaint does not plead factual allegations to sufficiently support a

       2
        Our decision to remand this matter as to Count One in no way implies that we believe
Appellant can state a claim under Lanfear.
                                              3
               Case: 11-16145    Date Filed: 02/21/2013   Page: 4 of 4

claim in Count Two for failure to monitor the Investment Committee or to

sufficiently support a claim in Count Four for breach of the duty to avoid conflicts

of interest.

       AFFIRMED in part, VACATED in part, and REMANDED.

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