Fifth Third Bancorp, et al., v. John Dudenhoeffer, et al.,

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The Supreme Court held that fiduciaries get no presumption of prudence; and a plaintiff must plead a legal available alternative.

In its brief, the U.S. Chamber urged the Supreme Court to reverse the ruling of the Sixth Circuit. The Sixth Circuit’s ruling has diverged from the rulings of seven other circuits, which held that fiduciaries who offer employer stock funds are entitled to a “presumption of prudence,” which is in substance a standard of adjudication rather than a traditional presumption. In the majority of the circuits, the plaintiff can establish imprudence only by demonstrating that employer was facing dire financial or other circumstances that threatened its viability as a going concern. The Chamber argued that in order to ensure the continued success of employer stock funds, the Court should adopt the view of the majority of circuits and hold that a plaintiff claiming that it was imprudent for a plan fiduciary to offer an employer stock fund must plead plausible facts to establish that the employer was not viable as a going concern. Without a strong presumption of prudence, plan fiduciaries and corporate plan sponsors could be deterred from offering employer stock funds as an investment option for fear of the costs and risks of potential litigation.

Myron D. Rumfeld, Mark D. Harris, John E. Roberts and Hirschhorn of Proskauer Rose, LLP represented the U.S. Chamber as co-counsel to the National Chamber Litigation Center in this case.