Amgen Inc. v. Harris
The Supreme Court ruled that former Amgen employees suing over losses in their company-stock retirement plans had not pleaded enough facts to state a claim against the plan managers, reversing the Ninth Circuit for a second time.
The decision reinforces the strict pleading standard the Court set two years earlier in Fifth Third Bancorp v. Dudenhoeffer, making clear that lower courts must actually check whether a complaint spells out facts showing a plausible, less harmful alternative — not just assume the standard is met.
How it got here: A district court dismissed the suit, the Ninth Circuit reversed, the Court vacated and remanded once already, and the Ninth Circuit again ruled for the employees before the fiduciaries sought review again.
The Case in Depth
What happened
Former employees of Amgen and its manufacturing subsidiary held company stock through retirement plans. When Amgen's stock price fell, the employees sued the plans' fiduciaries, claiming the managers breached their duty under federal retirement law by not acting on inside information about the stock's declining value, such as removing the stock fund as an investment option or disclosing negative information.
The question before the Court
Did retirement plan holders who lost money on falling Amgen stock plead enough facts to sue the plan's managers for failing to act on inside information?
Why it matters
Employees who invest retirement savings in their own company's stock through employee stock ownership plans will find it harder to sue plan managers over stock-price drops unless their lawsuits include specific facts about a safer course of action the managers should have taken. Companies and plan fiduciaries get clearer protection from lawsuits based only on hindsight about falling stock prices.
What changes now
The case returns to the district court, which will decide whether the former employees may amend their complaint to add the specific facts needed to meet the Fifth Third pleading standard. This is a final ruling on whether the current complaint states a valid claim, though the underlying dispute could continue if an amended complaint is filed and found sufficient.
What this does not decide
The Court did not decide whether the fiduciaries actually acted imprudently or whether removing the stock fund would have helped or hurt the retirement plans. It only decided that the current complaint lacks the specific facts needed to proceed, leaving room for an amended complaint.
How the Court got there
The legal reasoning, step by step
- The Court applied the standard from its earlier decision in Fifth Third Bancorp v. Dudenhoeffer, which held that fiduciaries managing employee stock plans get no special presumption of prudence but must still be judged fairly given the unique risks of holding inside information about the employer's stock.
- Under that standard, a complaint must plausibly identify a specific alternative action the fiduciaries could have taken that a prudent fiduciary would not have viewed as more likely to hurt the retirement fund than to help it.
- The Ninth Circuit had assumed its earlier reasoning already satisfied this standard and concluded it was 'quite plausible' that removing the Amgen stock fund from the investment lineup would not have caused harm, without checking whether the complaint itself contained facts supporting that conclusion.
- The Court examined the complaint directly and found it lacked sufficient facts and allegations showing that a prudent fiduciary could not have concluded that removing the fund or disclosing the information would do more harm than good.
- Because the complaint did not meet the pleading standard from Fifth Third, the Ninth Circuit's ruling that the complaint stated a valid claim could not stand.
Doctrinal impact
Cases affected by this decision
Reaffirms Fifth Third Bancorp v. Dudenhoeffer (573 U. S. ___)
The Court applied and reinforced this decision's pleading standard for ESOP fiduciary duty-of-prudence claims.