Retirement Plans Comm. of IBM v. Jander

Background

The dispute involves the fiduciaries who ran IBM’s employee stock ownership retirement plan and plan participants who sued, claiming the fiduciaries failed to act on or disclose inside information about the employer’s stock. The case reached the Supreme Court after the Second Circuit issued a decision the Court reviewed under an earlier decision about how to plead such claims.

Reasoning

The core question was what a plaintiff must plausibly allege to show a prudent fiduciary could have taken an alternative action that would likely help, not harm, the fund. The per curiam opinion noted a prior test from Fifth Third Bancorp v. Dudenhoeffer and said the parties and the Government had pressed two main arguments the lower courts had not addressed: that retirement-plan fiduciaries owe no duty to act on inside information, and that any ERISA-based duty to disclose might conflict with federal securities rules. Because lower courts did not consider those arguments, the Court vacated the judgment and remanded so the Second Circuit can decide in the first instance whether to address them.

Real world impact

The ruling sends the case back to the Second Circuit for further consideration and does not resolve the merits of the dispute. That means the question of what fiduciaries must do when holding employer stock remains open and may be decided later by the lower courts. Plan fiduciaries, employees with plan stock, and regulators may all be affected depending on how the Second Circuit rules.

Dissents or concurrances

Two concurring opinions urged remand. One noted the lower court may refuse to consider arguments as forfeited; the other argued a separate legal question about acting in a corporate officer role should also be addressed on remand.