Whether ESOP fiduciaries are effectively immune from duty-of-prudence liability for failure to publicly disclose inside information

QUESTION PRESENTED In Fifth Third Corp. v. Dudenhoeffer, 573 U.S. 409 (2014), this Court held that stating a claim against fiduciaries of an employee stock ownership fund, for breaching ERISA’s duty of prudence requires plausibly alleging “an alternative action that the defendant could have taken that would have been consistent with the securities laws and that a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the fund than to help it.” 7d. at 428. It also held that such a claim is governed by ordinary pleading standards and requires a “careful, context-sensitive scrutiny” of whether the complaint plausibly alleges that fiduciaries “behaved imprudently by failing to act on the basis of nonpublic information that was available to them because they were [company] insiders.” Jd. at 425-28 (emphasis omitted). The courts of appeal have adopted divergent interpretations of this Court’s decision. Last term, this Court granted certiorari in Retirement Plans Committee of IBM v. Jander to clarify what it takes to plausibly allege a breach, but vehicle problems prevented it from doing so. 140 S. Ct. 592, 594-93 (2020). Meanwhile, the decision below has deepened the split, and interpreted Dudenhoeffer to effectively immunize all ESOP fiduciaries from duty-of-prudence claims premised on the failure to publicly disclose inside information because such disclosure would always cause an initial stock drop. The questions presented are: 1. Whether, under Dudenhoeffer, ESOP fiduciaries are effectively immune from duty-of-prudence -iiiliability for the failure to publicly disclose inside information. 2. Whether Dudenhoeffer’s framework extends beyond prudence-based claims and applies to dutyof-loyalty claims against ESOP fiduciaries.