In the document, submitted for the case Fifth
Third Bancorp v. John Dudenhoeffer in support of Third Fifth Bancorp, the Chamber of
Commerce of the United States, the ERISA Industry Committee, the American
Benefits Council, the Plan Sponsor Council of America and the National
Association of Manufacturers argue plan sponsors will be discouraged from offering employer
stock absent a strong presumption of prudence that applies at the pleading
stage of the court process.
The groups say if the standard for overcoming the presumption of prudence is
weakened or rendered inapplicable at the pleading phase, the costs of offering
employer stock could increase dramatically. There is also a concern that
employees would file nuisance suits every time a company’s stock price decreased.
"If fiduciaries cannot obtain dismissal of baseless
stock-drop suits at an early stage of the litigation, they will be less likely
to offer employer stock funds in the first instance for fear of incurring
significant legal fees to defend the prudence of their decisions,” states the
The brief asks that the Supreme Court should “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.” Further, the brief asks that the judgment of the 6th U.S. Circuit Court
of Appeals should be reversed.
The decision issued by the 6th
Circuit was that the presumption of prudence is not to be applied at the
pleading stage of such a lawsuit (see “SCOTUS
Takes Up Presumption of Prudence Issue”).