The court found that Putnam was a directed trustee with limited fiduciary duties, BNA reports. Judge Algenon Marbley said the employees’ complaint made “no allegation of any clear and compelling public indicator calling into question Cardinal’s viability as a going concern,” and thus Putnam had no duty to remove Cardinal Health stock.
The court allowed the plaintiffs to continue with their claim that the company and its top executives breached their fiduciary duties to participants by allowing company stock investments of their retirement funds at a time when the stock’s value was artificially inflated. Additionally, the court refused to dismiss claims that the defendants breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA) by making material misrepresentations in Securities and Exchange Commission filings that later were incorporated into the plan.
However, the court noted that Cardinal Health’s publicly filed statements did not show that Cardinal Health “was in danger of imminent collapse” and, therefore, would not have prompted Putnam’s obligation to remove Cardinal Health stock as an investment alternative.
Marbley also refused to dismiss the employees’ claim that some of the Cardinal Health defendants breached their ERISA fiduciary duties by failing to monitor those they had appointed to act as plan fiduciaries, and said Cardinal Health may be liable under the doctrine of respondeat superior for its board of directors’ failure to monitor those they appointed to act as plan fiduciaries.
The case is In re Cardinal Health Inc. ERISA Litigation, S.D. Ohio, No. C2-04-643, 3/31/06.