Judge Says Company Stock Fall No Fiduciary Breach

December 31, 2002 (PLANSPONSOR.com) - Corning Inc.'s defined contribution plan committee did not breach members' fiduciary duty by not revealing potential harm to the company's stock from an acquisition, a judge ruled.

US District Judge Charles Siragusa of the US District Court for the Western District of New York found that there was no evidence that the committee members knew about misinformation about the acquisition of Optical Technologies USA being put out by Corning, Washington-based legal reporter BNA said.

Siragusa also ruled in a lawsuit brought by participant Joseph Crowley that Corning and its board of directors were not designated as plan administrators so they weren’t ERISA fiduciaries – rejecting an argument that that company and its board improperly required that the company match be invested in Corning stock, according to BNA.

The plan also provided that once a participant turned age 55, he or she could move the Corning matching contributions to other available investment alternatives.

Despite having estimated that the Optical Technologies deal would bump its 2001 earnings by 25%, Corning actually suffered a $5 billion loss on the deal, which contributed to an 80% drop in the value of Corning stock, according to the BNA.

Finally, the court dismissed Crowley’s claims against the pension plan committee members, finding that Crowley failed to allege that the members knew or should have known that the plan should not have invested in Corning stock, according to the report.

The case is Crowley v. Corning Inc., W.D.N.Y., No. 02-CV-6172 CJS, 12/9/02.