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In ERISA stock-drop class actions, plaintiffs routinely allege that their employers breached a duty of prudence by permitting employees to invest their retirement assets in their company’s stock.  Until today, defendants typically defended against such claims by invoking a judicially crafted presumption that offering company stock was prudent.  Today, in Fifth Third Bancorp v. Dudenhoeffer, No. 12-751 (pdf), the Supreme Court rejected that presumption.

But all hope is not lost for stock-drop defendants.  Much of the work previously done by the presumption of prudence will now be done by the substantive requirements of the duty of prudence.  The Court…
Continue Reading ERISA Stock-Drop Class Actions: As One Door Opens for Plaintiffs, Another Closes

In what circumstances should you be permitted to invest your retirement savings in your own employer’s stock? We have blogged before about an ERISA class action pending at the Supreme Court regarding when plan fiduciaries must prevent participants from investing in employer stock. After the Solicitor General filed an amicus brief (pdf) asking the Court to broaden its inquiry, the case was poised to challenge a bedrock of ERISA stock-drop actions—a presumption that fiduciaries act prudently when investing in employer stock.

On Friday, the Supreme Court granted certiorari in the case, Fifth Third Bancorp v. Dudenhoeffer, No. 12-751, but…
Continue Reading Supreme Court Picks Up ERISA Stock-Drop Case: What’s Next?

This past March, the Supreme Court asked the Solicitor General to weigh in as to whether two rather technical questions about ERISA stock-drop actions are worthy of the Court’s attention. See Fifth Third Bancorp v. Dudenhoeffer, No. 12-751. The Solicitor General filed his brief (pdf) yesterday. Sidestepping the technical questions, he asked the Court to intervene on a different (and highly significant) question: whether ERISA plan fiduciaries are entitled to a presumption that they have acted prudently in permitting plan participants to invest in their own company’s common stock.

With the Solicitor General’s recommendation, the Supreme Court is highly…
Continue Reading Solicitor General to Supreme Court: Please Set The Rules For ERISA Stock-Drop Class Actions

Here’s a common scenario:  After unsuccessfully moving for class certification and having a petition for review under Federal Rule of Civil Procedure 23(f) rebuffed, the plaintiff wants to take another shot at an appeal.  Can the plaintiff simply settle his individual claims—subject to his right to appeal the denial of class certification—so that he has a dismissal giving him an automatic right to an immediate appeal?

If you’re in the Third, Seventh, Eighth, or Ninth Circuit, the answer is no. Each of these courts have held that they lack jurisdiction over the appeal of a would-be class representative following such…
Continue Reading Eighth Circuit Holds that a Plaintiff who Settles Individual Claims Lacks Standing to Challenge Denial of Class Certification

Some academics and commentators have been reading the tea leaves in Wal-Mart Stores, Inc. v. Dukes (pdf) and AT&T Mobility LLC v. Concepcion (pdf) as spelling doom for consumer and employment class actions. That’s overwrought; Dukes rejected an extremely adventuresome application of the class action rules by the Ninth Circuit, and Concepcion merely reminded courts that they can’t get around the Federal Arbitration Act by insisting that arbitration agreements permit expensive aspects of judicial litigation that are completely alien to arbitration in its traditional form. The continuing flood of class action filings is proof that the spigot hasn’t been shut off. But companies should pay attention to where the plaintiffs’ bar thinks they should move next if filing class actions stops being a viable business model.

In a recent article—After Class: Aggregate Litigation in the Wake of AT&T Mobility v. Concepcion (pdf), 79 U. Chi. L. Rev. 623 (2012)—law professor Myriam Gilles and plaintiffs’ lawyer Gary Friedman shine the spotlight on state attorneys general:

In our view, the “private attorney general” role assumed by class action lawyers over the past several decades should give way to a world in which state attorneys general make broad use of their parens patriae authority—far greater use than they have in the past—to represent the interests of their citizens in the very consumer, antitrust, wage-and-hour, and other cases that have long provided the staple of class action practice.

And to tackle complex cases, we would hope to see underfunded AG offices making use of the lawyers who have acquired expertise in originating, investigating, and prosecuting class actions, as well as financing them.

The linchpin of this strategy is, of course, the money. If a state AG can’t give the deputized class action lawyers a big chunk of the money recovered for citizens, the model falls apart. Of course, money was one of the main problems with the biggest experiment with deputizing private lawyers as state AGs—the states’ lawsuits against the tobacco industry. Then-Texas AG Dan Morales was sentenced to four years in prison for attempting to steer millions of dollars from the proceeds of the tobacco settlement to a Houston lawyer.

So what should businesses do if they face one of these parens patriae lawsuits from a faux “acting AG”? Here are a few thoughts:
Continue Reading What’s Next for the Class Action Plaintiffs’ Bar? Getting Deputized by State Attorneys General