Roe v. Arch Coal Inc et al
MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that the motion of the Arch Defendants to dismiss [Doc. # 46 ] is granted. IT IS FURTHER ORDERED that the motion of defendant Mercer Trust Company to dismiss [Doc. # 49 ] is granted. IT IS FURTHER ORDERED that the joint motion to stay discovery [Doc. # 63 ] is denied as moot. IT IS FURTHER ORDERED that the motion of defendant Mercer Trust Company for leave to file supplemental authority [Doc. # 74 ] is denied as moot. An order of dismissal will be filed separately. Signed by District Judge Carol E. Jackson on 8/4/2017. (CLO)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
DOUGLAS R. ROE, ELMER BUSH,
RONALD K. HUFF and JEROME
MCLAUGHLIN on behalf of themselves
and the Arch Coal, Inc. Employee Thrift
Plan, and/or on behalf of a class
consisting of similarly situated
participants of the Plan,
ARCH COAL, INC., et al.,
Case No. 4:15-CV-910 (CEJ)
MEMORANDUM AND ORDER
This matter is before the Court on the separate motions of the Arch
Defendants1 and Mercer Trust Company to dismiss the plaintiffs’ amended
complaint for failure to state a claim. Plaintiffs have responded, and the issues are
Plaintiffs Douglas R. Roe, Elmer Bush, Ronald K. Huff, and Jerome
McLaughlin, individually and as representatives of the Arch Coal, Inc. Employee
Thrift Plan (the Plan), bring this consolidated class action pursuant to §§ 404, 405,
409 and 502 of the Employee Retirement Income Security Act of 1974 (ERISA), 29
U.S.C. §§ 1104, 1105, 1109 and 1132.
Plaintiffs claim that the defendants
breached duties of prudence and loyalty in administering the Plan. The defendants
The Arch Defendants include all defendants other Mercer Trust Company.
are Arch Coal, its directors, the company officers who served as Plan Administrator
and/or on the Retirement Committee (collectively, the Arch Defendants), and
Mercer Trust, the Plan’s trustee.
The Plan is a retirement savings plan which
required the Arch Coal Stock Fund (the Fund) to include Arch Coal stock as one of
the investment options offered to Plan participants.
During the period July 27,
2012 to November 12, 2015 (the Class Period), Arch Coal was the sponsor of the
According to the amended complaint, the Plan and its participants suffered
tens of millions of dollars of losses during the Class Period, as the market price of
Arch Coal Stock fell from approximately $680.00 on July 27, 2012 to $1.42 on
November 12, 2015. On or about November 12, 2015, the Plan’s investment in the
Fund was forcibly liquidated. Before and during the Class Period “massive amounts
of publicly-available information” about the collapse of the coal industry in general,
and Arch Coal in particular, was generated.
[Doc. #43, ¶6, 9-10, 85-399].
January 11, 2016, Arch Coal filed for bankruptcy.
Plaintiffs claim that the
beneficiaries, in violation of the defendants’ legal obligations under ERISA.
The purpose of a motion to dismiss under Rule 12(b)(6) is to test the legal
sufficiency of the complaint. Fed. R. Civ. P. 12(b)(6). The factual allegations of a
complaint are assumed true and construed in favor of the plaintiff, “even if it strikes
a savvy judge that actual proof of those facts is improbable.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 556 (2007) (citing Swierkiewicz v. Sorema N.A., 534 U.S.
506, 508 n.1 (2002)); Neitzke v. Williams, 490 U.S. 319, 327 (1989) (“Rule
12(b)(6) does not countenance . . . dismissals based on a judge’s disbelief of a
complaint’s factual allegations.”); Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)
(stating that a well-pleaded complaint may proceed even if it appears “that a
recovery is very remote and unlikely”). The issue is not whether the plaintiff will
ultimately prevail, but whether the plaintiff is entitled to present evidence in
support of his claim. Scheuer, 416 U.S. at 236. A viable complaint must include
“enough facts to state a claim to relief that is plausible on its face.” Twombly, 550
U.S. at 570; see id. at 563 (stating that the “no set of facts” language in Conley v.
Gibson, 355 U.S. 41, 45–46 (1957), “has earned its retirement”); see also Ashcroft
v. Iqbal, 556 U.S. 662, 678–84 (2009) (holding that the pleading standard set forth
in Twombly applies to all civil actions).
“Factual allegations must be enough to
raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555.
A. Count I
ERISA imposes duties of loyalty and prudence on a plan fiduciary. 29 U.S.C.
§ 1104(a)(1)(A)-(B). The duty of prudence requires the fiduciary to act “with the
care, skill, prudence, and diligence under the circumstances then prevailing that a
prudent [person] acting in a like capacity and familiar with such matters would use
in the conduct of an enterprise of a like character and with like aims.” 29 U.S.C. §
The duty of prudence includes choosing wise investments and
monitoring investments to remove imprudent ones. Tibble v. Edison Int'l, 135 S. Ct.
1823, 1828-1829 (2015).
In Count I of the amended complaint, the plaintiffs claim that the Arch
Defendants breached their fiduciary duty by “failing to adequately monitor the
prudence of investment in Arch Stock for Plan beneficiaries and continuing to allow
the investment of the Plan’s assets in Arch Stock throughout the Class Period.”
[Doc. # 43 at ¶ 414]. The Arch Defendants argue that the allegations in Count I fail
to state a claim for breach of any duty to manage the plan prudently and that
plaintiffs’ claim is foreclosed by the Supreme Court’s decision in Fifth Third Bancorp
v. Dudenhoeffer, 134 S. Ct. 2459, 189 L. Ed. 2d 457 (2014).
In Dudenhoeffer, the Supreme Court wrote that “where a stock is publicly
traded, allegations that a fiduciary should have recognized from publicly available
information alone that the market was over- or undervaluing the stock are
implausible, as a general rule, at least in the absence of special circumstances.”
Id., at 2471. Here, plaintiffs’ claim rests on allegations that the Arch Defendants
should have recognized from publicly available information alone that the market
was improperly valuing Arch Coal stock.
Courts applying Dudenhoeffer have
concluded that allegations that fiduciaries breached their duties of prudence in
managing employee stock ownership plans based upon public information revealing
poor performance failed to state a claim. See Saumer v. Cliffs Nat. Res. Inc., 853
F.3d 855, 862 (6th Cir. 2017) (finding that participants in an employee stock
ownership plan failed to state a claim that fiduciaries breached their duty of
based on public
which revealed company’s
revenues, high operating costs, and unmanageable debt); Coburn v. Evercore Trust
Co., N.A., 844 F.3d 965, 969 (D.C. Cir. 2016) (foreclosing breach of prudence
claims where fiduciaries relied on a stock price reflecting all publicly available
information, absent allegations of special circumstances); Rinehart v. Lehman Bros.
Holdings Inc., 817 F.3d 56 (2d Cir. 2016) (interpreting Dudenhoeffer to foreclose
breach of prudence claims based on public information “irrespective of whether
such claims are characterized as based on alleged overvaluation or alleged riskiness
of a stock”). The Court concludes that the ruling in Dudenhoeffer applies in this
case such that, absent allegations of special circumstances,
maintain a breach of prudence claim based on the fiduciaries’ alleged failure to
recognize public information indicating that the Arch Coal stock was improperly
Plaintiffs argue that they plausibly alleged Arch Coal Stock was an imprudent
investment for the Plan during the Class Period and claim the Supreme Court’s
opinion in Tibble v. Edison Int'l confirms the viability of their claims. 135 S. Ct. at
1829. Plaintiffs suggest that Tibble’s holding that market-priced retail class mutual
funds can be imprudent for retirement savings is incompatible with defendants’
argument. In Tibble, the Court wrote that “[a] plaintiff may allege that a fiduciary
breached the duty of prudence by failing to properly monitor investments and
remove imprudent ones.”
Id. at 1826.
In Dudenhoeffer, however, the Court
agreed that “a fiduciary usually ‘is not imprudent to assume that a major stock
market…provides the best estimate of the value of the stocks traded on it that is
available to him.” 134 S. Ct. at 2471-72. [quoting Summers v. State Street Bank &
Trust Co., 453 F.ed 404, 408 (7th Cir. 2006).
Therefore, applying both
Dudenhoeffer and Tibble, a plaintiff could properly allege that a fiduciary breached
the duty of prudence by failing to properly monitor investments and remove
imprudent ones, but not when the allegations are based upon publicly available
Plaintiffs also argue that Tatum v. RJR Pension Inv. Comm., 855 F.3d 553,
564 (4th Cir. 2017), supports their position.
Tatum does not address the
Dudenhoeffer pleading standard at issue and was decided after a bench trial in
which the district court found that a prudent fiduciary would have relied on the
market price as a correct estimate of the present value of the stock. Id. at 564-65.
Further, Tatum distinguishes Dudenhoeffer, noting that it “concerned allegations
that the market overvalued a stock and that a fiduciary should have known the
stock was overvalued because of public information,” not loss causation which was
at issue in Tatum. Id. at 566. Because the plaintiffs’ claim here clearly concerns
the allegation that, based on public information, the defendant fiduciaries should
have known that the Arch Coal stock was overvalued, Tatum does not apply.
In support of their assertion that Dudenhoeffer’s special circumstances
requirement does not apply to their claim, plaintiffs point to Gedek v. Perez, 66 F.
Supp. 3d 368 (W.D.N.Y. 2014).
In Gedek, the court ruled that Dudenhoeffer's
special circumstances requirement did not apply because there were no allegations
of stock inflation. Id. at 379. Plaintiffs argues that Gedek more properly applies to
their claims, and that Dudenhoeffer doesn’t address the situation presented here
where “a company's downward path was so obvious and unstoppable that,
regardless of whether the market was ‘correctly’ valuing the stock, the fiduciaries
should have halted or disallowed further investment in it.” 66 F.Supp.3d at 375.
Plaintiffs argue they are not required to plead facts that meet Dudenhoeffer’s
special circumstances test because this is not a market value case.
Dudenhoeffer explicitly addressed claims involving fiduciary duties of prudence
based on publicly available information regarding publicly traded stock, as is the
case in this matter.
Clearly, Dudenhoeffer is applicable.
The Court declines to
follow Gedek’s reasoning because Dudenhoeffer involved a case, like this one,
where the plaintiff alleged that the fiduciary should have divested the plan of stock
that had become excessively risky.
Plaintiffs have alleged the following special circumstances which they contend
made it imprudent for the Arch Defendants to rely the Arch Coal stock price:
(a) allegations of Arch’s serious deteriorating condition, evidenced by
an exceptional amount of negative publicly available information,
coupled with the state of international coal markets, which was
ignored by the Plan’s fiduciaries in continuing to offer Company Stock;
(b) Arch’s overwhelming debt was unserviceable based upon its
underlying business prospects and consistent quarterly losses; and (c)
Defendants’ failure to employ a reasoned decision making process in
monitoring and evaluating Company Stock. [Doc. #43, ¶21]
In Dudenhoeffer, the Supreme Court declined to define the standard for a
special circumstance that would permit a plaintiff to survive a motion to dismiss.
Id., at 2472.
However, the special circumstance would need to be pleaded as
“affecting the reliability of the market price as an unbiased assessment of the
security's value in light of all public information.” Id. The Eighth Circuit has also
not yet addressed the question of what “special circumstances” a plaintiff could
allege at the pleading stage that would render reliance on the market price
imprudent, however courts in this district have found that the Supreme Court
intended to set the standard so high as to preclude cases involving a company’s
impending bankruptcy. Lynn v. Peabody Energy Corp., 2017 WL 1196473, at *6
(E.D. Mo. Mar. 30, 2017) (finding that a company’s impending bankruptcy was not
a special circumstance contemplated by the Supreme Court in Dudenhoeffer). Lynn
points to a number of cases outside of the Eighth Circuit supporting such a
determination. See e.g., In re 2014 RadioShack ERISA Litig., 165 F. Supp. 3d 492,
504-05 (N.D. Tex. 2016) (holding that the a company's “slide into bankruptcy”
rendering its stock excessively risky was not a “special circumstance” under
Dudenhoeffer); Pfeil v. State St. Bank & Trust Co., 806 F.3d 377, 380 (6th Cir.
2015) (holding that a company's “severe business problems that resulted,
Following the reasoning of the above-cited cases, the Court finds that
plaintiffs have not sufficiently pleaded special circumstances as required by ERISA
Plaintiffs’ allegations of Arch Coal’s “serious deteriorating
condition” and “overwhelming debt” are evidence of the company’s impending slide
into bankruptcy but do not establish a special circumstance under Dudenhoeffer.
Plaintiffs’ allegation that defendants’ failure to employ a reasoned decision making
process in monitoring and evaluating Arch Coal stock also fails to establish a special
circumstance under Dudenhoeffer. See Saumer v. Cliffs Nat. Res. Inc., 853 F.3d
855, 862 (6th Cir. 2017) (upholding a district court’s determination that alleging
fiduciaries failure to engage in a reasoned decision-making process regarding the
Furthermore, plaintiffs’ have failed to articulate how any of their special
circumstance allegations impacted the reliability of the market price of Arch Coal
According to the complaint, it was suggested that Participants “may be able
to ride out the short-term declines” in Arch Coal stock “in hope for the long-term
returns” they would need in order for their savings to outpace inflation.
Compl. ¶39 [Doc. #43]. Plaintiffs assert that this was a breach of ERISA’s fiduciary
duty of candor.
The Plan’s Summary Plan Description specifically provides:
“[i]nvestment in a single stock, such as Arch Coal Common Stock, will generally be
considered more risky than investment in a diversified mutual fund” and “[o]ne way
to reduce your risk is by spreading your money among a mix of several different
[Doc. #43-2, ARCH_000189].
Plaintiffs argue that blanket
statements like these did not adequately describe the risks of Arch Coal stock.
However, plaintiffs point to no obligation that requires defendants to provide
additional warnings regarding the risks of company-issued stock.
plaintiffs admit that defendants disclosed what the regulations require to be
disclosed. Plaintiffs have failed to provide any facts or law to support their
allegation that defendants violated their duty of candor.
Count I of the amended complaint will be dismissed.
B. Count II
In Count II, plaintiffs claim that the Arch Defendants breached their duty of
loyalty by continuing to allow the investment of the Plan’s assets in Arch Coal stock
throughout the Class Period despite the fact that they knew or should have known
that such investment was imprudent as a retirement vehicle.2 Plaintiffs allege that
the Arch Defendants breached their duty to avoid conflicts of interest and to
promptly resolve them by
failing to timely engage independent fiduciaries who could make
independent judgments concerning the Plan’s investment in the
Company’s own securities; and by otherwise placing their own and/or
the Company’s interests above the interests of the Participants with
respect to the Plan’s investment in Company Stock . . . by . . .
Although Count II is brought against “all Defendants” (Amd. Compl., ¶ 423), plaintiffs
state that they did not intend to include Mercer Trust.
fostering a positive attitude toward Company Stock, and/or allowing
Participants in the Plan to follow their natural bias towards investments
in the equities of their employer by not disclosing negative material
information concerning the imprudence of investment in Company
Amd. Compl. ¶¶ 427, 429 [Doc. # 43].
Plaintiffs have abandoned their allegation that failure to procure an
independent fiduciary constitutes a breach of loyalty, instead suggesting that
this was just an illustration of a potential course of action for defendants.
Plaintiffs do not present any support for their allegation that defendants
breached their duty of loyalty by allowing participants in the Plan to follow
their “natural bias.”
The ERISA duty of loyalty includes the duty to avoid conflicts of interest.
Mertens v. Hewitt Assocs., 508 U.S. 248, 251–52 (1993) (citing Massachusetts Mut.
Life Ins. Co. v. Russell, 473 U.S. 134, 142–143 (1985)); see also 29 U.S.C. §
The duty of loyalty is breached when a plan administrator participates
knowingly and significantly in deceiving a plan's beneficiaries in order to save the
employer money at the beneficiaries' expense. Crocker v. KV Pharm. Co., 782 F.
Supp. 2d 760, 785 (E.D. Mo. 2010) (citing Christensen v. Qwest Pension Plan, 462
F.3d 913, 917 (8th Cir.2006)). Here, plaintiffs assert that the Arch Defendants had
a conflict of interest because their compensation was tied to Arch Coal. Plaintiffs
have cited a number of cases they claim support their claim.
In In re Wilmington Trust Corp. ERISA Litig., 943 F. Supp. 2d 478, 492 (D.
Del. 2013), the court denied a motion to dismiss in which an alleged conflict of
interest was based on the fact that the defendants’ compensation was tied to
company stock. However, the defendants also allegedly had information that was
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inconsistent with the financial condition publicly presented. The court in In re
Wilmington Trust recognized that compensation tied to stock prices, without more,
is not necessarily enough to show the existence of a breach of duty of loyalty or a
conflict of interest. Id. In In re Advanta Corp. ERISA Litig., 2011 WL 4528341, at
*4 (E.D. Pa. Sept. 30, 2011), the court denied a motion to dismiss in which a
conflict of interest was alleged. However, plaintiffs had alleged that, in addition to
the fact that defendants’ compensation was tied to the price of company stock,
defendants had sold their own stock holdings while failing to protect the plan
participants. In In re Westar Energy, Inc., ERISA Litig., 2005 WL 2403832, at *21–
22 (D. Kan. Sept. 29, 2005), the court denied a motion to dismiss a duty of loyalty
claim, based upon a conflict of interest, when the defendants, whose compensation
was tied to company stock prices, allegedly misled members of the board of
unauthorized benefits. In In re ADC Telecommunications, Inc., ERISA Litig., 2004
WL 1683144, at *8 (D. Minn. July 26, 2004), the court denied a motion to dismiss a
duty of loyalty claim, premised upon a conflict of interest, when the plaintiffs
alleged that several executives sold their holdings based on information that should
have been, but was not, shared with plan participants.
The cases plaintiffs rely on are distinguishable from the instant case. In each
of the above-cited cases, the plaintiffs’ allegations went beyond compensation being
tied to the price of company stock, but to other actions by the defendants in which
they knowingly misled, deceived, or acted adversely to the interests of the plan
participants. Here, plaintiffs’ mere allegation that the Arch Defendants owned Arch
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Coal stock and maintained options and stock awards is insufficient to state a claim
of breach of the duty of loyalty.
Therefore, Count II will be dismissed.
C. Count III
In Count III, plaintiffs claim that the Arch Defendants breached their
fiduciary duties by: failing to monitor their appointees in administration of the Plan;
failing to evaluate their performance, and failing to have a proper system in place
for doing so; failing to ensure the monitored fiduciaries “appreciate the true extent”
of Arch Coal’s situation; failing to provide complete and accurate information to
their appointees; and failing to remove inadequately performing appointees. Amd.
Compl. ¶¶ 438-444 [Doc. #43].
Plaintiffs concede that their monitoring and co-
fiduciary claims are derivative of their prudence and disclosure claims. Further, the
Eighth Circuit has ruled that a derivative claim, such as a claim alleging a breach of
the duty to monitor, cannot survive without a sufficiently pled theory of an
underlying breach. Brown v. Medtronic, Inc., 628 F.3d 451, 461 (8th Cir. 2010).
Because plaintiffs have failed to state a claim for an underlying breach of fiduciary
duty, plaintiffs’ claims for failure to adequately monitor these fiduciaries must also
fail. Count III will be dismissed.
D. Count IV
ERISA provides that a directed trustee is “subject to proper directions of such
fiduciary which are made in accordance with the terms of the plan.” 29 U.S.C. §
1103(a)(1). Section 403(a) of ERISA prescribes the duties of a fiduciary acting as a
directed trustee. Id. Specifically, § 403(a) requires a directed trustee to comply
Plaintiffs argue that defendants would have them prove every disloyal act they
claim defendants took during the Class Period. The Court disagrees. Only one allegation of
a disloyal act is necessary to allow this claim to go forward. Plaintiffs have not alleged any.
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with the directions of a named fiduciary. See e.g., Maniace v. Commerce Bank of
Kansas City, N.A., 40 F.3d 264, 267 (8th Cir. 1994) (noting that an ERISA directed
trustee may only act upon directions from the named fiduciary in accordance with
the terms of the plan).
Thus, a directed trustee under § 403(a) has no duty to
assess the merits of a named fiduciary's direction and to reject that direction, even
if, in the exercise of the directed trustee's independent judgment, the direction is
imprudent. Id.; see also 29 U.S.C. §1103(a).
In Count IV, plaintiffs claim that Mercer failed to prudently and loyally
manage the Plan’s assets. Plaintiffs specifically allege that Mercer knew or should
have known that Arch Coal stock was not a suitable and appropriate investment for
the Plan. Yet, despite knowledge of the imprudence of the investment, Mercer failed
to take any meaningful steps to protect Plan participants from sustaining losses and
failed to divest the Plan of the stock.
Plaintiffs further allege that Mercer also
breached its co-fiduciary obligations by “knowingly participating in the failure of the
Plan’s other fiduciaries to protect the Plan from inevitable losses.” Amd. Compl, ¶
457 [Doc. # 43].
According to the complaint, Mercer had or should have had
knowledge of breaches by the other fiduciaries of the Plan but made no effort to
Plaintiffs argue that the publicly available information alleged in the
complaint was sufficient to give Mercer notice to take action to protect the Plan.
Plaintiffs note that Mercer was a Plan fiduciary and that ERISA requires directed
trustees only follow instructions “which are not contrary to” ERISA’s fiduciary
duties. 29 U.S.C. §1103(a). Plaintiffs argue that Mercer thus had the authority,
and duty under ERISA, to not follow instructions to invest Plan assets in Arch Coal
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Stock. The parties agree that the Department of Labor’s Field Assistance Bulletin
No. 2004-03 should be used to determine the plausibility of plaintiffs’ claims. See
Department of Labor, Field Assistance Bulletin No. 2004-03, (Dec. 17, 2004),
https://www.dol.gov/ebsa/pdf/fab-2004-3.pdf (hereinafter, the “FAB”).
The FAB provides that “a directed trustee is a fiduciary under ERISA and
must exercise its duties prudently and solely in the interest of the plan participants
and beneficiaries. Id. at 7.
The FAB also provides that “when a directed trustee
knows or should know that a direction from a named fiduciary . . . is contrary to
ERISA, the directed trustee may not, consistent with its fiduciary responsibilities,
follow the direction.
Id. at 2-3. The FAB further provides that in “limited,
extraordinary circumstances, where there are clear and compelling public indicators
. . . that call into serious question a company’s viability as a going concern, the
directed trustee may have a duty not to follow the named fiduciary’s instruction
without further inquiry.” Id. at 5-6.
The FAB used a bankruptcy filing or similar
public indicator as examples of clear and compelling public indicators. Id. at 5-6.
As an example, the FAB also stated that in a situation where a company filing for
bankruptcy under circumstances which make it unlikely that there would be any
distribution to equity-holders, or otherwise publicly stated that it was unlikely to
survive the bankruptcy proceedings in a manner that would leave current equityholders with any value, the directed trustee would have an obligation to question
whether the named fiduciary has considered the prudence of the direction. Id. at 6.
Courts applying the FAB’s direction have recognized that a formal bankruptcy filing
is the “proper trigger for a duty of inquiry by the directed trustee.
In re Avon
Prod., Inc. Sec. Litig., 2009 WL 848083, at *18 (S.D.N.Y. Mar. 3, 2009) (citing Field
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Assistance Bulletin No. 2004-03 at 6, n. 6). The court in In re Avon further ruled
that the public acknowledgement of the possibility of bankruptcy nor the hiring of
bankruptcy counsel were sufficient to trigger the directed trustee’s duty to question
the prudence of the named fiduciary’s directions. Id. Furthermore, “[k]nowledge
that a company's fortunes are declining does not impose a duty of inquiry.” In re
WorldCom, Inc. ERISA Litig., 354 F. Supp. 2d 423, 449 (S.D.N.Y. 2005) (citing
Lalonde v. Textron, Inc., 369 F.3d 1, 7 (1st Cir.2004)).
Here, plaintiffs allege that
Mercer should have been aware that bankruptcy was imminent based upon public
statements and general industry knowledge. However, the duty of inquiry was not
triggered until January 11, 2016, when Arch Coal filed for bankruptcy. The Plan’s
investment in the Fund was forcibly liquidated two months earlier on November 12,
The plaintiffs’ allegations do not rise to the level of limited, extraordinary
circumstances that would establish a duty of inquiry for the directed trustee
because the Plan’s investment in the Fund was liquidated prior to the trigger for the
duty of inquiry.
Because there was no breach of duty on behalf of the Arch Defendants,
Mercer cannot be liable as a co-fiduciary for the same conduct.
See In re Bear
Stearns Companies, Inc. Sec., Derivative, & ERISA Litig., 763 F. Supp. 2d 423, 580
(S.D.N.Y. 2011) (requiring antecedent breaches of fiduciary duties by co-fiduciaries
to be viable); In re Citigroup Erisa Litig., 2009 WL 2762708, at *27 (S.D.N.Y. Aug.
31, 2009), aff'd sub nom. In re Citigroup ERISA Litig., 662 F.3d 128 (2d Cir. 2011)
(dismissing a claim of co-fiduciary liability because plaintiffs’ failed to allege breach
of fiduciary responsibility of another fiduciary); In re Avon Prod., Inc. Sec. Litig.,
2009 WL 848083, at *18 (S.D.N.Y. Mar. 3, 2009) (concluding that because
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plaintiffs failed to plead a basis for liability by any of the defendants, the claim for
co-fiduciary liability also failed). Accordingly, Mercer’s motion to dismiss Count IV
will be granted.4
For the reasons set out above,
IT IS HEREBY ORDERED that the motion of the Arch Defendants to dismiss
[Doc. #46] is granted.
IT IS FURTHER ORDERED that the motion of defendant Mercer Trust
Company to dismiss [Doc. #49] is granted.
IT IS FURTHER ORDERED that the joint motion to stay discovery [Doc.
#63] is denied as moot.
IT IS FURTHER ORDERED that the motion of defendant Mercer Trust
Company for leave to file supplemental authority [Doc. # 74] is denied as moot.
An order of dismissal will be filed separately.
CAROL E. JACKSON
UNITED STATES DISTRICT JUDGE
Dated this 4th day of August, 2017.
Plaintiffs argue that if the action is dismissed, the dismissal should be without
prejudice because they plausibly alleged that defendants failed to undertake a reasoned
investigation and failed to avoid and resolve conflicts of interest. However, the dismissal is
grounded on plaintiffs’ failure to plausibly allege a conflict of interest or duty to undertake a
Plaintiffs have also failed to identify any basis for further
amendment of the complaint. The dismissal will be with prejudice.
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