Alexander Y. Usenko, Derivatively on Behalf of the SunEdison Semiconductor Ltd. Retirement Savings Plan v. MEMC LLC, et al.

In Fifth Third Bancorp v. Dudenhoeffer, this Court unanimously held that the question whether a plaintiff had plausibly alleged a claim under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., for breach of the fiduciary duty of prudence had to be answered by conducting a “careful, context-sensitive scrutiny of a complaint’s allegations” because the content of the duty of prudence “turns on ‘the circumstances . . . prevailing’ at the time the fiduciary acts.” 573 U.S. 409, 425 (2014) (alteration in original) (quoting 29 U.S.C. § 1104(a)(1)(B)). In the decision below, the court of appeals discarded the core lesson of Dudenhoeffer and imposed a categorical heightened pleading standard on ERISA plaintiffs alleging a breach of the duty of prudence based on the fiduciary’s decision to hold an unduly risky asset despite publicly available information evincing the asset’s risk. Specifically, the court of appeals held that such a plaintiff is always required to plead “special circumstances” that call into question whether the asset’s price was overvalued, even when the plaintiff’s claim turns on the prudence of including the asset in a retirement plan rather than its price, and further required that those “special circumstances” include nonpublic information. The question presented is: Whether Dudenhoeffer’s “context-sensitive scrutiny of a complaint’s allegations” can be met where a court presumes an asset must be prudent if it is publicly traded and imposes a categorical requirement that a plaintiff meet a heightened pleading standard without considering the circumstances surrounding the alleged breach.