Gannett Company, Inc., et al. v. Jeffrey Quatrone

The Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., imposes on fiduciaries of ERISA retirement plans a duty to act with prudence and to “diversify[] the investments of the plan so as to minimize the risk of large losses.” Id. § 1104(a)(1)(B)-(C). The Second and Fifth Circuits have held that in a defined contribution plan—in which participants choose how to invest their assets from a menu of investment options—these duties require fiduciaries to provide a diversified menu, but do not require that each separate option on the menu be diversified. Thus, in the Second and Fifth Circuits, a fiduciary does not breach the duty of prudence or diversification merely by offering an undiversified single-stock fund as one item on the menu as long as the overall menu is adequately diversified. The Fourth Circuit here disagreed. Holding that “each available fund on a menu must be prudently diversified,” App. 19a, the court concluded that Plaintiff, Respondent Jeffrey Quatrone, stated a claim for breach of the duties of prudence and diversification solely by alleging that Defendants, Petitioners Gannett Co., Inc. and The Gannett Benefit Plans Committee, allowed participants to invest in an undiversified single-stock fund. The question presented is: Whether a plaintiff adequately pleads breach of the duties of prudence and diversification solely by alleging that fiduciaries permitted participants in a defined contribution plan to choose, from an adequately diversified menu of investment options, to invest in an undiversified single-stock fund.