Court Finds Tibble No Precedent for Stock Drop Case

Asked to reconsider a decision regarding fiduciary review in the wake of Tibble v. Edison, a district court found no reason to do so.

The case, In re Citigroup ERISA Litig., No. 11 CV 7672 JGK, __F.Supp.3d___, 2015 WL 4071893 (S.D.N.Y. July 6, 2015), brought in the U.S. District Court, Southern District of New York, was a stock drop case brought against Citigroup. During the subprime mortgage crisis of 2008, the price of Citigroup Inc. stock dropped precipitously, while the Citigroup 401(k) Plan and the Citibuilder 401(k) Plan for Puerto Rico required that the plans include an option to allow employees to invest in the Citigroup Common Stock Fund, which was invested in Citigroup common stock. The plaintiffs, participants and beneficiaries of the plans, claimed that the various defendants were responsible for the plans’ investments and breached their fiduciary duties by failing to limit the plans’ investments in Citigroup common stock.

The court had already dismissed their claims as time-barred, and on a failure to show any special circumstances that would have made it imprudent for the defendants to rely on market valuations of Citigroup common stock. However, in the wake of Tibble v. Edison, the plaintiffs argued that the Supreme Court’s decision in that case compelled reconsideration of the determination that their claims were time-barred.

However, an analysis by Springer & Roberts LLP notes that the court found that Tibble has little in common with this case since it did not concern ESOPs or the duties of fiduciaries faced with a drop in the price of company stock held by such plans.

Time ‘Passages’

The court noted that ERISA’s statute of limitations bars a claim after the earlier of either: (1) six years after “the date of the last action which constituted a part of the breach or violation” or (2) “three years after the earliest date on which the plaintiff had actual knowledge of the breach of violation,” and that Tibble only addressed the six-year statute of limitations.

In the Citigroup case, the court dismissed the claims based on the three-year statute of limitations because it found that the plaintiffs acquired actual knowledge of the alleged violations more than three years before they filed their complaint. Additionally, the court noted that Tibble’s reaffirmation of ERISA’s reliance on trust law did not involve claims based on a drop in an employer’s stock price. Ultimately, the court concluded that the plaintiffs had not shown any change in controlling law that warranted reconsideration of the court’s prior opinion.

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