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Fifth Third Bank Files Its Brief In The US Supreme Court

The Supreme Court briefs have started appearing on the docket in the most notable ERISA case of the term – Fifth Third Bank v. Dudenhoefer. Petitioner (Fifth Third) and its supporting amici are already filed, and Respondent’s brief is due soon. Oral argument is set for April 2.

The Petitioner’s brief – arguing in favor of a presumption of prudence, strictly applied at the motion to dismiss stage and overcome only when “extraordinary circumstances” have been adequately alleged – focuses on three core arguments: 1) the text of ERISA Section 404, 2) trust law, and 3) Congress’s encouragement of employee ownership.

The first argument focuses upon the text of Section 404, because acting prudently is judged “in the conduct of an enterprise of a like character and with like aims” – here, a plan with the stated purpose of requiring and supporting employee ownership. This argument dovetails with the third argument – Congress’s support, both in ERISA and in the 1976 Tax Reform Act two years later, of ESOPs. Both arguments are retorts to the Solicitor’s jurisdictional brief (which is likely to be repeated in a brief in support of Respondents), which argued that ERISA requires a strong duty of prudence that should not be applied differently for ESOPs than other ERISA plans.

The second argument looks to trust law, and cites the Joseph Pulitzer estate case (249 NYS 87) for the principle that only in extraordinary circumstances are deviations from a trust’s stated purpose warranted. The brief concludes by arguing that as applied in this case, this standard warrants dismissal of the complaint. To do otherwise would place ESOP trustees on the “razor’s edge” articulated in the Armstrong case from the Seventh Circuit (446 F3d 728).

Here’s the link to the brief –