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Fifth Third Bank’s Reply Brief Frames the Issues Before the US Supreme Court as Oral Argument Approaches

With oral argument in the U.S. Supreme Court this week – April 2 – my last comment before the oral argument focuses on the last brief filed – the Reply brief filed by Fifth Third Bank, the Petitioner. The brief starts oddly – arguing that no one has supported the Sixth Circuit’s standard; which is only true because the plaintiffs and their amici assert that the standard should be more permissive than permitted by the Sixth Circuit. Fifth Third criticizes this position, pointing out that no Circuit that has addressed the issue has agreed with a more permissive standard than the Sixth Circuit’s position.

The core of the Reply, however, is a return to the argument that the duty of prudence should be situational; that it depends on facts and circumstances that apply in the context of the plan at issue and the aims of that plan. Because an ESOP is, by definition, undiversified and primarily concerned with employee ownership, Fifth Third argues that the focus should be upon those unique characteristics, and not a duty of prudence that is inflexible.

The brief concludes by criticizing the plaintiffs’ focus on the duty of loyalty, asserting that it’s an issue (and a focus) not before the court within the question presented, and not availing in any respect. Which is a nice summary of the differences between the two positions before the court. Fifth Third asserts that a robust presumption of prudence is warranted because ERISA’s duty of prudence is contextual, and different from the duty of loyalty (which raises different issues not before the court in this case). The plaintiffs assert that no (or a very limited) presumption should apply because the duty of prudence is similar for all ERISA plans (except for the limited diversification exception for ESOPs), and this case demonstrates how the divided loyalties of inside fiduciaries can result in imprudent actions that harm participants. I look forward to seeing which way the Justices appear to be leaning.

Here’s the link to the Reply brief –,