The Eleventh Circuit affirmed dismissal of ERISA breach of fiduciary claims against Delta Air Lines and other alleged plan fiduciaries in connection with a defined contribution plan’s investments in Delta Air Lines stock. In so ruling, the Court joined a growing number of decisions following Dudenhoeffer that have dismissed claims based on public information.

Plaintiff Dennis Smith was a participant in the Delta Family-Care Savings Plan, which offered Delta stock as an investment option. His plan account value declined when the price of Delta stock dropped between 2000 and 2004.  He sued Delta and plan fiduciaries in 2005, alleging, among other things, that they imprudently continued to permit participants to invest in Delta stock despite the company’s poor financial performance and questions about its ability to survive.

The district court originally dismissed the Complaint for failure to state a claim, and the Eleventh Circuit affirmed.  After the Supreme Court’s decision in Fifth Third Bancorp v. Dudenhoeffer, Smith filed a petition for writ of certiorari with the U.S. Supreme Court. The Supreme Court vacated and remanded for further consideration in light of Dudenhoeffer.

On remand, the district court again dismissed the claims and the Eleventh Circuit again affirmed.  In so ruling, the Eleventh Circuit cited to Dudenhoeffer’s finding that “allegations based on ‘over- or undervaluing the stock are implausible as a general rule, at least in the absence of special circumstances.’”  The Court concluded that the prudence claim before it was just the type of claim that the Supreme Court would deem “implausible,” particularly since plaintiff did not allege that the fiduciaries “had material inside information about Delta’s financial condition that was not disclosed to the market” or the existence of a special circumstance, such as fraud or other improper conduct, that would render reliance on the market price imprudent.

The case is Smith v. Delta Air Lines, 2015 U.S. App. LEXIS 13165 (11th Cir. July 29, 2015) (unpublished).