Tatum v. RJR Pension Investment, No. 16-1293 (4th Cir. 2017)Annotate this Case
The court affirmed the district court's finding that, under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., a plan fiduciary's breach did not cause substantial losses to the retirement plan because a prudent fiduciary would have made the same divestment decision at the same time and in the same manner. The district court explained that a prudent fiduciary would have balanced the increased risk of loss that the Nabisco Funds brought to the Plan against the Funds' likely average returns. The court concluded that the district court's findings and analysis entirely accord with the efficient market hypothesis and Fifth Third Bancorp v. Dudenhoeffer. In this case, a prudent fiduciary would have concluded the Nabisco Funds' expected returns did not justify the increased risk of loss to the plan, especially because ERISA requires that a fiduciary diversify plan assets to minimize risk of loss.