Harris v. Amgen, No. 10-56014 (9th Cir. 2013)
Annotate this CasePlaintiffs, current and former employees of Amgen and AML, participated in two employer-sponsored pension plans, the Amgen Plan and the AML Plan. The Plans were employee stock-ownership plans that qualified as "eligible individual account plans" (EIAPs) under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1107(d)(3)(A). Plaintiffs filed an ERISA class action against Amgen, AML, and others after the value of Amgen common stock fell, alleging that defendants breached their fiduciary duties under ERISA. The court concluded that defendants were not entitled to a presumption of prudence under Quan v. Computer Sciences Corp., that plaintiffs have stated claims under ERISA in Counts II through VI, and that Amgen was a properly named fiduciary under the Amgen Plan. Therefore, the court reversed the decision of the district court and remanded for further proceedings.
Court Description: ERISA. Reversing the dismissal of an ERISA class action brought by current and former employees of Amgen, Inc., and an Amgen subsidiary, the panel held that a presumption of prudence did not apply and that, in the absence of the presumption, the plaintiffs sufficiently alleged violation of defendants’ fiduciary duties regarding two employer- sponsored pension plans. Agreeing with the Second Circuit, the panel concluded that the plan terms did not require or encourage the defendant fiduciaries to invest primarily in employer stock. Accordingly, the presumption of prudence articulated in Quan v. Computer Sciences Corp., 623 F.3d 870 (9th Cir. 2010), did not apply to a claim that defendants acted imprudently and violated their duty of care by continuing to provide Amgen common stock as an investment alternative when they knew or should have known that the stock was being sold at an artificially inflated price due to material omissions and misrepresentations, as well as illegal off-label sales. The panel held that, in the absence of the presumption, the first amended class action consolidated complaint stated a claim for violation of the duty of care. The panel also held that the plaintiffs sufficiently alleged that defendants violated their duties of loyalty and care by failing to provide material information to plan participants about investment in the Amgen Common Stock Fund. The panel stated that defendants’ duties of loyalty and care to plan participants under ERISA, with respect to company stock, were not less than the duties they owed the general public under securities laws. The panel held that the plaintiffs, like other investors in publicly traded stock, could rely on a rebuttable presumption of reliance based on the “fraud-on- the-market” theory. Finally, the panel held that Amgen was an adequately alleged fiduciary of the Amgen Plan.
The court issued a subsequent related opinion or order on October 23, 2013.
The court issued a subsequent related opinion or order on October 30, 2014.
The court issued a subsequent related opinion or order on May 26, 2015.
The court issued a subsequent related opinion or order on March 28, 2016.