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In Dudenhoefer v. Fifth Third Bancorp, No. 11-3012, 2012 WL 3826969 (6th Cir. Sept. 5, 2012), the Sixth Circuit reversed the dismissal of an ERISA class action against the company, its CEO, and other officers that alleged defendants breached their fiduciary duties by allowing employees to invest in the company’s stock, even though defendants allegedly knew the stock was at risk because of the company’s subprime lending activity. Of particular note, the court became the first appeals court to hold that plaintiffs stated a claim that defendants violated their fiduciary duties by expressly incorporating by reference certain SEC filings into the plan’s Summary Plan Description.
In this alert, attorneys from our ERISA Litigation Practice summarize this case and identify important ramifications of the court’s decision, which could increase the litigation risks for many publicly-traded companies that allow employees to invest in company stock through a benefit plan.