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Compliance October 20, 2010
Employer in Stock Drop Case Gets 2nd Chance
October 20, 2010 (PLANSPONSOR.com) – A federal judge in Missouri has reversed himself and given a St. Peters, Missouri-based silicon wafer manufacturer another chance to argue that a stock-drop lawsuit against it should be thrown out.
Reported by Fred Schneyer
With that ruling, U.S. District Judge Henry Edward Autrey of the U.S. District Court for the Eastern District of Missouri threw out his March decision rebuffing a dismissal request from MEMC Electronic Material Inc. Autrey gave both sides a chance to file additional legal briefs on the dismissal request as part of the court’s reconsideration.
Autrey said he had changed his mind on the issue of whether the 401(k) participants filing the stock-drop action had put forth a sufficiently strong case to overcome the presumption of prudence typically granted to employers offering company stock plans as a retirement savings investment option.
The court said the March ruling was “gravely in error” because he had lightened the evidentiary burden the plaintiffs would need to carry to survive an initial legal challenge from the employer.
The plaintiffs’ suit alleged the company violated its fiduciary duties under the Employee Retirement Income Security Act (ERISA) by continuing to offer the company stock after it was no longer prudent to do so. The company’s share price was hit hard in mid-2008 after the disclosure of major production problems at two of its plants.
The case is Jones v. MEMC Electronic Material Inc., E.D. Mo., No. 4:08CV1991 HEA.