Pending before the U.S. Court of Appeals for the Second Circuit is Gray v. Citigroup, a case that may have significant implications for ERISA “stock drop” litigation. This article provides background on ERISA “stock drop” litigation—i.e., cases in which members of an employer-sponsored retirement plan sue the employer and others for failing to remove the employer’s stock as a plan investment option prior to a decline in its value—and also identifies four key issues in Citigroup. Some of these issues may result in a circuit split if the Second Circuit parts company with other courts of appeal.
Background
Since the onset of the financial crisis, federal courts nationwide have grappled with issues posed by ERISA “stock drop” litigation. Although many of these litigations have not survived the motion-to-dismiss stage, some have settled for substantial sums. Merrill Lynch, for example, settled a recent ERISA “stock drop” putative class action for $75 million.
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