District Judge William H. Pauley III


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IBM’s 401(k) Plus Plan’s investment options included an employee stock option plan invested in IBM stock. Defendant Retirement Plans Committee is a named fiduciary under ERISA. Between Jan. 21, and Oct. 20, 2014, IBM misrepresented the value of its Microelectronics business. After IBM’s Oct. 20, 2014 announcement of that business’s sale and concomitant $2.4 billion write-down of assets, Plan members invested in the IBM Stock Fund sued–claiming violation of fiduciary duties by failing to mitigate the foreseeable drop in IBM’s stock and protect Plan members from losing retirement savings. District court dismissed plaintiffs’ second amended class complaint, which did not meet the standard of Fifth Third Bancorp. v. Dudenhoeffer, 134 S. Ct. 2459, and Amgen Inc. v. Harris, 136 S. Ct. 758. Noting that the Fund was a net seller of IBM stock during the class period, the court found it entirely conceivable that a prudent fiduciary could have concluded that issuing an earlier corrective notice would have done more harm than good to the long-term investment value of IBM stock. Nor did plaintiffs consider the costs and harm to the Fund, that could have been incurred from purchasing a generic hedging product.