Clark Law Group, PLLC
Supreme Court Hears Case from IBM Employees
On November 6, an attorney representing employees of IBM told the Supreme Court in Washington, D.C. that the employees should be allowed to sue the company’s retirement fund managers because they did not disclose that the company’s stock was overvalued. IBM’s 401(k) plan invests in company stock. The Supreme Court will decide whether the Employee Retirement Income Security Act requires fund managers to disclose to employees drops in stock value that result from wrongdoing. In this case, stocks dropped because the microchip-making division had issues.
According to a friend-of-the-court brief filed by the U.S. Chamber of Commerce, if IBM loses, this could lead to other companies’ reluctance to include company stock in retirement plans. There are a number of other class-action lawsuits that also assert that there is a fiduciary duty to inform employees of wrongdoing that leads to stock drops.
In 2014, a Supreme Court ruling specified what must be included by plaintiffs in stock-drop lawsuits based on ERISA. Since then, a number of lawsuits have been thrown out by courts. Justice Neil Gorsuch expressed the view that there might not be a reason for corporate insiders to be fiduciaries if they are unable to disclose any information. The employees’ attorney said having them as fiduciaries is useful because the insiders could potentially offer information that would protect employees.
Laws around retirement funds and other employee benefits, including disability and health insurance, can be complex. Employees who believe their rights are being violated or who are facing denial of disability or ERISA benefits claims may want to contact an attorney to help them understand their rights and what their options may be. These employee benefits can be critical to the financial security of individuals and their families, and in some cases, a lawsuit may be necessary.