On July 28, 2020, a Faegre Drinker securities litigation team won an important victory for Target Corporation and several Target employees who were fiduciaries of Target’s employee stock ownership plan (ESOP).
The case arose out of Target’s unsuccessful business venture in Canada. Between 2013 and 2015, Target expanded into Canada, opening over 100 stores. Due to difficulties with supply chain and inventory management, it ultimately decided to shut down its Canada stores. When it did, the price of Target’s stock dropped, and plaintiffs decided to sue Target and some of its executives under the federal securities laws. But in addition to that more typical lawsuit, some current and former Target employees sued Target and various executives under a different theory: that Target and its fiduciaries who managed Target’s ESOP had breached duties of prudence and loyalty by allowing the ESOP to remain invested in Target stock when its price was artificially inflated (which they attributed to failure to fully disclose problems with Target Canada).
Target’s securities and ERISA litigators immediately jumped in. They successfully convinced a judge in the District of Minnesota to dismiss the complaint, because it failed to satisfy the exacting pleading standard set by the U.S. Supreme Court in Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. 409 (2014).
Plaintiffs appealed to the Eighth Circuit, where Faegre Drinker then applied its appellate experience in defending the victory. Nearly two years after the case was fully briefed, the Eighth Circuit issued its opinion, affirming in its entirety the order dismissing the case. Target is thrilled with the result.