In “7th Circ. Decision Narrows ERISA 401(k) Pleading Standard,” Law360 spoke to benefits and executive compensation partner Rick Pearl about a Seventh Circuit decision upholding the dismissal of an Employee Retirement Income Security Act (ERISA) lawsuit regarding a company’s 401(k) plan. Pearl addressed considerations for other circuits regarding what pleadings make it past a motion to dismiss.
Pearl said, “I think that most courts, appellate courts, will actually conduct a very similar, if not identical, analysis to this.”
He also stated that some other courts nationwide have been less careful about scrutinizing complaints at the pleading stage. But the Seventh Circuit’s decision showed why it’s important for plaintiffs to plead compelling facts and use adequate comparators when making allegations about an imprudent investment management process.
“You have to show no prudent fiduciary would have done this,” Pearl explained. “The Seventh Circuit seems to get that. The Supreme Court seems to get it. And I think that more courts need to stop and sort of ground themselves in that analysis before they review complaints and motions to dismiss.”
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