Anderson v. Intel Corp. Investment Policy Committee

Chief Justice, and may it please the Court, ERISA's duty of prudence is inherently flexible.

As a result, this Court has consistently declined to inject judicially crafted bright-line rules into a determination of whether a complaint's allegations plausibly allege imprudence.

Categorical rules, as this Court put it colorfully in Dudenhofer, do not readily divide the plausible sheep from the meritless goats, because they are inconsistent with the careful, context-sensitive inquiry that both ERISA and Rule 8 require.

The Ninth Circuit's, quote, meaningful benchmark requirement is just such a rule.

Under it, a court first asks whether a complaint's performance allegations on their own can plausibly demonstrate imprudence by identifying a virtually indistinguishable fund that performed better.

If the complaint fails to identify that specific fund, the performance allegations are discarded.

And that is true even if the complaint relies on benchmarks selected by the fiduciaries themselves or comparators identified by benchmarking experts.

In the respondent's view, this rule is consistent with the ordinary pleading framework set forth in Twombly and Iqbal, but under that framework, courts must assess all non-conclusory allegations together in determining if a complaint plausibly states a claim.

The meaningful benchmark requirement precludes that assessment.

And the Ninth Circuit's rule isn't even necessary.

Everyone agrees that without more, a complaint merely alleging that one fund performed better than another won't survive a motion to dismiss.

The ordinary pleading standards, however, are perfectly capable of weeding out a truly meritless claim like that.

Ultimately, because the meaningful benchmark rule is both out of step with Twombly and Iqbal and an unnecessary solution in search of a problem, it should be rejected.

I welcome the Court's questions.

So are you saying that you can prove imprudence or demonstrate it by comparing dissimilar funds?

I mean, that is one way that a complaint— So

how would you do that?

Sure.

So it's context-dependent, and there is no one specific fund that a complaint needs to identify to make performance allegations relevant— to support a claim of imprudence.

It can run a very wide spectrum of different ways that the complaint could use performance allegations to contribute to the overall plausibility of a complaint.

And the way it would do that is it would identify a relevant way of comparing the performance of one fund with other potential comparators, and it would explain why that performance was relevant to the theory of breach alleged in a complaint.

But what the Ninth Circuit has done here is it has attempted to predefine the kind of comparison that will count when a court is asking how the performance allegations contribute to plausibility.

I think what the

Ninth Circuit is saying is you can't compare apples and orange.

If you have a fund, an equity fund, that is designed to produce high returns but riskier returns, and you can't compare that to a fund that is to protect against losses.