16‐222‐cv
Loeza, et al. v. JPMorgan Chase & Co., et al.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURTʹS LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST
CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
ʺSUMMARY ORDERʺ). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second
Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in
the City of New York, on the 8th day of September, two thousand sixteen.
PRESENT: RALPH K. WINTER,
DENNY CHIN,
CHRISTOPHER F. DRONEY,
Circuit Judges.
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MARY LOEZA, MATT WARD, CARMINA
MCCORMACK,
Plaintiffs‐Appellants,
GREGORY SCRYDOFF, Individually and on behalf
of all others similarly situated,
Plaintiffs,
v. 16‐222‐cv
JOHN DOES 1‐10, JOHN DOES 1‐100, BERNADETTE J.
ULISSI, DAVID C. NOVAK, STEPHEN B. BURKE, LEE R.
RAYMOND, WILLIAM WELDON, JAMES DIMON, INA
R. DREW, NORMAN CORIO, SALLY DURDAN,
JPMORGAN RETIREMENT PLAN, JPMORGAN
COMPENSATION 7 MANAGEMENT DEVELOPMENT
COMMITTEE, JPMORGAN CHASE 401(K) SAVINGS
PLAN, SELECTION COMMITTEE,
Defendants,
JPMORGAN CHASE & CO., JPMORGAN CHASE
BANK, N.A., DOUGLAS L. BRAUNSTEIN, JOHN
WILMOT,
Defendants‐Appellees.
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FOR PLAINTIFFS‐APPELLANTS: SAMUEL E. BONDEROFF (Jacob H.
Zamansky, on the brief), Zamansky LLC, New
York, New York.
FOR DEFENDANTS‐APPELLEES: RICHARD C. PEPPERMAN, II (M. David
Possick, Daryl A. Libow, on the brief), Sullivan
& Cromwell LLP, New York, New York and
Washington, D.C.
Appeal from the United States District Court for the Southern District of
New York (Daniels, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.
Plaintiffs‐appellants appeal a January 11, 2016 judgment of the district
court dismissing this putative class action against defendants‐appellees. The Fourth
Amended Complaint (the ʺComplaintʺ) alleges that certain fiduciaries of the JPMorgan
Chase & Co. 401(k) Savings Plan (the ʺPlanʺ) breached the duty of prudence owed to
Plan participants under the Employee Retirement Income Security Act (ʺERISAʺ),
29 U.S.C. § 1001 et seq. By an opinion and order entered January 8, 2016, the district
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court granted defendantsʹ motion to dismiss the Complaint under Federal Rule of Civil
Procedure 12(b)(6) on the grounds that the Complaint failed to satisfy the applicable
pleading requirements articulated by the Supreme Court in Fifth Third Bancorp v.
Dudenhoeffer, 134 S. Ct. 2459 (2014). We review de novo a district courtʹs grant of a
motion to dismiss. Fink v. Time Warner Cable, 714 F.3d 739, 740‐41 (2d Cir. 2013). We
assume the partiesʹ familiarity with the Complaint, procedural history, and issues on
appeal.
Plaintiffs are current and former employees of defendant‐appellee
JPMorgan Chase & Co. (ʺJPMorganʺ) who participated in the Plan and invested portions
of their retirement in the JPMorgan Chase Common Stock Fund (the ʺFundʺ). The Fund
invests primarily in JPMorgan common stock, and thus it is an employee stock
ownership plan under ERISA.
The Complaint alleges that defendants, who are JPMorgan corporate
insiders and named fiduciaries of the Plan, were imprudent in failing to prevent the
Fund from purchasing JPMorgan stock at a price inflated by alleged securities fraud
related to certain trading activities undertaken by the firmʹs Chief Investment Office
(the ʺCIOʺ). Specifically, it is alleged that defendants‐appellees Douglas Braunstein and
James Wilmot knew that the CIO had taken risky trading positions and helped it
circumvent JPMorganʹs internal risk controls. Such facts allegedly should have been
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publicly disclosed under the federal securities laws. Their belated disclosure allegedly
caused JPMorganʹs stock price to fall by approximately 16% in one day.
Plaintiffs allege that Braunstein and Wilmot could have discharged their
duty of prudence and prevented harm to the Fund either by freezing its purchases of
JPMorgan stock or publicly disclosing the CIO‐related securities fraud. The Complaint
further alleges that these remedial measures would not have caused the Fund more
harm than good because ʺthe longer a fraud goes on, the more painful the [stock price]
correction would be, as experienced finance executives like Wilmot and Braunstein
reasonably should have known,ʺ J. App. at 59, and ʺ[t]he longer [Wilmot and
Braunstein] allowed Plan participants to be harmed by JPMorganʹs fraud, the greater
the harm to Plan participants [they] permitted,ʺ J. App. at 118.
The district court concluded that the Complaint failed to plausibly allege
that a prudent fiduciary could not conclude that freezing purchases or disclosing the
alleged securities fraud would cause the Fund ʺmore harm than good,ʺ as is required to
be alleged by Fifth Third Bancorp, 134 S. Ct. at 2473, and Amgen Inc. v. Harris, 136 S. Ct.
758 (2016) (per curiam). It dismissed the Complaint on that ground. Plaintiffs appeal,
arguing that the Complaint satisfies the ʺmore harm than goodʺ prong of Fifth Third
Bancorp.
We have reviewed the Complaintʹs allegations in this regard and conclude
that they are wholly conclusory and materially indistinguishable from the allegations
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that the Supreme Court found insufficient in Amgen. See 136 S. Ct. at 759‐60. Therefore,
the district court properly dismissed the Complaint. See Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (ʺThreadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice [to defeat a Rule 12(b)(6) motion].ʺ).
We have reviewed plaintiffsʹ remaining arguments and conclude they are
without merit. Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT:
Catherine OʹHagan Wolfe, Clerk
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Loeza v. JPMorgan Chase & Co.
Combined Opinion