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State Street litigation II



As I noted in yesterday's entry, the U.S. Supreme Court this week declined to hear an appeal from State Street Bank & Trust after the 6th Circuit Court of Appeals gave the go-ahead to litigation against it brought by former (pre-bankruptcy) employees of General Motors.

State Street had tried to get this case squashed on a motion to dismiss for failure to state a claim on which relief can be granted (the old-fashioned term for that was a demurrer).  SCOTUS' non-decision decision means that it has failed in that effort.

State Street's claim had been that ERISA shielded it from immunity. Other fiduciaries in similar situations may continue to make such claims (outside of the 6th Circuit), because SCOTUS' s refusal to take an appeal has no precedential significance.  Still, the 6th Circuit, which consists of the federal districts within Tennessee, Kentucky, Ohio, and Michigan, ain't peanuts, and the 6th Circuits decision is sure to be cited elsewhere.

This means that workers (and their attorneys of course) may yet have a chance to make the case to a real live jury that they have been ripped off by the investment advisors who were supposed to be looking out for their retirement nest eggs, and who proved more-or-less wilfully blind. These workers seem to have gotten further toward that end than anyone else in their position with regard to the crises of 2007-08 yet has.

Here is a nicely worded passage from the 6th Circuit opinion:

"Finally, we recognize that sister circuits have reached the opposite conclusion and held that the Kuper presumption [of the fiduciary's good faith] should be considered at the pleadings stage. State Street cites this authority in support of its assertion that the plaintiffs must plead facts to overcome the presumption....we find these decisions distinguishable becaused these circuits have adopted more narrowly-defined tests for rebutting the presumption than the test this Court announced in Kuper."

Did you catch that? We find their decisions distinguishable because they are them and we are ourselves. That is pretty much the only distinction asserted there.

Good enough for me, and I am happy to say good enough for SCOTUS.
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