Journal of Air Law and Commerce


This Comment analyzes the recent Employee Retirement Income Security Act (ERISA) stock drop cases against The Boeing Company (Boeing) and reviews the underlying pleading standard in these cases that the Supreme Court set forth in Fifth Third Bancorp v. Dudenhoeffer. With the tremendous amount of assets in retirement plans—and specifically in employee stock ownership plans—litigation under ERISA can be extremely costly to employers, especially those in the airline industry that offer these plans. The current pleading standard for stock drop cases has become a practically insurmountable barrier to plaintiffs, even when their employers know they are negligently creating products that cause serious harm. When these stock drop cases are brought in court, plaintiffs must allege alternative actions that “no prudent fiduciary” could have decided would have done more harm than good for the employer.

However, this alternative action requirement does not consider the industry type or the underlying cause of harm the employer has potentially caused. This Comment asserts that courts undergo a context-specific analysis and factor in the public health considerations and devastating harm that some products can have on the broader community. While many employers may have concerns that this factor may be difficult to weigh, plaintiffs must still overcome a high bar to bring these cases. Plaintiffs must continue to allege that the employer acted negligently in violating the underlying industry’s safety statutes or other standards. Additionally, among the contested duties of the employer is the scope of liability when it appoints a third-party investment fiduciary. This Comment then asserts that employers should be required to inform appointed investment fiduciaries as a part of their ongoing duty to monitor investments in their employee stock ownership plans.

This Comment takes these considerations and proposes weighing public safety in the alternative action pleading requirements outlined by the U.S. Supreme Court. First, the Boeing 737 Max crashes are summarized, and the subsequent ERISA litigation is analyzed. Next, this Comment discusses fiduciary duties under ERISA and the evolution of the pleading standards in stock drop cases, including how this standard has been applied in various circuits around the United States. Finally, the public safety factor is scrutinized and shown how it can be assessed: no prudent fiduciary could conclude that corrective disclosure would potentially do more harm than good when public safety is a major risk factor. This would prove to be a more equitable standard consistent with the U.S. Supreme Court’s recent precedent requiring context-specific inquiries into ERISA claims, while still protecting employers from frivolous lawsuits.