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. ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x

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),

et seq. By an opinion and order entered January 8, 2016, the district

‐ 2 ‐ 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,

(2014). We review de novo a district courtʹs grant of a

motion to dismiss. Fink v. Time Warner Cable,

, 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

‐ 3 ‐ 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,

, and Amgen Inc. v. Harris,

(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

‐ 4 ‐ 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,

(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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