SUPREME COURT OF THE UNITED STATES

SUPREME COURT OF THE UNITED STATES

AMGEN INC., ET AL. v. STEVE HARRIS, ET AL. ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

No. 15–278.   Decided January 25, 2016

PER CURIAM.

The Court considers for the second time the Ninth Cir- cuit’s determination that respondent stockholders’ com- plaint states a claim against petitioner  fiduciaries  for  breach of the duty of prudence. The first time, the Court vacated and remanded in light of Fifth Third Bancorp v. Dudenhoeffer, 573 U. S.    (2014), a case which set forth    the standards for stating a claim for breach of the duty of prudence against fiduciaries who manage employee stock ownership plans (ESOPs). On remand, the Ninth Circuit reiterated its conclusion that the complaint states such a claim.   The Court  now reverses and  remands.

The stockholders are former employees of Amgen Inc. and its subsidiary Amgen Manufacturing, Limited, who participated   in   plans   that   qualified   under   29  U. S. C.

§1107(d)(3)(A) as eligible individual account plans. Like ESOPs, these plans offer ownership  in  employer  stock  as an option to employees. The parties agree  that  the  deci- sion in Fifth Third is fully applicable to the plans at issue here.  See 788 F. 3d 916, 935  (2014).

All of the plans had holdings in the Amgen Common Stock Fund (composed, unsurprisingly, of Amgen common stock) during the relevant period. The value of Amgen stock fell, and in 2007, the stockholders filed a class action against petitioner fiduciaries alleging that they had breached their fiduciary duties, including the duty of prudence, under the Employee Retirement Income Secur- ity  Act  of  1974  (ERISA),  88  Stat.  829,  as  amended,  29

U. S. C.  §1001  et seq.     The  District  Court  granted     the

fiduciaries’ motion to dismiss, and the Ninth Circuit re- versed, Harris v. Amgen, Inc., 738 F. 3d 1026 (2013). The fiduciaries  sought certiorari.

While that petition was pending, this Court issued a decision that concerned the duty of prudence owed by  ERISA fiduciaries who administer ESOPs. That decision, Fifth Third, held that such ERISA fiduciaries  are  not entitled to a presumption of prudence but are “subject to   the same duty of prudence that applies to ERISA fiduciar-  ies in general, except that they need not  diversify  the   fund’s assets.”   573 U. S., at          (slip op., at   1–2).

Notwithstanding the lack of a presumption of prudence, Fifth Third noted that “Congress sought to encourage the creation of ” employee stock-ownership plans, id., at                                                                        (slip op., at 14), a purpose that the decision recognized may come into tension with ERISA’s general duty of pru- dence. Moreover, ESOP fiduciaries confront unique chal- lenges given “the potential for conflict” that arises when fiduciaries are alleged to have imprudently “fail[ed] to act on inside information they had about the value of the employer’s stock.”  Id., at             (slip op., at 13).  Fifth Third therefore laid out standards to help “divide the plausible sheep from the meritless goats,” id., at                                        (slip op., at 15):

“To state a claim for breach of the duty of prudence on the basis of inside information, a plaintiff must plau- sibly allege an alternative action that the defendant could have taken that would  have  been  consistent  with the securities laws  and  that  a  prudent  fiduciary in the same circumstances would not have viewed as  more  likely  to  harm  the  fund  than  to  help  it.”  Id., at

        (slip op., at 18).

It further clarified that courts should determine whether the complaint itself states a claim satisfying that liability standard:

“[L]ower  courts  faced  with  such  claims  should     also

consider whether the complaint has plausibly alleged that a prudent fiduciary in the defendant’s position could not have concluded that stopping purchases— which the market might take as a sign that insider fi- duciaries viewed the employer’s stock as a bad in- vestment—or publicly disclosing negative information would do more harm than good to the fund by causing    a drop in the stock price  and  a  concomitant  drop  in the value of the stock already held by the fund.”   Id.,    at         (slip op., at 20) (emphasis  added).

In the matter that is once again before the Court here, following the issuance of Fifth  Third,  the  Court  granted  the fiduciaries’ first petition for a writ of certiorari,  va-  cated the judgment, and remanded for further proceedings consistent  with  that  decision.   Amgen  Inc.  v.  Harris, 576

U. S.  (2014).  On remand, the Ninth Circuit reversed  again the dismissal of the complaint and denied the fidu- ciaries’ petition for rehearing en banc. See 788 F. 3d 916. The fiduciaries once more sought certiorari.

The Court now holds that the Ninth Circuit failed to properly evaluate the complaint. That court  explained that its previous opinion (that is, the one it issued before Fifth Third was decided) “had already assumed” the standards for ERISA fiduciary liability laid out by this Court in Fifth Third. 788 F. 3d, at 940. And it reasoned that the complaint at issue here satisfies those standards because when “the federal securities laws require disclo- sure of material information,” it is “quite plausible” that removing the Amgen Common Stock Fund “from the list of investment options” would not “caus[e] undue harm to plan participants.” Id., at 937–938. The Ninth Circuit, however, failed to assess whether the complaint in its current form “has plausibly alleged” that a prudent fiduci- ary in the same position “could not have concluded” that the alternative action “would do more harm than good.”

Fifth Third, supra, at           (slip op., at 20).

The Ninth Circuit’s proposition that removing the Amgen Common Stock Fund from the list of investment options was an alternative action that could plausibly have satisfied Fifth Third’s standards may be true. If so, the facts and allegations supporting that proposition should appear in the stockholders’ complaint. Having examined the complaint, the Court has not found suffi- cient facts and allegations to state a claim for breach of  the duty of prudence.

Although the Ninth Circuit did not correctly apply Fifth Third, the stockholders are the masters of their complaint. The Court leaves to the District Court in the first instance whether the stockholders may amend it in order to ade- quately plead a claim for breach of the duty of prudence guided by the standards provided in Fifth   Third.

The petition for certiorari is  granted.  The  judgment  of the Ninth Circuit is reversed, and the case is remanded for further proceedings consistent with this   opinion.

It is so ordered.