              Case: 13-15155     Date Filed: 07/29/2015    Page: 1 of 6


                                                                [DO NOT PUBLISH]



                IN THE UNITED STATES COURT OF APPEALS

                         FOR THE ELEVENTH CIRCUIT
                           ________________________

                                 No. 13-15155
                           ________________________

                       D.C. Docket No. 1:04-cv-02592-ODE

DENNIS SMITH,
Individually and on behalf of all others similarly situated,

                                                                  Plaintiff–Appellant,

JACKLIN TOMA,

                                                                    Consol. Plaintiff,

IVONNE BERMUDEZ,

                                                                 Intervenor–Plaintiff,

versus

DELTA AIR LINES INC.,
GERALD GRINSTEIN,
LEON PIPER,
ADMINISTRATIVE COMMITTEE OF DELTA AIR LINES, INC.,
BENEFIT FUND INVESTMENT COMMITTEE, et al.,

                                                               Defendants–Appellees,

PERSONNEL & COMPENSATION COMMITTEE, et al.,

                                                                          Defendants.
              Case: 13-15155    Date Filed: 07/29/2015   Page: 2 of 6


                           ________________________

                   Appeal from the United States District Court
                      for the Northern District of Georgia
                         ________________________

                                  (July 29, 2015)

               ON REMAND FROM THE SUPREME COURT
                      OF THE UNITED STATES


Before HULL, MARCUS, and DUBINA, Circuit Judges.
PER CURIAM:
      This case is before us on remand from the United States Supreme Court for

our consideration in light of Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. ___,

134 S. Ct. 2459 (2014). After reviewing the pertinent materials, including

supplemental briefs from the parties on remand, we conclude that the Fifth Third

decision does not alter our prior disposition of this case. Accordingly, we again

affirm the district court’s judgment of dismissal entered in March 2006.


                               I. BACKGROUND
      Delta Air Lines offers its employees a defined contribution savings plan that

has a variety of different investment options, including Delta stock. Dennis Smith

is a former Delta employee who participated in the plan and lost money when the

price of Delta stock declined between 2000 and 2004. In March 2005, Smith filed

an amended class action complaint under the Employee Retirement Income


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Security Act of 1974 against Delta and the fiduciaries of the plan alleging that they

breached their duty to prudently manage the plan’s assets, their duty to monitor,

their duty to disclose, and their duty of loyalty. As to the prudence claim, the

complaint specifically alleges that the fiduciaries imprudently invested in Delta

securities in the face of disappointing financial performance, loss in competitive

advantage, and concerns about Delta’s ability to survive in the industry. In light of

this information, Smith contends that the fiduciaries failed to investigate the

viability of Delta stock and maintained its adherence to the plan documents,

regardless of the harm to the plan participants, thus breaching their duty to

prudently manage the plan’s assets.

      Delta filed a motion to dismiss the amended complaint for failure to state a

claim, and the district court granted the motion. While an appeal from that

decision was pending, our circuit decided Lanfear v. Home Depot, Inc., 679 F.3d

1267 (11th Cir. 2012), which clarified the legal standard for evaluating ERISA

claims against plan fiduciaries arising out of employer stock investments as part of

an employee stock ownership program (ESOP). Because the district court did not

have the benefit of our Lanfear decision, we remanded the case to the district court

with instructions that it apply Lanfear to the amended complaint. The district court

complied with our mandate and again concluded that Smith failed to state a claim.




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      On appeal, we affirmed the district court’s judgment of dismissal. Smith v.

Delta Air Lines, 563 F. App’x 681, 682 (11th Cir. 2014). Soon thereafter, the

Supreme Court decided Fifth Third, and Smith filed a petition for rehearing in our

court, arguing that our decision was inconsistent with Fifth Third. We denied

rehearing on September 10, 2014. Smith then filed a petition for writ of certiorari

in the Supreme Court. The Supreme Court granted Smith’s petition, vacated our

judgment, and remanded the case to this court for further consideration of the

prudence claim in light of Fifth Third. Smith v. Delta Air Lines, Inc., 135 S. Ct.

1421, 1421 (2015).


                                 II. DISCUSSION
      In Fifth Third, the Supreme Court clarified that “ESOP fiduciaries are

subject to the same duty of prudence that applies to ERISA fiduciaries in general,

except that they need not diversify the fund’s assets.” 134 S. Ct. at 2463, 2467.

The Court noted that 29 U.S.C. § 1104(a)(2) does not refer to a special

presumption for ESOP fiduciaries. Id. at 2467. Rather, this section “provides that

an ESOP fiduciary is exempt from § 1104(a)(1)(C)’s diversification requirement

and also from § 1104(a)(1)(B)’s duty of prudence, but ‘only to the extent that it

requires diversification.’” Id. (quoting § 1104(a)(2) (emphasis added)). Thus,

ESOP fiduciaries are not liable for losses that result from a failure to diversify, but

they are still subject to the duty of prudence, like any other ERISA fiduciary. Id.


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      The Court also recognized that a presumption of prudence, which we

endorsed in Lanfear, 679 F.3d at 1279, “is [not] an appropriate way to weed out

meritless lawsuits” against ESOP fiduciaries. Id. at 2470. The Court maintained

that the important task of weeding out meritless lawsuits “can be better

accomplished through careful, context-sensitive scrutiny of a complaint’s

allegations” when deciding a motion to dismiss for failure to state a claim. Id. at

2470–71. In analyzing these allegations at the motion-to-dismiss stage, the Court

cautioned that allegations based on “over- or undervaluing the stock are

implausible as a general rule, at least in the absence of special circumstances.” Id.

at 2471. Thus, “a fiduciary usually ‘is not imprudent to assume that a major stock

market provides the best estimate of the value of the stocks traded on it that is

available to him.’” Id. (alteration omitted) (quoting Summers v. State Street Bank

& Trust Co., 453 F.3d 404, 408 (7th Cir. 2006)).

      Smith’s prudence claim falls squarely within the class of claims the Supreme

Court deems “implausible as a general rule.” Id. The crux of his prudence claim is

that the Delta fiduciaries should have foreseen that Delta stock would continue to

decline. There is no allegation in the amended complaint that the fiduciaries had

material inside information about Delta’s financial condition that was not disclosed

to the market, nor is there any allegation of a “special circumstance [that rendered]

reliance on the market price imprudent,” id. at 2472, such as fraud, improper



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accounting, illegal conduct or other actions that would have caused Delta stock to

trade at an artificially inflated price. Absent such circumstances, the Delta

fiduciaries cannot be held liable for failing to predict the future performance of the

airline’s stock. See id. at 2471–72. Thus, while Fifth Third may have changed the

legal analysis of our prior decision, it does not alter the outcome.

      Accordingly, upon remand, we reaffirm our prior disposition consistent with

this opinion. The judgment of dismissal is affirmed.

      AFFIRMED.




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