                             PUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT


                            No. 13-1360


RICHARD G. TATUM, individually and on behalf of a class of
all other persons similarly situated,

                Plaintiff - Appellant,

           v.

RJR PENSION INVESTMENT COMMITTEE;        RJR EMPLOYEE BENEFITS
COMMITTEE; R.J. REYNOLDS TOBACCO         HOLDINGS, INC.; R.J.
REYNOLDS TOBACCO COMPANY,

                Defendants - Appellees.

---------------------------------------------------

AARP; NATIONAL EMPLOYMENT LAWYERS ASSOCIATION; THOMAS E.
PEREZ, Secretary of the United States Department of Labor,

                Amici Supporting Appellant,

CHAMBER OF COMMERCE OF THE       UNITED    STATES   OF    AMERICA;
AMERICAN BENEFITS COUNCIL,

                Amici Supporting Appellees.


Appeal from the United States District Court for the Middle
District of North Carolina, at Greensboro.   N. Carlton Tilley,
Jr., Senior District Judge. (1:02-cv-00373-NCT-LPA)


Argued:   March 18, 2014                   Decided:      August 4, 2014


Before WILKINSON, MOTZ, and DIAZ, Circuit Judges.
Affirmed in part, vacated in part, reversed in part, and
remanded by published opinion.  Judge Motz wrote the majority
opinion, in which Judge Diaz joined.  Judge Wilkinson wrote a
dissenting opinion.


ARGUED: Catha Worthman, LEWIS, FEINBERG, LEE, RENAKER & JACKSON,
P.C., Oakland, California, for Appellant.   Adam Howard Charnes,
KILPATRICK   TOWNSEND   &  STOCKTON   LLP, Winston-Salem,  North
Carolina, for Appellees.      Michael R. Hartman, UNITED STATES
DEPARTMENT OF LABOR, Washington, D.C., for Amicus Thomas E.
Perez, Secretary of the United States Department of Labor.    ON
BRIEF: Jeffrey G. Lewis, LEWIS, FEINBERG, LEE, RENAKER &
JACKSON, P.C., Oakland, California; Robert M. Elliot, Helen L.
Parsonage,   ELLIOT   MORGAN   PARSONAGE,  Winston-Salem,  North
Carolina; Kelly M. Dermody, Daniel M. Hutchinson, LIEFF CABRASER
HEIMANN & BERNSTEIN, LLP, San Francisco, California, for
Appellant.    Daniel R. Taylor, Jr., Richard D. Dietz, Chad D.
Hansen, Thurston H. Webb, KILPATRICK TOWNSEND & STOCKTON LLP,
Winston-Salem, North Carolina, for Appellees.       Ronald Dean,
RONALD DEAN ALC, Pacific Palisades, California; Rebecca Hamburg
Cappy, NATIONAL EMPLOYMENT LAWYERS ASSOCIATION, San Francisco,
California; Mary Ellen Signorille, AARP FOUNDATION LITIGATION,
Washington, D.C.; Melvin Radowitz, AARP, Washington, D.C., for
Amici AARP and National Employment Lawyers Association.   Hollis
T. Hurd, THE BENEFITS DEPARTMENT, Bridgeville, Pennsylvania;
Kathryn Comerford Todd, Steven P. Lehotsky, Jane E. Holman,
NATIONAL CHAMBER LITIGATION CENTER, Washington, D.C.; Janet M.
Jacobson, AMERICAN BENEFITS COUNCIL, Washington, D.C., for Amici
Chamber of Commerce of the United States of America and American
Benefits Council.      M. Patricia Smith, Solicitor of Labor,
Timothy D. Hauser, Associate Solicitor for Plan Benefits
Security, Elizabeth Hopkins, Counsel for Appellate and Special
Litigation, Stephanie Lewis, UNITED STATES DEPARTMENT OF LABOR,
Washington, D.C., for Amicus Thomas E. Perez, Secretary of the
United States Department of Labor.




                               2
DIANA GRIBBON MOTZ, Circuit Judge:

       This is an appeal from a judgment in favor of R.J. Reynolds

Tobacco    Company   and     R.J.     Reynolds     Tobacco   Holdings,    Inc.

(collectively “RJR”).       Richard Tatum brought this suit on behalf

of himself and other participants in RJR’s 401(k) retirement

savings plan (collectively “the participants”).              He alleges that

RJR breached its fiduciary duties under the Employee Retirement

Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq., when it

liquidated two funds held by the plan on an arbitrary timeline

without conducting a thorough investigation, thereby causing a

substantial loss to the plan.

       After a bench trial, the district court found that RJR did

indeed breach its fiduciary duty of procedural prudence and so

bore the burden of proving that this breach did not cause loss

to the plan participants.           But the court concluded that RJR met

this   burden   by   establishing      that   “a    reasonable   and   prudent

fiduciary could have made [the same decision] after performing

[a proper] investigation.”          Tatum v. R.J. Reynolds Tobacco Co.,

926 F. Supp. 2d 648, 651 (M.D.N.C. 2013) (emphasis added).                    We

affirm    the   court’s    holdings    that   RJR    breached    its   duty   of

procedural prudence and therefore bore the burden of proof as to

causation.      But, because the court then failed to apply the

correct legal standard in assessing RJR’s liability, we must



                                       3
reverse its judgment and remand the case for further proceedings

consistent with this opinion.



                                       I.

                                       A.

       In March 1999, fourteen years after the merger of Nabisco

and R.J. Reynolds Tobacco into RJR Nabisco, Inc., the merged

company decided to separate its food business, Nabisco, from its

tobacco business, R.J. Reynolds.             The company determined to do

this through a spin-off of the tobacco business.                        The impetus

behind    the     spin-off     was   the     negative      impact       of   tobacco

litigation on Nabisco’s stock price, a phenomenon known as the

“tobacco taint.”         As the district court found, “[t]he purpose of

the spin-off was to ‘enhance shareholder value,’ which included

increasing the value of Nabisco by minimizing its exposure to

and association with tobacco litigation.”                Id. at 658-59.

       Prior to the spin-off, RJR Nabisco sponsored a 401(k) plan,

which    offered    its     participants     the    option      to   invest    their

contributions in any combination of eight investment funds.                      The

plan    offered    six    fully   diversified      funds   --    some    containing

investment contracts, fixed-income securities, and bonds; some

containing a broad range of domestic or international stocks;

and some containing a mix of stocks and bonds.                       The plan also

offered   two     company    stock   funds   --    the   Nabisco     Common    Stock

                                        4
Fund, which held common stock of Nabisco Holdings Corporation,

and the RJR Nabisco Common Stock Fund, which held stock in both

the food and tobacco businesses.             After the spin-off, the RJR

Nabisco Common Stock Fund was divided into two separate funds:

the     Nabisco   Group    Holdings       Common   Stock   Fund   (“Nabisco

Holdings”), which held the stock from the food business, and the

RJR Common Stock Fund, which held the stock from the tobacco

business. 1

      The 401(k) plan at issue in this case (“the Plan”) was

created on June 14, 1999, the date of the spin-off, by amendment

to the existing RJR Nabisco plan.             The Plan expressly provided

for the retention of the Nabisco Funds as “frozen” funds in the

Plan.     Freezing   the   Nabisco    Funds    permitted   participants   to

maintain their existing investments in the Nabisco Funds, but

prevented     participants    from     purchasing     through     the   Plan

additional shares of those funds.           As the district court found,

“[t]here was no language in the [Plan] eliminating the Nabisco

Funds or limiting the duration in which the Plan would hold the

funds.”     Id. at 657-58.     The Plan also retained as investment



      1
       Thus, as a result of the spin-off, there were two funds
holding exclusively Nabisco stock: the Nabisco Common Stock
Fund, which existed prior to the spin-off, and the Nabisco Group
Holdings Common Stock Fund, which was created as a result of the
spin-off.   We refer to these two funds collectively as the
“Nabisco Funds.”


                                      5
options the six diversified funds offered in the pre-spin-off

plan, as well as the RJR Common Stock Fund.

       The Plan named as Plan fiduciaries two committees composed

of RJR officers and employees:                     the Employee Benefits Committee

(“Benefits       Committee”),               responsible         for     general       Plan

administration,         and           the      Pension         Investment       Committee

(“Investment Committee”), responsible for Plan investments.                            The

Plan    vested   the    Benefits            Committee     with    authority      to   make

further amendments to the Plan by a majority vote of its members

at   any   meeting     or   by    an        instrument    in    writing      signed   by   a

majority of its members.

       Notwithstanding        the       requirement       in     the   governing      Plan

document that the Nabisco Funds remain as frozen funds in the

Plan,   RJR   determined         to    eliminate       them    from    the    Plan.    RJR

further determined to sell the Nabisco Funds approximately six

months after the spin-off.                  These decisions were made at a March

1999 meeting by a “working group,” which consisted of various

corporate employees.          Id. at 656-57.             But, as the district court

found, the working group “had no authority or responsibility

under the then-existing Plan documents to implement any decision

regarding the pre-spin[-off] RJR Nabisco Holdings Plan, nor [was

it] later given authority to make or enforce decisions in the

[RJR] Plan documents.”           Id. at 655.



                                               6
      According to testimony from members of the working group,

the group spent only thirty to sixty minutes considering what to

do with the Nabisco Funds in RJR’s 401(k) plan.                        The working

group “discussed reasons to remove the funds [from the plan] and

assumed that [RJR] did not want Nabisco stocks in its 401(k)

plan due to the high risk of having a single, non-employer stock

fund in the Plan.”          Id. at 656.         The members of the working

group also discussed “their [incorrect] belief that such funds

were only held in other [companies’] plans as frozen funds in

times of transition.”        Id.   Several members of the working group

“believed that a single stock fund in the plan would be an

‘added administrative complexity’ and incur additional costs.”

Id.     But   the   group   “did   not       discuss   specifically      what    the

complexities were or the amount of costs of keeping the fund in

the Plan, as balanced against any benefit to participants.”                      Id.

The working group agreed that the Nabisco Funds should be frozen

at the time of the spin-off and eventually eliminated from the

Plan.   In terms of the timing of the divestment, a member of the

working group testified that “[t]here was a general discussion,

and   different     ideas   were   thrown      out,    would   three    months   be

appropriate, would a year be appropriate, and everybody got very

comfortable with six months.”         Id.      There was no testimony as to

why six months was determined to be an appropriate timeframe.



                                         7
         The    working     group’s     recommendation         was    reported      back     to

Robert         Gordon,     RJR’s      Executive       Vice      President       for       Human

Resources and a member of both the Benefits Committee and the

Investment          Committee.         Gordon       testified    at     trial      that     the

members        of    the   Benefits        Committee     agreed       with    the     working

group’s recommendation.               But the district court found that aside

from this testimony, there was no evidence that the Benefits

Committee “met, discussed, or voted on the issue of eliminating

the Nabisco Funds or otherwise signed a required consent in lieu

of a meeting authorizing an amendment that would do so.”                              Id. at

657. 2

         In the months immediately following the June 1999 spin-off,

the      Nabisco     Funds    declined       precipitously       in    value.         Markets

reacted        sharply     to      numerous     class    action       tobacco       lawsuits

pending        against     RJR,     which   continued     to    impact       the    value    of

Nabisco stock as a result of the “tobacco taint.”                             Id. at 659-

60.          Despite this decline in value, however, analyst reports

throughout          1999     and    2000     rated     Nabisco       stock     positively,

“overwhelmingly recommending [to] ‘hold’ or ‘buy,’ particularly

after the spin-off.”               Id. at 662.

         2
       In November 1999, Gordon drafted a purported amendment to
the Plan calling for the removal of Nabisco Funds from the Plan
as of February 1, 2000.     Because a majority of the Benefits
Committee members neither voted on nor signed this amendment,
the district court found it invalid. Id. at 674 n.19. No party
challenges this ruling on appeal.


                                                8
       In     early     October      1999,        various        RJR    human     resources

managers, corporate executives, and in-house legal staff met to

discuss possible reconsideration of the decision made by the

working group in March to sell the Nabisco Funds.                              Id. at 661.

They decided against changing course, however, largely because

they       feared    doing      so   would     expose      RJR     to    liability       from

employees who had already sold their shares of the Nabisco Funds

in reliance on RJR’s prior communications.                        Id. at 661-62. 3        The

working      group    considered       that       this    perceived       liability      risk

could have been mitigated by temporarily unfreezing the Nabisco

Funds and allowing Plan participants to reinvest if desired.

But RJR was concerned that participants might view such action

as a recommendation to hold or reinvest in Nabisco Funds and

then blame RJR if the funds further declined.                          Id. at 661.

       Moreover, RJR was concerned that keeping Nabisco Funds in

the    Plan     would      require      the       fiduciaries          “to     monitor   and

investigate         them   on    a   continuing          basis    and     at    significant

expense paid from the Plan’s trust.”                     Id. at 662.         Nevertheless,

RJR    decided      against      hiring   “a      financial       consultant,        outside


       3
       Apparently, no meeting attendee knew how many employees
had already sold their shares of the Nabisco Funds.     Following
the meeting, RJR ascertained that the number of participants in
each of the Nabisco Funds had decreased by approximately 15-16%
as of September 30, 1999.    Id. at 662.   Thus, at the time the
attendees considered whether to change course, the vast majority
of employees still retained their shares in the Nabisco Funds.


                                              9
counsel, and/or independent fiduciary to assist” it in resolving

these questions and “deciding whether and when to eliminate the

Nabisco      Funds.”          Id.       Assertedly,        this     was    so    because       RJR

believed        that    the     Plan   would    have       to    pay    the     cost    of     such

assistance.        Id.     But, as the district court found, “[t]he issue

of monitoring the funds and how independent consultants were

paid was not discussed at length or investigated.”                              Id.

      Later       in     October       1999,        RJR    sent     a     letter        to     Plan

participants informing them that it would eliminate the Nabisco

Funds from the Plan as of January 31, 2000.                            Id. at 663-64.          The

letter erroneously informed participants that the law did not

permit the Plan to maintain the Nabisco Funds.                                  Specifically,

the letter stated:               “Because regulations do not allow the Plan

to   offer      ongoing       investment       in    individual         stocks    other        than

Company      stock,       the    ‘frozen’       [Nabisco]         stock       funds     will     be

eliminated.”           Id. at 664 (alteration in original).

      The       human     resources        manager         who      drafted       the        letter

testified at trial that she did so at the direction of Gordon,

and that, at the time she prepared this letter, she knew the

statement was incorrect.                 Id.        No lawyer reviewed the letter

before it was sent to participants.                        And, as the district court

found,      the        statement        “was    never           corrected,       even        after

responsible RJR officials were informed that it was wrong.”                                    Id.

Rather,     a    second       letter,    sent       in    January      2000,    repeated       the

                                               10
incorrect statement.             “By that time,” the district court found,

“RJR’s managers, including its lawyers, had become aware that

the     statement     was        false,    but     nevertheless         permitted    the

communication to be sent to participants.”                  Id.

       On   January       27,    2000,     days    before   the    scheduled        sale,

plaintiff Richard Tatum sent an e-mail to both Gordon and Ann

Johnston, Vice President for Human Resources and a member of the

Benefits Committee and the Investment Committee.                           In this e-

mail, Tatum asked that RJR not go through with the forced sale

of the Plan’s Nabisco shares because it would result in a 60%

loss to his 401(k) account.                Tatum indicated that he wanted to

wait to sell his Nabisco stock until its price rebounded, and he

noted    that   company         communications     had   been     “optimistic”       that

Nabisco stock would increase in value after the spin-off.                             He

also    related     his    understanding         that   former    RJR    employees     of

Winston-Salem Health Care and Winston-Salem Dental Care still

retained frozen Nabisco and RJR funds in their 401(k) plans,

even though those companies had been acquired by a different

company, Novant, in 1996.                 (This claim was later substantiated

through evidence at trial.                See id. at 667 n.15.)            In response

to Tatum’s concerns, Johnson replied that nothing could be done

to stop the divestment.            Id. at 667.

       On January 31, 2000, RJR went through with the divestment

and sold the Nabisco shares held by employees in their 401(k)

                                            11
accounts.       Between June 15, 1999 (the day after the spin-off)

and   January    31,    2000,     the   market    price      for    Nabisco     Holdings

stock had dropped by 60% to $8.62 per share, and the price for

Nabisco Common Stock had dropped by 28% to $30.18 per share.

Id. at 665.

      RJR    invested    the    proceeds       from    the   sale    of   the   Nabisco

stock in the Plan’s “Interest Income Fund,” which consisted of

short-term investments, such as guaranteed investment contracts

and   government       bonds.      Id.      The       proceeds      remained     in   the

Interest Income Fund until a participant took action to reinvest

them in one of the other six funds offered in the Plan.                         Id.    At

the   same    time     as   RJR    eliminated         Nabisco      stocks     from    the

employees’ 401(k) Plan, several RJR corporate officers opted to

retain their personal Nabisco stock or stock options.                            Id. at

665-66.

      A few months after the divestment, in the early spring of

2000, Nabisco stock began to rise in value.                        On March 30, Carl

Icahn made his fourth attempt at a takeover of Nabisco in the

form of an unsolicited tender offer to purchase Nabisco Holdings

for $13 per share.          Id. at 666.         The district court noted that

“[b]efore his unsolicited offer, Icahn had made three previous

attempts to take over Nabisco, between November 1996 and the

spring of 1999, and was well known to have an interest in the

company.”     Id.      This tender offer provoked a bidding war, and,

                                          12
on   December    11,      2000,     Philip    Morris      acquired    Nabisco   Common

Stock at $55 per share and infused Nabisco Holdings with $11

billion     in   cash.        RJR    then    purchased      Nabisco     Holdings     for

approximately $30 per share.                  As compared to the January 31,

2000    divestment        prices,     these       share    prices     represented     an

increase of 247% for Nabisco Holdings stock and 82% for Nabisco

Common Stock.       Id.

                                             B.

       In May 2002, Tatum filed this class action against RJR as

well as the Benefits Committee and the Investment Committee,

asserting that they acted as Plan fiduciaries.                         Tatum alleged

that    these    Plan     fiduciaries        breached     their     fiduciary   duties

under ERISA by eliminating Nabisco stock from the Plan on an

arbitrary timeline without conducting a thorough investigation.

He     further      claimed       that      their     fiduciary       breach    caused

substantial loss to the Plan because it forced the sale of the

Plan’s Nabisco Funds at their all-time low, despite the strong

likelihood that Nabisco’s stock prices would rebound.

       In   2003,    the     district        court    granted       RJR’s   motion    to

dismiss, concluding that Tatum’s allegations involved “settlor”

rather than “fiduciary” actions, meaning that the decision to

eliminate the Nabisco Funds from the Plan was non-discretionary.

We reversed, holding that the Plan documents did not mandate

divestment of the Nabisco Funds, and thus did not preclude Tatum

                                             13
from       stating    a   claim     against      the   defendants       for       breach   of

fiduciary duty.           Tatum v. R.J. Reynolds Tobacco Co., 392 F.3d

636, 637 (4th Cir. 2004).

       On    remand,      the   district      court       granted     RJR’s       motion   to

dismiss the Benefits Committee and the Investment Committee as

defendants.          After the limitations period had expired, Tatum

filed a motion seeking leave to amend his complaint to add the

individual         committee      members     as    defendants,       which       the   court

denied. 4      The court then held a bench trial from January 13 to

February 9, 2010 to determine whether RJR breached its fiduciary

duties in eliminating the Nabisco Funds from the Plan.

       On February 25, 2013, the court issued its final judgment,

containing detailed and extensive factual findings.                               The court

recognized (as we had held) that RJR’s decision to remove the

Nabisco Funds from the Plan was a fiduciary act subject to the

duty of prudence imposed by ERISA.                     Tatum, 926 F. Supp. 2d at

673.       The court then held that (1) RJR breached its fiduciary

duties when it “decided to remove and sell Nabisco stock from

the Plan without undertaking a proper investigation into the

prudence      of     doing   so,”    id.    at     651,   and   (2)    as     a   breaching

       4
       Shortly thereafter, the district court certified a class
of Plan participants and beneficiaries whose investments in the
Nabisco Funds were sold by RJR in connection with the spin-off.
See Tatum v. R.J. Reynolds Tobacco Co., 254 F.R.D. 59, 62
(M.D.N.C. 2008).   On appeal, RJR raises no challenge to this
certification.


                                            14
fiduciary, RJR bore the burden of proving that its breach did

not cause the alleged losses to the Plan.                        But the court further

held that (3) RJR met its burden of proof because its decision

to eliminate the Nabisco Funds was “one which a reasonable and

prudent   fiduciary       could       have    made       after    performing    such    an

investigation.”       Id. (emphasis added).

     Tatum noted a timely appeal.



                                             II.

     Congress        enacted        ERISA    to     protect       “the   interests      of

participants         in      employee          benefit           plans    and         their

beneficiaries . . . by              establishing           standards     of     conduct,

responsibility,       and      obligation          for    fiduciaries     of    employee

benefit     plans,     and     by     providing          for   appropriate     remedies,

sanctions, and ready access to the Federal courts.”                            29 U.S.C.

§ 1001(b).         Consistent with this purpose, ERISA imposes high

standards     of     fiduciary       duty     on     those       responsible    for    the

administration of employee benefit plans and the investment and

disposal of plan assets.              As the Second Circuit has explained,

“[t]he fiduciary obligations of the trustees to the participants

and beneficiaries of [an ERISA] plan are . . . the highest known

to the law.”         Donovan v. Bierwirth, 680 F.2d 263, 272 n.8 (2d

Cir. 1982).



                                             15
      Pursuant to the duty of loyalty, an ERISA fiduciary must

“discharge       his         duties . . . solely                in     the     interest        of    the

participants and beneficiaries.”                              29 U.S.C. § 1104(a)(1).                The

duty of prudence requires ERISA fiduciaries to act “with the

care,     skill,      prudence,            and        diligence      under     the    circumstances

then prevailing that a prudent man acting in a like capacity and

familiar       with     such         matters          would    use     in    the     conduct    of    an

enterprise         of        a       like        character        and        with     like      aims.”

Id. § 1104(a)(1)(B).                  The statute also requires fiduciaries to

act “in accordance with the documents and instruments governing

the     plan    insofar              as        such    documents        and        instruments       are

consistent with [ERISA].”                       Id. § 1104(a)(1)(D).                And fiduciaries

have a duty to “diversify[] investments of the plan so as to

minimize       the       risk             of     large        losses,        unless        under     the

circumstances           it       is       clearly        prudent       not     to     do    so.”     Id.

§ 1104(a)(1)(C).                 However,             legislative       history        and     federal

regulations clarify that the diversification and prudence duties

do    not   prohibit             a    plan        trustee       from        holding    single-stock

investments as an option in a plan that includes a portfolio of

diversified funds. 5                 Moreover, the diversification duty does not


      5
       See H.R. Rep. No. 93-1280 (1974) (Conf. Rep.), reprinted
at 1974 U.S.C.C.A.N. 5038, 5085-86 (clarifying that, in plans in
which the participant exercises individual control over the
assets in his individual account -- like the plan at issue here
-- “if the participant instructs the plan trustee to invest the
(Continued)
                                                       16
apply to investments that fall within the exemption for employer

stocks provided for in § 1104(a)(2).

      A fiduciary who breaches the duties imposed by ERISA is

“personally liable” for “any losses to the plan resulting from

[the]     breach.”         Id.    § 1109(a).         Section     1109(a),        ERISA’s

fiduciary liability provision, provides in full:

      Any person who is a fiduciary with respect to a plan
      who breaches any of the responsibilities, obligations,
      or duties imposed upon fiduciaries by this subchapter
      shall be personally liable to make good to such plan
      any losses to the plan resulting from each such
      breach, and to restore to such plan any profits of
      such fiduciary which have been made through use of
      assets of the plan by the fiduciary, and shall be
      subject to such other equitable or remedial relief as
      the court may deem appropriate, including removal of
      such fiduciary.

Id.     ERISA thus provides for both monetary and equitable relief,

and   does   not     (as    the       dissent     claims)    limit     a    fiduciary’s

liability    for     breach      of    the   duty    of     prudence       to   equitable

relief.

      In determining whether fiduciaries have breached their duty

of prudence, we ask “whether the individual trustees, at the

time they engaged in the challenged transactions, employed the

appropriate methods to investigate the merits of the investment



full balance of his account in, e.g., a single stock, the
trustee is not to be liable for any loss because of a failure to
diversify or because the investment does not meet the prudent
man standards” so long as the investment does not “contradict
the terms of the plan”); see also 29 C.F.R. § 2550.404c–1(f)(5).


                                             17
and to structure the investment.”                    DiFelice v. U.S. Airways,

Inc.,   497   F.3d   410,    420     (4th    Cir.    2007).       Our     focus    is    on

“whether the fiduciary engaged in a reasoned decision[-]making

process, consistent with that of a ‘prudent man acting in [a]

like capacity.’”      Id. (quoting 29 U.S.C. § 1104(a)(1)(B)).

      When the fiduciary’s conduct fails to meet this standard,

and the plaintiff has made a prima facie case of loss, we next

inquire   whether    the     fiduciary’s         imprudent      conduct    caused       the

loss.     For      “[e]ven      if    a     trustee    failed      to      conduct       an

investigation before making a decision,” and a loss occurred,

the trustee “is insulated from liability . . . if a hypothetical

prudent fiduciary would have made the same decision anyway.”

Plasterers’ Local Union No. 96 Pension Plan v. Pepper, 663 F.3d

210, 218 (4th Cir. 2011) (quoting Roth v. Sawyer-Cleator Lumber

Co., 16 F.3d 915, 919 (8th Cir. 1994)).

      ERISA’s fiduciary duties “draw much of their content from

the common law of trusts, the law that governed most benefit

plans   before    ERISA’s    enactment.”            DiFelice,     497     F.3d    at    417

(quoting Varity Corp. v. Howe, 516 U.S. 489, 496 (1996)).                          Thus,

in   interpreting     ERISA,     the       common    law   of    trusts     informs      a

court’s analysis.         Id.      “[T]rust law does not tell the entire

story,”   however,        because     “ERISA’s       standards      and     procedural

protections      partly    reflect     a    congressional       determination          that

the common law of trusts did not offer completely satisfactory

                                            18
protection.”       Varity Corp., 516 U.S. at 497.                 Therefore, courts

must be mindful that, in “develop[ing] a federal common law of

rights and obligations under ERISA,” Congress “expect[s] that”

courts “will interpret th[e] prudent man rule (and the other

fiduciary duties) bearing in mind the special nature and purpose

of   employee      benefit        plans.”         Id.    (internal      citations        and

quotation marks omitted).

     On appeal, Tatum argues that, although the district court

correctly determined that RJR breached its duty of procedural

prudence and so bore the burden of proving that its breach did

not cause the Plan’s loss, the court applied the wrong standard

for determining       loss     causation.          He    contends    that    the    court

incorrectly       considered       whether    a    reasonable       fiduciary,      after

conducting a proper investigation, could have sold the Nabisco

Funds at the same time and in the same manner, as opposed to

whether a reasonable fiduciary would have done so.

     In response, RJR contends that the district court applied

the appropriate causation standard.                      In the alternative, RJR

urges   us   to    reverse        the   district        court’s   holdings    that        it

breached     its    duty     of     procedural      prudence      and    that,      as     a

breaching    fiduciary,      it     bore     the   burden    of   proving    that        its

breach did not cause the Plan’s loss.

     “We review a judgment resulting from a bench trial under a

mixed standard of review -- factual findings may be reversed

                                            19
only if clearly erroneous, while conclusions of law are examined

de   novo.”   Plasterers’,    663   F.3d   at   215   (internal   quotation

marks omitted).



                                    III.

      We first consider the district court’s finding that RJR

breached its duty of procedural prudence. 6

                                    A.

      ERISA requires fiduciaries to employ “appropriate methods

to investigate the merits of the investment and to structure the

investment” as well as to “engage[] in a reasoned decision[-

]making process, consistent with that of a ‘prudent man acting

in [a] like capacity.’”      DiFelice, 497 F.3d at 420.       The duty of

      6
       We can quickly dispose of RJR’s claim that it was not a
fiduciary subject to ERISA’s duty of prudence. RJR argues that
the Plan fiduciaries, the Benefits Committee and the Investment
Committee, exercised “exclusive fiduciary authority” over the
management and administration of the Plan and that RJR qua
employer is thus not liable as a Plan fiduciary. Appellee’s Br.
49.   ERISA, however, does not limit fiduciary status to the
fiduciaries named in a plan document.    Instead, ERISA provides
that a person or entity is a “functional fiduciary” to the
extent that he, she, or it “exercises any discretionary
authority or discretionary control respecting management . . .
or disposition of [the plan’s] assets.” 29 U.S.C. § 1002(21)(A)
(emphasis added). Recognizing this standard, the district court
held that RJR “made and implemented the elimination decision
before any official committee action was ever attempted and
failed to use the committees designated in the Plan . . . for
any of the discretionary decisions.” Tatum, 926 F. Supp. 2d at
672 n.18.   Thus, we think it clear that RJR exercised actual
control over the management and disposition of Plan assets, and
so acted as a functional fiduciary.


                                     20
prudence also requires fiduciaries to monitor the prudence of

their investment decisions to ensure that they remain in the

best interest of plan participants.                 Id. at 423.

       “The       evaluation    is    not   a    general     one,   but    rather        must

‘depend on the character and aim of the particular plan and

decision      at     issue     and    the   circumstances        prevailing       at     the

time.’”       Id. at 420 (alteration omitted) (quoting Bussian v. RJR

Nabisco, Inc., 223 F.3d 286, 299 (5th Cir. 2000)).                         Of course, a

prudent fiduciary need not follow a uniform checklist.                              Courts

have found that a variety of actions can support a finding that

a    fiduciary       acted     with    procedural     prudence,       including,         for

example, appointing            an    independent     fiduciary,      seeking      outside

legal       and    financial        expertise,     holding      meetings     to     ensure

fiduciary oversight of the investment decision, and continuing

to   monitor       and   receive       regular     updates    on    the    investment’s

performance.          See, e.g., id. at 420-21; Bunch v. W.R. Grace &

Co., 555 F.3d 1, 8-9 (1st Cir. 2009); Laborers Nat’l Pension

Fund v. N. Trust Quantitative Advisors, Inc., 173 F.3d 313, 322

(5th       Cir.    1999). 7     In     other     words,    although       the     duty     of

procedural        prudence     requires     more    than   “a    pure     heart    and    an

       7
       By contrast, courts have found that a fiduciary’s failure
to act in accordance with plan documents serves as evidence of
imprudent conduct -- in addition to independently violating
Subsection (D) of § 1104(a)(1) –- so long as the plan documents
are consistent with ERISA’s requirements. See, e.g., Dardaganis
v. Grace Capital, Inc., 889 F.2d 1237, 1241 (2d Cir. 1989).


                                            21
empty head,” DiFelice, 497 F.3d at 418 (internal quotation marks

and       citation       omitted),        courts        have     readily       determined        that

fiduciaries          who        act     reasonably       –-     i.e.,       who     appropriately

investigate the merits of an investment decision prior to acting

-- easily clear this bar.

                                                   B.

          The district court carefully examined the relevant facts

and made extensive factual findings to support its conclusion

that RJR failed to engage in a prudent decision-making process.

          The court found that “the working group’s decision in March

1999 was made with virtually no discussion or analysis and was

almost entirely based upon the assumptions of those present and

not on research or investigation.”                             Tatum, 926 F. Supp. 2d at

678.       Indeed, the court found that the group’s discussion of the

Nabisco         stocks     lasted        no   longer          than   an     hour    and    focused

exclusively on removing the funds from the Plan.

          The   court      further       found     “no       evidence     that      the   [working

group] ever considered an alternative [to divestment within six

months],         such      as     maintaining          the     stock      in    a   frozen       fund

indefinitely, making the timeline for divestment longer, or any

other       strategy        to        minimize     a    potential         immediate       loss    to

participants or any potential opportunity for gain.”                                       Id. at

680.       Instead, the “driving consideration” was the “general risk

of    a    single       stock     fund,”      as       well    as    “the      emphasis    on    the

                                                   22
unconfirmed assumption that RJR would no longer be exempt from

the ERISA diversification requirement because the funds would no

longer be employer stocks.”               Id. at 678.       Yet the evidence

adduced at trial showed that “no one researched the accuracy of

that assumption, and it was later determined that nothing in the

law or regulations required that the Nabisco Funds be removed

from the Plan.”         Id. at 680.

       The district court found that “the six month timeline for

the divestment was chosen arbitrarily and with no research.”

Id. at 679.       The working group failed to consider “[t]he idea

that, perhaps, it would take a while for the tobacco taint to

dissipate” or “the fact that determining for employees exactly

when   the    stocks     would   be    removed   could   result   in   large   and

unnecessary losses to the Plan through the individual accounts

of employees.”          Id.     Similarly, there was no consideration of

“the purpose of the Plan, which was for long term retirement

savings,” or “the purpose of the spin-off, which was, in large

part, to allow the Nabisco stock a chance to recover from the

tobacco taint and hopefully rise in value.”                 Id. at 678.        The

court found the failure to consider these issues particularly

notable      “[g]iven    that    the   strategy    behind   the   spin-off     was

largely to rid Nabisco stock prices of the ‘tobacco taint.’”

Id. at 680.



                                          23
       The court also found that the only time following the spin-

off    that    RJR      “actually          discussed      the      merits    of    the     [March]

decision was at the October 8, 1999 meeting.”                                Id. at 681.          In

that    meeting,        Gordon        raised     the    concern       from   RJR’s       CEO   that

“participants           were    questioning         the      timing    of    the    elimination

given    the    Nabisco         stocks’       continued       decline       in    value.”       Id.

Although RJR engaged in this additional discussion, it undertook

no    investigation            into     the      assumptions        underlying       its       March

decision to sell the Plan’s Nabisco stock.                            Id. at 682.

       Rather, those involved in the October discussion expressed

“their    view      that       the    employees        who    cashed    out      their    Nabisco

stock    at    a   loss        were    a    problem,”        and    there    was    “fear       that

[these] early sellers might sue RJR.”                               Id. at 681 (internal

quotation marks and alterations omitted).                             The court found that

the discussion “focused around the liability of RJR, rather than

what might be in the best interest of the participants.”                                    Id. at

682 (emphasis in original).                      As a result, RJR failed to explore

the    option      of    amending          the   Plan   to    temporarily          unfreeze     the

Nabisco Funds and give “the early sellers the opportunity to

repurchase the stock.”                     Id.    Nor did RJR consider any “other

alternatives for remedying the problem.”                             Id.     The court noted

that, despite fearing liability, RJR “still did not engage an

independent analyst or outside counsel to analyze the problem.”

Id. at 681-82.

                                                  24
     The court found no evidence of any other discussions in

which RJR ever “contemplated any formal action other than what

had already been decided at the March meeting.”                          Id. at 680.

Instead, the evidence showed that RJR’s focus after the spin-off

“was on setting a specific date for divestment and on providing

notice    to    participants       regarding        the   planned     removal    of    the

funds.”        Id. at 680-81.           “Indicative of the pervading mindset

against        reexamining         the         original      decision         were     the

communications known to be false when sent to participants” by

RJR with the October 1999 and January 2000 401(k) statements.

Id. at 681.

     In    sum,       the    district    court      found   that     “there    [wa]s    no

evidence -- in the form of documentation or testimony -- of any

process     by       which     fiduciaries          investigated,       analyzed,      or

considered the circumstances regarding the Nabisco stocks and

whether it was appropriate to divest.”                      Id. at 679.        The court

explained that, in light of the fiduciary duty to act “solely in

the interest of participants and beneficiaries,” it was clearly

improper for the fiduciaries “to consider their own potential

liability as part of the reason for not changing course on their

decision to divest the Plan of Nabisco stocks.”                           Id. at 681

(emphasis       in    original).         The    district     court    concluded       that

“[t]he    lack       of   effort   on    the    part   of   those    considering       the

removal of the Nabisco Funds –- from March 1999 until the stock

                                               25
was removed from the plan on January 31, 2000 –- compel[led] a

finding   that    the     RJR    decision-makers          in   this    case       failed    to

exercise prudence in coming to their decision to eliminate the

Nabisco Funds from the Plan.”             Id. at 682.

                                            C.

     Despite these extensive factual findings, RJR contends that

it did not breach its duty of procedural prudence and that the

district court too rigorously scrutinized its procedural process

in so holding.         We cannot agree.

     As a threshold matter, RJR provides no basis for this court

to question the district court’s well-supported factual finding

that RJR failed to present evidence of “any process by which

fiduciaries       investigated,           analyzed,            or     considered           the

circumstances regarding the Nabisco stocks and whether it was

appropriate      to    divest.”       Id.     at   679     (emphasis         added).        By

conducting     no      investigation,         analysis,         or     review        of    the

circumstances         surrounding     the        divestment,          RJR        acted    with

procedural     imprudence        no   matter       what     level     of     scrutiny       is

applied to its actions.

     Instead      of    grappling     with        its     failure     to     conduct       any

investigation, RJR urges us to hold that it did not breach its

duty of procedural prudence because certain types of investment

decisions    assertedly         trigger   a      lesser    standard         of    procedural

prudence.     Thus, RJR contends that “[n]on-employer, single stock

                                            26
funds    are     imprudent       per     se” due         to    their     inherent          risk.

Appellee’s Br. 35. 8        But this per se approach is directly at odds

with our case law and federal regulations interpreting ERISA’s

duty of prudence.           See DiFelice, 497 F.3d at 420 (explaining

that, in all cases, evaluating the prudence of an investment

decision requires a totality-of-the-circumstances inquiry that

takes into account “the character and aim of the particular plan

and decision at issue and the circumstances prevailing at the

time”      (internal       quotation        marks             omitted));       29      C.F.R.

§ 2550.404a-1(b)(1) (stressing the importance of a totality-of-

the-circumstances          inquiry).           Indeed,          in     promulgating         its

regulations,      the    Department       of     Labor        expressly       rejected      the

suggestion that a particular investment can be deemed per se

prudent or per se imprudent based on its level of risk.                                      See

Investment of Plan Assets under the “Prudence” Rule, 44 Fed.

Reg. 37,221, 37,225 (June 26, 1979); see also id. at 37,224-25

(declining       to    create     “any    list      of    investments,         classes       of

investment,       or    investment       techniques”           deemed    permissible         or

impermissible under the prudence rule).

     Nor    is     there    any     merit      to    RJR’s       contention         that    its

decision    to    sell     the    employees’        Nabisco          shares   merits       less


     8
       We note that at the time plan participants purchased
shares of the Nabisco Funds through the Plan, they were indeed
employer funds.


                                            27
scrutiny because that decision was assertedly made “in the face

of financial trouble” to “protect[] participants and advance[] a

fiduciary’s         duty   to     ‘minimize          the    risk    of    large     losses.’”

Appellee’s Br. 34 (citation omitted).                          To adopt this argument,

we would have to ignore the findings of the district court as to

the actual context in which RJR acted.

        The     court        found        that,         without          undertaking       any

investigation,         RJR       forced        the     sale,       within    an     arbitrary

timeframe,      of     funds     in     which        Plan   participants      had     already

invested.       The court found that RJR adhered to that decision in

the     face    of     sharply        declining         share       prices    and     despite

contemporaneous analyst reports projecting the future growth of

those     share       prices      and     “overwhelmingly”            recommending       that

investors “buy” or at least “hold” Nabisco stocks.                                  The court

also    found       that   RJR    did     so    without      consulting       any    experts,

without considering that the Plan’s purpose was to provide for

retirement savings, and without acknowledging that the spin-off

was undertaken in large part to enhance the future value of the

Nabisco stock by eliminating the tobacco taint.

       The district court further found that RJR sold the Nabisco

funds when it did because of its fear of liability, not out of

concern       for    its   employees’          best     interests.          RJR   blinks   at

reality in maintaining that its actions served to “protect[]

participants” or to “minimize the risk of large losses.”                               To the

                                                28
contrary, RJR’s decision to force the sale of its employees’

shares     of   Nabisco     stock,    within   an   arbitrary      timeframe   and

irrespective of the prevailing circumstances, ensured immediate

and permanent losses to the Plan and its beneficiaries.

      In sum, in support of its holding that RJR breached its

duty of procedural prudence, the district court made extensive

and careful factual findings, all of which were well supported

by   the   record       evidence.     RJR’s    challenge    to    those   findings

fails.



                                        IV.

      We next address the district court’s holding with respect

to which party bears the burden of proof as to loss causation.

A breach of fiduciary duty “does not automatically equate to

causation of loss and therefore liability.”                      Plasterers’, 663

F.3d at 217.           ERISA provides that a fiduciary who breaches its

duties “shall be personally liable” for “any losses to the plan

resulting       from    each   such   breach.”      Id.    (quoting    29   U.S.C.

§ 1109(a)).       Accordingly, in Plasterers’, we adopted the Seventh

Circuit’s reasoning that “[i]f trustees act imprudently, but not

dishonestly, they should not have to pay a monetary penalty for

their imprudent judgment so long as it does not result in a loss

to the Fund.”           Id. (emphasis added) (quoting Brock v. Robbins,

830 F.2d 640, 647 (7th Cir. 1987)).              We cautioned, however, that

                                         29
“imprudent conduct will usually result in a loss to the fund, a

loss for which [the fiduciary] will be monetarily penalized.”

Id. at 218 (quoting Brock, 830 F.3d at 647).                          But in Plasterers’

we did not need to answer the question of which party bore the

burden of proof on loss causation.

      In    this        case,    the    district       court    had      to    resolve   that

question.      The court held that the burden of both production and

persuasion rested on RJR at this stage of the proceedings.                                   The

court explained that “once Tatum made a showing that there was a

breach of fiduciary duty and some sort of loss to the plan, RJR

assumed      the    burden (that         is,     the    burden      of    production         and

persuasion)        to    show    that    the    decision       to   remove      the    Nabisco

stock from the plan was objectively prudent.”                                 Tatum, 926 F.

Supp. 2d at 683. 9               RJR contends that in doing so, the court

erred.      We disagree.

      Generally, of course, when a statute is silent, the default

rule provides that the burden of proof rests with the plaintiff.

Schaffer ex rel. Schaffer v. Weast, 546 U.S. 49, 56 (2005).                                  But

“[t]he ordinary default rule . . . admits of exceptions,” id. at

57,   and    one    such        exception      arises    under      the       common   law    of


      9
       Thus, contrary to RJR’s passing comment on appeal, see
Appellee’s Br. 22 n.4, the district court did find that Tatum
made a prima facie showing of loss. Moreover, no party disputes
that, on January 31, 2000, when RJR sold all of the Plan’s
Nabisco stock, that stock’s value was at an all-time low.


                                               30
trusts.       “[I]n   matters    of   causation,     when   a   beneficiary      has

succeeded in proving that the trustee has committed a breach of

trust and that a related loss has occurred, the burden shifts to

the trustee to prove that the loss would have occurred in the

absence of the breach.”           Restatement (Third) of Trusts § 100,

cmt. f (2012) (internal citation omitted); see also Bogert &

Bogert, The Law of Trusts and Trustees § 871 (2d rev. ed. 1995 &

Supp. 2013) (“If the beneficiary makes a prima facie case, the

burden of contradicting it . . . will shift to the trustee.”).

       The district court adopted this well-established approach.

It reasoned that requiring the defendant-fiduciary, here RJR, to

bear    the    burden    of     proof   was    the    “most     fair”    approach

“considering     that    a    causation      analysis would only        follow     a

finding of [fiduciary] breach.”              Tatum, 926 F. Supp. 2d at 684;

see also Roth, 16 F.3d at 917 (stating that once the ERISA

plaintiff meets this burden, “the burden of persuasion shifts to

the fiduciary to prove that the loss was not caused by . . . the

breach of duty.”        (alteration in original) (internal quotation

marks omitted)); McDonald v. Provident Indem. Life Ins. Co., 60

F.3d 234, 237 (5th Cir. 1995); cf. Sec’y of U.S. Dep’t of Labor

v. Gilley, 290 F.3d 827, 830 (6th Cir. 2002) (placing the burden

of proof on the defendant-fiduciary to disprove damages); N.Y.




                                        31
State Teamsters Council v. Estate of DePerno, 18 F.3d 179, 182-

83 (2d Cir. 1994) (same). 10

     We have previously recognized the burden-shifting framework

in an analogous context.       In Brink v. DaLesio, 667 F.2d 420 (4th

Cir. 1982), modified and superseded on denial of reh’g, (1982),

we considered the impact of a breach of fiduciary duty under the


     10
        None of the cases RJR and the dissent cite to support
their contrary view persuade us that the district court erred.
See Silverman v. Mut. Benefit Life Ins. Co., 138 F.3d 98, 105
(2d Cir. 1998); Kuper v. Iovenko, 66 F.3d 1447, 1459 (6th Cir.
1995), abrogated by Fifth Third Bancorp v. Dudenhoeffer, No. 12–
751, 573 U.S. -- (2014); Willett v. Blue Cross & Blue Shield of
Ala., 953 F.2d 1335, 1343 (11th Cir. 1992).    Neither Kuper nor
Willett addressed a situation in which plaintiffs had already
established both fiduciary breach and a loss.       Moreover, in
Silverman, the decision not to shift the burden of proof was
based in large part on the unique nature of a co-fiduciary’s
liability under § 1105(a)(3). See 138 F.3d at 106 (Jacobs, J.,
concurring). That reasoning does not apply to the present case,
in which plan participants sued under § 1104(a)(1) and alleged
losses   directly  linked   to   the  defendant-fiduciary’s  own
fiduciary breach.   Nor does it appear that the Second Circuit
would apply the Silverman reasoning to a case brought under
§ 1104(a).   See N.Y. State Teamsters Council, 18 F.3d at 182,
182-83 (acknowledging “the general rule that a plaintiff bears
the burden of proving the fact of damages” but concluding in an
ERISA case that “once the beneficiaries have established their
prima facie case by demonstrating the trustees’ breach of
fiduciary duty, the burden of explanation or justification
shifts to the fiduciaries” (internal quotation marks and
alterations omitted)).   Furthermore, Willett, which the dissent
quotes at length, actually undercuts its position.     There the
court held that the burden of proof remained with the plaintiff,
prior to establishing breach, but that “in order to prevail as a
matter of law,” it was the defendant-fiduciary who had to
“establish the absence of causation by proving that the
beneficiaries’ claimed losses could not have resulted from
[defendant-fiduciary’s] failure to cure [the co-fiduciary’s]
breach.” 953 F.2d at 1343 (emphasis added).


                                    32
Labor-Management Reporting and Disclosure Act, 29 U.S.C. § 501.

We explained that “[i]t is generally recognized that one who

acts in violation of his fiduciary duty bears the burden of

showing   that   he   acted    fairly      and    reasonably.”        Id.   at   426.

Thus, we held that the district court in that case had erred

when, after finding that the defendant breached his fiduciary

duty, it placed the burden on the plaintiffs to prove what, if

any, damages were attributable to that breach.               Id. 11

     Moreover, this burden-shifting framework comports with the

structure and purpose of ERISA.              As stated in its preamble, the

statute’s   primary    objective     is      to   protect   “the   interests      of

participants in employee benefit plans and their beneficiaries.”

29 U.S.C. § 1001(b).          To achieve this purpose, ERISA imposes

fiduciary   obligations       on   those     responsible    for    administering


     11
        RJR and the dissent suggest that our holding in U.S. Life
Insurance Co. v. Mechanics & Farmers Bank, 685 F.2d 887 (4th
Cir. 1982), supports their view that RJR did not bear the burden
of proof. They contend that in U.S. Life, we held that “placing
the burden of proof on a plaintiff [here Tatum] to prove
causation is supported by trust law.” Appellee’s Br. 21. But,
in fact, in U.S. Life, we dealt with the unique situation in
which a trustee breached the terms of an indenture agreement and
so assertedly violated state contract law.      685 F.2d at 889.
Because the parties’ relationship was principally contractual in
nature (a critical fact that both RJR and the dissent ignore),
we declined to apply a burden-shifting framework in what we held
was, in essence, a    “typical breach of contract type of case.”
Id. at 896.     Here, by contrast, ERISA –- not a contract –-
governs   the   parties’  relationship,  and   expressly  imposes
fiduciary -- not contractual -- duties. Thus, U.S. Life offers
no support to RJR and the dissent.


                                        33
employee   benefit    plans   and   plan    assets,   and   provides   for

enforcement through “appropriate remedies, sanctions, and ready

access to the Federal courts.”           Id.     As amicus Secretary of

Labor notes, “[i]mposing on plaintiffs who have established a

fiduciary breach and a prima facie case of loss the burden of

showing that the loss would not have occurred in the absence of

a breach would create significant barriers for those (including

the Secretary) who seek relief for fiduciary breaches.”             Amicus

Br. of Sec’y of Labor 19-20.        Such an approach would “provide an

unfair advantage to a defendant who has already been shown to

have   engaged   in   wrongful   conduct,      minimizing   the   fiduciary

provisions’ deterrent effect.”       Id. at 20.

       In sum, the long-recognized trust law principle -- that

once a fiduciary is shown to have breached his fiduciary duty

and a loss is established, he bears the burden of proof on loss

causation -- applies here.       Overwhelming evidence supported the

district court’s finding that RJR breached its fiduciary duty to

act prudently and that this breach resulted in a prima facie

showing of loss to the Plan.          Thus, the court did not err in

requiring RJR to prove that its imprudent decision-making did

not cause the Plan’s loss.       Accordingly, we turn to the question

of whether the district court correctly held that RJR carried

its burden of proof on causation.



                                    34
                                               V.

       To carry its burden, RJR had to prove that despite its

imprudent     decision-making                process,    its    ultimate      investment

decision was “objectively prudent.”                     Because the term “objective

prudence” is not self-defining, in Plasterers’, we turned to the

standard set forth by our sister circuits.                         Thus, we explained

that   a   decision       is    “objectively        prudent”      if   “a    hypothetical

prudent fiduciary would have made the same decision anyway.”

663 F.3d at 218 (quoting Roth, 16 F.3d at 919) (emphasis added);

see also Peabody v. Davis, 636 F.3d 368, 375 (7th Cir. 2011);

Bussian, 223 F.3d at 300; In re Unisys Sav. Plan Litig., 173

F.3d   145,    153-54      (3d        Cir.    1999).      Under    this      standard,   a

plaintiff     who   has    proved        the    defendant-fiduciary’s         procedural

imprudence and a prima facie loss prevails unless the defendant-

fiduciary can show, by a preponderance of the evidence, that a

prudent    fiduciary       would        have    made    the    same    decision.       Put

another     way,      a        plan     fiduciary        carries       its    burden     by

demonstrating that it would have reached the same decision had

it undertaken a proper investigation.

       Somewhat surprisingly, the dissent accuses us of concocting

a new standard for loss causation, never adopted in Plasterers’.

We cannot agree.          We are simply applying the standard set forth

by this court in Plasterers’, a case on which the dissent itself

heavily relies.           The dissent’s claim that Plasterers’ decided

                                               35
nothing more than that “causation of loss is not an axiomatic

conclusion    that    flows    from    a    breach”      is    baseless.       For   in

Plasterers’,    immediately      after      recognizing        that   the    district

court had been “without the benefit of specific circuit guidance

on   this   issue,”   663     F.3d    at    218   n.9,    we    stated      what   loss

causation means.       Thus, we then explained:                “Even if a trustee

failed to conduct an investigation before making a decision, he

is insulated from liability [under § 1109(a)] if a hypothetical

prudent fiduciary would have made the same decision anyway.”

Id. at 218 (quoting Roth, 16 F.3d at 919).                     This language would

serve no purpose in the opinion if not to instruct the district

court regarding the proper analysis on remand. 12


      12
        Moreover, the dissent is simply mistaken in contending
that the standard applicable for loss causation “was not
discussed, was not briefed, and was not before the court” in
Plasterers’.   In urging the court to adopt the loss causation
requirement, the appellants’ brief in Plasterers’ cited the
language from then-Judge Scalia’s concurrence in Fink v. Nat’l
Sav. & Trust Co., 772 F.2d 951, 962 (D.C. Cir. 1985), see infra
at 40, and then recognized that:
     The Eighth Circuit’s formulation of the rule [of loss
     causation in Roth] is more common, if less colorful:
     “Even if a trustee failed to conduct an investigation
     before making a decision, he is insulated from
     liability if a hypothetical prudent fiduciary would
     have made the same decision anyway.”         This rule
     follows directly from § 409 of ERISA, which provides
     that fiduciaries are liable only for “losses to the
     plan resulting from . . . a breach.”
Br. of Appellants 21-22, Plasterers’, 663 F.3d 210 (emphasis
added) (citations omitted).      Thus, both the loss causation
requirement and the standard used to define it were indeed
discussed, briefed, and before the court in Plasterers’.


                                           36
      The district court properly acknowledged the “would have”

standard that we and our sister circuits have adopted.                                     See

Tatum,     926    F.    Supp.     2d    at   683.        But    the   court   nonetheless

applied a different standard.                    Thus, it required RJR to prove

only that “a hypothetical prudent fiduciary could have decided

to eliminate the Nabisco Funds on January 31, 2000.”                           Id. at 690

(emphasis        added).         The    manner      in   which    the   district       court

evaluated        the     evidence       unquestionably          demonstrates        that    it

indeed meant “could have” rather than “would have.”                            See, e.g.,

id. at 689 n.29, 690.                  For instead of determining whether the

evidence established that a prudent fiduciary, more likely than

not, would have divested the Nabisco Funds at the time and in

the   manner      in     which    RJR    did,      the   court    concluded     that       the

evidence     did       not   “compel     a   decision      to    maintain     the    Nabisco

Funds in the Plan,” and that a prudent investor “could [have]

infer[red]” that it was prudent to sell.                         Id. at 686 (emphasis

added). 13


      13
        For this analysis, the court relied on Kuper v. Quantum
Chemicals Corp., 852 F. Supp. 1389, 1395 (S.D. Ohio 1994), aff’d
sub nom. Kuper v. Iovenko, 66 F.3d at 1447.        But Kuper is
inapposite because it applied a presumption of reasonableness to
a fiduciary’s decision to retain company stock, a presumption
that plaintiffs failed to rebut by establishing breach of
fiduciary duty.   See 66 F.3d at 1459.    We have never applied
this presumption, and the Supreme Court has recently clarified
that ERISA contains no such presumption. See Dudenhoeffer, No.
12–751, 573 U.S.--, at 1.     Moreover, this case differs from
Kuper in two critical respects.     First, Tatum challenges the
(Continued)
                                              37
      RJR recognizes that the district court applied a “could

have” standard, but argues that this is the proper standard for

determining     whether     its     divestment      decision    was   objectively

prudent.       Alternatively,        RJR     maintains      that,   even   if   the

district court erred in applying the “could have” rather than

“would have” standard, the error was harmless.                  We address these

arguments in turn.

                                           A.

      RJR    acknowledges     that    the       causation   inquiry   requires    a

finding of objective prudence.                  But it contends that a court

measures a fiduciary’s objective prudence by determining whether

its “decision, when viewed objectively, is one a hypothetical

prudent fiduciary could have made.”                Appellee’s Br. 16 (emphasis

added).

      But we, like our sister circuits, have adopted the “would

have” standard to determine a fiduciary’s objective prudence.

As   the    Supreme   Court   has    explained,       the   distinction    between

“would” and “could” is both real and legally significant.                       See




divestment of stock, while Kuper involved a challenge to the
retention of stock.    Second, Tatum has established that RJR
breached its fiduciary duty; Kuper never established this.
Notably, the Sixth Circuit, which decided Kuper, has since
expressly recognized, at least with respect to the amount of
damages,   that   when a   fiduciary   breach  is    established,
“uncertainty    should be   resolved   against   the    breaching
fiduciary.” Gilley, 290 F.3d at 830 (emphasis added).


                                           38
Knight v. Comm’r, 552 U.S. 181, 187-88, 192 (2008).                                  In opining

that this distinction is simply “semantics at its worst,” the

dissent    ignores        Knight.           There,    the       Court        instructed      that

“could”     describes         what     is     merely       possible,           while    “would”

describes what is probable.                   Id. at 192.              “[D]etermining what

would happen if a fact were changed . . . necessarily entails a

prediction; and predictions are based on what would customarily

or commonly occur.”             Id. (emphasis added).              Inquiring what could

have    occurred,        by   contrast,       spans       a     much    broader        range   of

decisions, encompassing even the most remote of possibilities.

See id.     at     188   (“The    fact       that    an    individual          could . . . do

something     is     one      reason    he     would . . .,            but     not     the   only

possible reason.”).

       The “would have” standard is, of course, more difficult for

a   defendant-fiduciary          to    satisfy.           And    that     is    the     intended

result.     “Courts do not take kindly to arguments by fiduciaries

who have breached their obligations that, if they had not done

this, everything would have been the same.”                            In re Beck Indus.,

Inc.,   605      F.2d    624,    636   (2d     Cir.       1979).        ERISA’s        statutory

scheme is premised on the recognition that “imprudent conduct

will usually result in a loss to the fund, a loss for which [the

fiduciary] will be monetarily penalized.”                         Plasterers’, 663 F.3d

at 218 (quoting Brock, 830 F.3d at 647).                                We would diminish

ERISA’s enforcement provision to an empty shell if we permitted

                                              39
a breaching fiduciary to escape liability by showing nothing

more than the mere possibility that a prudent fiduciary “could

have” made the same decision.    As the Secretary of Labor notes,

this approach would “create[] too low a bar, allowing breaching

fiduciaries to avoid financial liability based on even remote

possibilities.”   Amicus Br. of Sec’y of Labor 23. 14

     To support its contrary argument, RJR heavily relies on

then-Judge Scalia’s concurrence in Fink v. Nat’l Sav. & Trust

Co., 772 F.2d 951 (D.C. Cir. 1985), in which he states:

     I know of no case in which a trustee who has happened
     –- through prayer, astrology or just blind luck –- to
     make      (or       hold)      objectively      prudent
     investments . . . has been held liable for losses from
     those   investments   because   of   his   failure   to
     investigate or evaluate beforehand.

Id. at 962 (Scalia, J., concurring in part and dissenting in

part).    But, despite the protestations of RJR and the dissent,

     14
        Moreover, notwithstanding the suggestion of RJR and the
dissent, the Supreme Court in Dudenhoeffer did not hold that the
“could have” standard applies in determining whether a trustee,
like RJR, who has utterly failed in its duty of procedural
prudence, has nonetheless acted in an objectively prudent manner
and so not caused loss to the plan.         Rather, Dudenhoeffer
addressed an allegation that a fiduciary failed to act on
insider information. In this very different context, the Court
held that when “faced with such claims,” courts should “consider
whether the complaint has plausibly alleged that a prudent
fiduciary in the defendant’s position could not have concluded
that [acting on insider information] would do more harm than
good.”   Dudenhoeffer, No. 12-751, 573 U.S. --, at 20 (emphasis
added).   The Court’s use of “could not have” in this limited
context does not cast doubt on our instruction that a “would
have” standard applies to determine loss causation after a
fiduciary breach has been established.


                                 40
this observation is entirely consistent with the “would have”

standard we adopted in Plasterers’.                 It is simply another way of

saying    the    same   thing:          that    a    fiduciary        who    fails   to

“investigate and evaluate beforehand” will not be found to have

caused a loss if the fiduciary would have made the same decision

if   he   had   “investigat[ed]     and       evaluat[ed]    beforehand.”            Id.

Stated yet another way, the inquiry is whether the loss would

have occurred regardless of the fiduciary’s imprudence.

      Of course, intuition suggests, and a review of the case law

confirms, that while such “blind luck” is possible, it is rare.

When a plaintiff has established a fiduciary breach and a loss,

courts tend to conclude that the breaching fiduciary was liable.

See Peabody, 636 F.3d at 375; Allison v. Bank One-Denver, 289

F.3d 1223, 1239 (10th Cir. 2002); Meyer v. Berkshire Life Ins.

Co., 250 F. Supp. 2d 544, 571 (D. Md. 2003), aff’d, 372 F.3d

261, 267 (4th Cir. 2004); cf. Chao v. Hall Holding Co., 285 F.3d

415, 434, 437-39 (6th Cir. 2002); Donovan v. Cunningham, 716

F.2d 1455, 1476 (5th Cir. 1983).                As explained above, that is

precisely the result anticipated by ERISA’s statutory scheme.

                                         B.

      Alternatively,     RJR     maintains      that,    even    if    the    district

court erred      in   applying    the    “could      have”   rather     than    “would

have” standard, the error was harmless.                  This is so, in RJR’s

view, because the facts found by the district court as to the

                                         41
high-risk nature of the Nabisco Funds unquestionably establish

that a prudent fiduciary would have eliminated them from the

Plan.    Appellee’s Br. 20.            This argument also fails.

       Although risk is a relevant consideration in evaluating a

divestment decision, risk cannot in and of itself establish that

a   fiduciary’s       decision       was    objectively      prudent.       Indeed,     in

promulgating the regulations governing ERISA fiduciary duties,

the Department of Labor expressly rejected such an approach.                           In

its     Preamble       to      Rules        and     Regulations      for      Fiduciary

Responsibility,        the    Department          explained,   as   we    noted    above,

that “the risk level of an investment does not alone make the

investment per se prudent or per se imprudent.”                           Investment of

Plan    Assets    under      the    “Prudence”       Rule,   44   Fed.    Reg.    37,221,

37,225 (June 26, 1979).                    Moreover, the Department instructed

that:

       an investment reasonably designed –- as part of a
       portfolio –- to further the purposes of the plan, and
       that is made upon appropriate consideration of the
       surrounding facts and circumstances, should not be
       deemed to be imprudent merely because the investment,
       standing alone, would have, for example, a relatively
       high degree of risk.

Id. at 37,224 (emphasis added); see also Dudenhoeffer, No. 12-

751, 573 U.S. --, at 15 (“Because the content of the duty of

prudence      turns   on     ‘the    circumstances . . . prevailing’              at   the

time    the      fiduciary         acts,     § 1104(a)(1)(B),       the     appropriate

inquiry will necessarily be context specific.” (alteration in

                                              42
original));   DiFelice,    497     F.3d   at   420    (holding    that,   when

determining whether an ERISA fiduciary has acted prudently, a

court must consider the “character and aim of the particular

plan and decision at issue and the circumstances prevailing at

the time”).      In sum, while the presence of risk is a relevant

consideration in determining whether to divest a fund held by an

ERISA plan, it is not controlling.             We must therefore reject

RJR’s contention that it would necessarily be imprudent for a

fiduciary to maintain an existing single-stock investment in a

plan that, like the Plan at issue here, offers participants a

diversified portfolio of investment options.

     Moreover, we cannot hold that the district court’s error in

adopting   the    “could   have”    standard    was    harmless    when   the

governing Plan document required the Nabisco Funds to remain as

frozen funds in the Plan.          ERISA mandates that fiduciaries act

“in accordance with the documents and instruments governing the

plan insofar as such documents and instruments are consistent

with [ERISA].”     29 U.S.C. § 1104(a)(1)(D). 15       Accordingly, courts


     15
        On appeal, RJR suggests that following the Plan terms
would have been inconsistent with ERISA.     Specifically, RJR
asserts that if it had maintained the Nabisco Funds as frozen
funds after the spin-off, it would have violated ERISA’s
requirement that fiduciaries “diversify[] investments of the
plan so as to minimize the risk of large losses.”          Id.
§ 1104(a)(1)(C).   Thus, RJR argues that it “was required to
divest the Nabisco Funds from the Plan.”    Appellee’s Br. 27.
Before the district court, however, RJR properly “admit[ted]
(Continued)
                                     43
have    found      a    breaching     fiduciary’s       failure    to    follow      plan

documents to be highly relevant in assessing loss causation.

See Allison, 289 F.3d at 1239; Dardaganis, 889 F.2d at 1241. 16

Tatum stipulated at trial that he would not assert that RJR’s

failure to adhere to the Plan’s terms rendered RJR automatically

liable under § 1109(a).             But he expressly preserved his argument

that   the   Plan       terms   are   “highly    relevant”        to    the   causation

analysis and that “a prudent fiduciary would have taken [them]

into account” in deciding whether to divest.                  Appellant’s Br. 28

n.13; see also Mem. re: Legal Effect of Invalid Plan Amendment

at 2, Tatum v. R.J. Reynolds Pension Inv. Comm. (2013)(No. 1:02-

cv-00373-NCT-LPA), ECF No. 365.                Therefore, the district court

erred by failing to factor into its causation analysis RJR’s

lack of compliance with the governing Plan document.

       For   all       of   these   reasons,    after    careful       review   of    the

record, we cannot hold that the district court’s application of




that there are no regulations prohibiting single stock funds of
any kind in an ERISA plan.” Tatum, 926 F. Supp. 2d at 681. See
supra note 5; see also H.R. Rep. No. 93-1280, reprinted at 1974
U.S.C.C.A.N.    5038,   5084-85  (explaining    that    whether   a
fiduciary’s    investment    of   plan   assets     violates    the
diversification duty depends on the “facts and circumstances of
each case”).
     16
        Of course, this does not mean, as the dissent suggests,
that plan terms trump the duty of prudence.       It simply means
that plan terms, and the fiduciary’s lack of compliance with
those terms, inform a court’s inquiry as to how a prudent
fiduciary would act under the circumstances.


                                          44
the incorrect “could have” standard was harmless.                        Particularly

given the extraordinary circumstances surrounding RJR’s decision

to   divest        the   Nabisco    Funds,      including     the     timing    of   the

decision and the requirements of the governing Plan document, we

must conclude that application of the incorrect legal standard

may have influenced the court’s decision.                     Reversal is required

when      a   district     court     has     applied     an       “incorrect    [legal]

standard[]”         that    “may . . . have         influenced         its      ultimate

conclusion.”         See Harris v. Forklift Sys., Inc., 510 U.S. 17, 23

(1993).

         The district court’s task on remand will be to review the

evidence to determine whether RJR has met its burden of proving

by   a    preponderance      of    the   evidence    that     a    prudent     fiduciary

would have made the same decision.                See Plasterers’, 663 F.3d at

218. 17       In   doing   so,     the   court    must   consider       all     relevant


         17
       In evaluating the evidence, the district court abused its
discretion to the extent it refused to consider the testimony of
one of Tatum’s experts, Professor Lys, regarding what a prudent
investor would have done under the circumstances.     Even though
Professor Lys lacked expertise as to the specific requirements
of ERISA, his testimony was relevant as to what constituted a
prudent investment decision. See Plasterers’, 663 F.3d at 218;
see also Hecker v. Deere & Co., 556 F.3d 575, 586 (7th Cir.
2009) (“A fiduciary must behave like a prudent investor under
similar circumstances . . . .”); Katsaros v. Cody, 744 F.2d 270,
279-80 (2d Cir. 1984) (noting that an investment expert’s lack
of experience with pension fund management did not affect his
qualifications to testify as to what constituted a prudent
investment decision in an ERISA case).      On remand, the court
should consider this with all other relevant evidence.


                                           45
evidence, including the timing of the divestment, as part of a

totality-of-the-circumstances            inquiry.        See    Dudenhoeffer,        No.

12-751, 573 U.S. --, at 15; DiFelice, 497 F.3d at 420.                       Perhaps,

after    weighing   all    of    the    evidence,      the    district     court    will

conclude that a prudent fiduciary would have sold employees’

existing    investments     at    the    time    and    in    the   manner    RJR    did

because of the Funds’ high-risk nature, recent decline in value,

and RJR’s interest in diversification.                       Or perhaps the court

will instead conclude that a prudent fiduciary would not have

done so, because freezing the Funds had already mitigated the

risk and because divesting shares after they declined in value

would     amount    to     “selling      low”      despite      Nabisco’s      strong

fundamentals and positive market outlook.                     In either case, the

district    court   must    reach      its     conclusion      after   applying      the

standard this court announced in Plasterers’ -- that is, whether

“a   hypothetical    prudent      fiduciary       would      have   made     the    same

decision anyway.”          663 F.3d at 218 (quotation marks omitted)

(emphasis added).

                                          C.

        Before concluding our discussion of loss causation, we must

briefly address the dissent’s apparent misunderstanding of our

holding, the facts found by the district court, and controlling

legal principles.



                                          46
        The dissent repeatedly charges that we hold RJR “monetarily

liable        for   objectively         prudent       investment        decisions.”           It

further charges that we have “confuse[d] remedies” -- claiming

that fiduciaries who act with procedural imprudence should be

released from their fiduciary duties but not held monetarily

liable.       These charges misstate our holding.

        Our    decision     is     a   modest       one.     We    affirm      the    district

court’s       holdings      that       RJR    breached      its    duty     of    procedural

prudence and that a substantial loss occurred.                           We simply remand

for the district court to determine whether, under the correct

legal standard, RJR’s imprudence caused that loss.                             If the court

determines that a fiduciary who conducted a proper investigation

would    have       reached      the    same    decision,         RJR   will     escape     all

monetary liability, notwithstanding its procedural imprudence.

But    if     the   court     concludes        to    the     contrary,      then      the   law

requires that RJR be held monetarily liable for the Plan’s loss.

For,    as     noted   above,      Congress      has       expressly    provided       that   a

fiduciary       “who   breaches         any    of    the . . . duties            imposed    [by

ERISA] shall be personally liable to make good to [the] plan any

losses to the plan resulting from [the] breach.”                                     29 U.S.C.

§ 1109(a) (emphasis added).

        Thus, contrary to the dissent’s rhetoric, nothing in our

holding requires a fiduciary to “make a decision that in the

light of hindsight proves best.”                     Instead, a fiduciary need only

                                               47
adhere to its ERISA duties to avoid liability.                               So long as a

fiduciary undertakes a reasoned decision-making process, it need

never   fear   monetary       liability         for    an       investment    decision     it

determines to be in the beneficiaries’ best interest.                               This is

so even if that investment decision yields an outcome that in

hindsight      proves,       in     the        dissent’s          language,    less      than

“optimal.”     Indeed, our holding, like ERISA’s statutory scheme,

acknowledges     the     uncertainty            of     outcomes       inherent      in   any

investment decision.              Precisely for this reason, ERISA requires

fiduciaries     to     undertake       a       reasoned      decision-making        process

prior to making such decisions.                     Only because RJR failed to do

so here will it be monetarily liable under § 1109(a) for any

losses caused by its imprudence.

       The dissent paints RJR as a faultless victim that, after

following a “prudent investment strategy” has fallen prey to

“opportunistic        litigation.”             In    the    dissent’s       view,   we   are

“penalizing     the    RJR    fiduciaries            for    doing    nothing    more     than

properly diversifying the plan.”                    But the district court’s well-

supported factual findings establish that RJR did a good deal

more    (or,   more    precisely,          a    good       deal    less).      It   made    a

divestment decision that cost its employees millions of dollars

with     “virtually          no      discussion            or      analysis,”       without

consideration of any alternative strategy or consultation with

any experts, and without considering “the purpose of the Plan,

                                               48
which was for long term retirement savings,” or “the purpose of

the spin-off, which was, in large part, to allow the Nabisco

stock a chance to recover from the tobacco taint and hopefully

rise in value.”      Tatum, 926 F. Supp. 2d at 678-79.                 RJR carried

out this decision by adhering to a timeline that was “chosen

arbitrarily and with no research.”              Id. at 679.       And in doing

so, RJR failed to act “solely in the interests of participants

and beneficiaries” and instead “improperly considered its own

potential     liability.”       Id.    at    681.   Indeed,      the    extent     of

procedural imprudence shown here appears to be unprecedented in

a reported ERISA case.

       The dissent eschews the loss-causation standard that this

court articulated in Plasterers’, and would instead apply a new

standard that it dubs “objective prudence simpliciter.”                     Because

this standard is not self-defining (and the dissent does not

attempt to define it) it is unclear how this standard would

operate in practice.        At times, the dissent’s analysis suggests

that   its    “objective    prudence    simpliciter”      test   is    in   fact    a

“could have” standard.          But, of course, the application of a

“could       have”   standard     contravenes       our     instructions           in

Plasterers’ and elides the critical distinction between “could

have” and “would have” that the Supreme Court drew in Knight.

Far from “fuss[ing]” over “semantics,” we are merely applying

the law.

                                        49
     Moreover,      the   dissent        fails    to   acknowledge            the    alarming

consequences of its “objective prudence simpliciter” standard.

Pursuant     to    this    standard,         ERISA’s         protections            would    be

effectively       unenforceable      any     time      a    fiduciary          invokes      the

talisman of “diversification.”               Under the dissent’s reading of

the statute, any decision assertedly “made in the interest of

diversifying       plan    assets”        would        be     automatically            deemed

“objectively       prudent.”         This       approach       would          put    numerous

investment     decisions     beyond       the     reach      of     ERISA’s         fiduciary

liability    provision.        As    a    result,      in     any   case       in    which    a

fiduciary      could      claim      that        it        acted     in        pursuit       of

diversification,       ERISA      would      neither         deter        a     fiduciary’s

imprudent decision-making, nor provide a make-whole remedy for

injured beneficiaries.            Congress certainly did not intend this

result when it expressly provided that a fiduciary who breaches

“any” of its ERISA duties “shall be personally liable” for “any

losses to the Plan resulting from [the] breach.”                                    29 U.S.C.

§ 1109(a).

     The     Department     of      Labor,       the    body       Congress         specially

authorized    to    promulgate       regulations           interpreting         ERISA,      has

expressly rejected the dissent’s approach.                     Thus, the Department

explains that “the relative riskiness of a specific investment

or investment course of action does not render such investment

or investment course of action either per se prudent or per se

                                           50
imprudent.”    44 Fed. Reg. 37,221, 37,222.          Rather, “the prudence

of an investment decision should not be judged without regard to

the role that the proposed investment or investment course of

action plays within the overall plan portfolio.”               Id.    A court

cannot, as the dissent does, impose its own construction of a

statute instead of that of the agency that Congress has vested

with authority to interpret and administer it.             See Chevron v.

Natural Res. Def. Council, 467 U.S. 837, 843 (1984).

     By applying a new standard of its own making, by ignoring

the command in § 1109(a), and by refusing to follow                  precedent

or defer to appropriate regulations, it is the dissent who, in

its words, employs “linguistic contortions” to “obfuscate rather

than illuminate” the law and “overrid[e] the statute.”                 Unlike

the dissent, we refuse to make up and then apply an approach, at

odds with the law, that would render ERISA a nullity in the face

of any after-the-fact     diversification defense.



                                    VI.

     Finally, we address the district court’s orders dismissing

the Benefits Committee and Investment Committee as defendants

and denying   Tatum   leave   to    amend    his   complaint    to   name   the

individual    committee   members    as     defendants.    We    review     the

former de novo, Smith v. Sydnor, 184 F.3d 356, 360-61 (4th Cir.



                                     51
1999), and the latter for an abuse of discretion, Galustian v.

Peter, 591 F.3d 724, 729 (4th Cir. 2010).

                                             A.

      The court dismissed the Benefits Committee and Investment

Committee as defendants because it concluded that “committees”

are   not    “persons”       capable    of       being    sued   under    ERISA.         That

statute defines “person” to include “an individual, partnership,

joint venture, corporation, mutual company, joint-stock company,

trust,      estate,      unincorporated           organization,       association,         or

employee     organization.”            29    U.S.C.      § 1002(9).       The     district

court    erred      in   reading    this      list       as   exhaustive.         That    the

provision does not expressly list “committees” does not mean

that committees cannot be “persons who are fiduciaries” under

ERISA.

      We need look no further than the statute itself to conclude

that a committee may be a proper defendant-fiduciary.                                ERISA

provides that a “named fiduciary” is a “fiduciary who is named

in    the   plan     instrument.”            Id.     § 1102(a)(2).          The    statute

requires that a plan document “provide for one or more named

fiduciaries who jointly or severally shall have authority to

control     and     manage    the   operation           and   administration       of    the

plan.”        Id.     § 1102(a)(1).              This    requirement      ensures        that

“responsibility for managing and operating the [p]lan -- and

liability     for     mismanagement         --    are    focused   with     a   degree     of

                                             52
certainty.”        Birmingham v. SoGen-Swiss Int’l Corp. Ret. Plan,

718 F.2d 515, 522 (2d Cir. 1983)(emphasis added).                  Here, the

Committees are the only named fiduciaries in the governing Plan

document.       As such, these entities are proper defendants in a

suit alleging breach of fiduciary duty with respect to the Plan.

Accord H.R. Rep. No. 93-1280 (1974) (Conf. Rep.), reprinted in

1974 U.S.C.C.A.N. 5038, 5075-78 (noting that a board of trustees

could be a plan fiduciary even though “board” is not expressly

listed as “person” under ERISA).

      Furthermore, Department of Labor regulations interpreting

the statute clearly state that a committee may serve as the

named fiduciary in a plan document.             See 29 C.F.R. § 2509.75-5,

at   FR-1.       And   this   and   other    courts   have   routinely   found

committees to be proper defendant-fiduciaries in ERISA suits.

See, e.g., Harris v. Amgen, Inc., 573 F.3d 728, 737 (9th Cir.

2009); In re Schering-Plough Corp. ERISA Litig., 420 F.3d 231,

233, 242 (3d Cir. 2005); Dzinglski v. Weirton Steel Corp., 875

F.2d 1075, 1080 (4th Cir. 1989).             The district court’s contrary

holding is at odds with the Department of Labor regulations and

these      cases. 18    Accordingly,    we     must   reverse   the   court’s

dismissal of the Benefits Committee and Investment Committee.


      18
       To the extent there is any ambiguity in the relevant
provisions, we conclude that in interpreting the word “person”
and its corresponding definition at 29 U.S.C. § 1002(9), we
(Continued)
                                       53
                                          B.

      After limitations had run, Tatum moved for leave to amend

his first amended complaint to name the individual committee

members.     The court denied the motion on the ground that Tatum’s

claims against the individual committee members did not “relate

back” to those in his first amended complaint, and thus the

statute of limitations barred suit against them.

      As the district court correctly recognized, an amendment to

add   an   additional     party     “relates   back”   when   (1)     the    claim

asserted    in   the    proposed    amendment    arises   out    of    the    same

conduct set forth in the original pleading, and (2) the party to

be added (a) received timely notice of the action such that he

would not be prejudiced in maintaining a defense on the merits,

and (b) knew or should have known that he would have been named

as defendant “but for a mistake concerning the proper party’s

identity.”       Fed.   R.   Civ.    P.    15(c)(1).    The   district       court

concluded    that   the   individual       committee   members   were       not   on

notice that they would have been named as defendants but for a

mistake concerning their identity.             The court did not abuse its

discretion in so holding.



should take into account “Congress’s broad remedial goals,” In
re Beacon Assocs. Litig., 818 F. Supp. 2d 697, 706 (S.D.N.Y.
2011), which is consistent with our holding that “committees”
are proper defendant-fiduciaries in ERISA suits.



                                          54
     In both his original complaint and in his first amended

complaint,      Tatum      named    as     defendants      only     RJR      and   the

Committees.      Tatum’s decision not to include as defendants the

individual committee members reflected “a deliberate choice to

sue one party instead of another while fully understanding the

factual and legal differences between the two parties.”                        Krupski

v. Costa Crociere S. p. A., 560 U.S. 538, 549 (2010).                        This, the

Supreme   Court    has     explained,      “is   the   antithesis       of   making   a

mistake    concerning        the     proper      party’s     identity.”            Id.

Accordingly, the Court has held that Rule 15(c)’s requirements

are not satisfied when, as here, “the original complaint and the

plaintiff’s conduct compel the conclusion that the failure to

name the prospective defendant in the original complaint was the

result of a fully informed decision.”              Id. at 552.



                                         VII.

     For the foregoing reasons, we affirm the district court’s

holding that RJR breached its duty of procedural prudence and so

carries   the     burden     of    proof    on   causation,       but    vacate    the

judgment in favor of RJR.            We reverse the order dismissing the

Benefits Committee and the Investment Committee as defendants,

but affirm the order denying Tatum’s motion for leave to amend

his complaint to add additional defendants.                 We remand the case

for further proceedings consistent with this opinion.

                                           55
     AFFIRMED IN PART, VACATED IN
          PART, REVERSED IN PART,
                     AND REMANDED




56
WILKINSON, Circuit Judge, dissenting:

       After a four-week bench trial, the district court found

that the investment decisions of the R.J. Reynolds Tobacco Co.

(RJR) fiduciaries were objectively prudent.                         It thus properly

refused    to    hold       the     RJR   fiduciaries     personally        liable   for

alleged plan losses.

       Yet this court, breaking new ground, reverses the district

court.     With all respect for my two fine colleagues, I do not

believe    ERISA    allows        plan    fiduciaries     to   be    held    monetarily

liable for prudent investment decisions, and especially not for

those made in the interest of diversifying plan assets.                         Market

conditions can, of course, create fluctuations, but a prudent

investment decision does not by definition cause a plan loss,

the precondition under 29 U.S.C. § 1109(a) for imposing personal

monetary liability upon fiduciaries.

       The statutory remedy for a breach of procedural prudence

that     precedes       a     reasonable      investment       decision       includes,

explicitly, the removal of plan fiduciaries.                        The majority goes

much    further,    forcing         fiduciaries     to    face      the   prospect   of

personal monetary liability instead.                 This confusion of remedies

is     wrong    three       times    over,    and   its    consequences       will    be

especially unfortunate for those who rely on ERISA plans for the

prudent    administration           of    their   retirement     savings.       As   for



                                             57
those who might contemplate future service as plan fiduciaries,

all I can say is: Good luck.

       First, and yet again, under the remedial scheme laid out by

ERISA,    fiduciaries        should     not    be   held   monetarily        liable    for

objectively        prudent    investment       decisions.        This    is    true    for

whatever standard -- "would have,” “could have,” or anything

else -- one adopts for loss causation.                      As I shall show, the

majority has adopted the wrong standard, one that strays from

the statutory test of objective prudence under then existing

circumstances, and one that trends toward a view of prudence as

the single best or most “likely” decision rather than a range of

reasonable      judgments      in   the    uncertain       business     of    investing.

Despite      the     majority’s      protestations,        its   reversal       of     the

district court’s well-grounded finding of objective prudence and

its imposition of a far more stringent test signals fiduciaries

that henceforth they had better make a decision that in the

light of hindsight proves the best.

       Second, monetary liability is even less appropriate where,

as here, the reasonable decision was taken in the interests of

asset diversification.              And third, on this record, the notion

that   the     RJR    fiduciaries’      decision      to   liquidate     the    Nabisco

stocks was anything but prudent borders on the absurd.

       ERISA    is,    first      and     foremost,    meant     to     protect       plan

participants from large, unexpected losses, including those that

                                              58
result      from     holding     undiversified      single-stock        non-employer

funds.      The fiduciaries knew this fact and acted upon it, only

to   find    that    prudent     decisions,      like   good   deeds,    do   not    go

unpunished when the breezes of legal caprice blow in the wrong

direction.

      As    judges,       we   tend   to   regard   the   parties   before      us   as

antagonists.         It is, after all, an adversary system.               But, in a

larger      sense,       the   interests    of   plan     participants    and    plan

fiduciaries often align.               It does neither any good to run up

plan overhead with litigation over investment decisions taken,

as this one was, to diversify plan assets and protect employees

down life’s road.              All will be losers -- perhaps fiduciaries

most immediately but plan participants, sadly, in the end.

                                            I.

                                            A.

      It    is,     to    repeat,     doubtful   that     ERISA-plan    fiduciaries

should ever be held monetarily liable for objectively reasonable

investment decisions.            This follows from § 1109 of ERISA, which

provides that fiduciaries that breach their duties of procedural

prudence “shall be personally liable to make good to such plan

any losses to the plan resulting from each such breach.”                             29

U.S.C. § 1109(a) (emphasis added).                  In other words, monetary

liability under § 1109 lies for a fiduciary’s breach of the duty

of procedural prudence only where a plaintiff also establishes

                                            59
loss     causation.        Because    investment     outcomes     are    always

uncertain,      not    every   investment    decision     that   leads   to    a

diminution in plan assets counts as a loss for § 1109 purposes.

Rather, loss causation only exists if the substantive decision

was,   all    things   considered,    an    objectively   unreasonable     one.

If, by contrast, we might expect a hypothetical prudent investor

to consider the decision prudent, the loss cannot be attributed

to the actual fiduciaries.

       This interpretation of § 1109’s text is well established.

Then-Judge Scalia’s opinion in Fink v. National Savings & Trust

Co., 772 F.2d 951 (D.C. Cir. 1985), is the locus classicus for

the need to prove substantive imprudence prior to the imposition

of   personal    monetary      liability    under   § 1109.      In   Fink,   he

observed that he knew of

       no case in which a trustee who has happened -- through
       prayer, astrology or just blind luck -- to make (or
       hold)   objectively  prudent  investments   (e.g.,  an
       investment in a highly regarded “blue chip” stock) has
       been held liable for losses from those investments
       because of his failure to investigate and evaluate
       beforehand.

Id. at 962 (Scalia, J., concurring in part and dissenting in

part).       The majority misreads the Fink concurrence to require

that a hypothetical prudent fiduciary make “the same decision.”

Maj. Op. at 41.          In so doing, the majority imputes its own

erroneous interpretation of loss causation into Justice Scalia’s

invocation of “objectively prudent investments.”                  Indeed, the

                                      60
example      Justice       Scalia     gave    --   an     investment    in     a    highly

regarded blue chip stock -- demonstrates the obvious: just as

there   is    more     than     one    such    blue     chip   stock,       there       is    a

reasonable     range       of   investments        that    qualify     as   objectively

prudent.

     Although there is an evidentiary relationship between the

breach of a fiduciary’s duty of procedural prudence and loss

causation, these two elements of fiduciary liability under ERISA

are distinct: “It is the imprudent investment rather than the

failure to investigate and evaluate that is the basis of suit;

breach of the latter duty is merely evidence bearing upon breach

of the former, tending to show that the trustee should have

known more than he knew.”                  Fink, 772 F.2d at 962 (Scalia, J.,

concurring in part and dissenting in part).

     The question posed by this case has in fact already been

decided.      This circuit has embraced Justice Scalia’s approach.

In Plasterers’ Local Union No. 96 Pension Plan v. Pepper, 663

F.3d 210 (4th Cir. 2011), we considered a suit for breach of

fiduciary duty under ERISA against former plan fiduciaries.                                  We

noted that “simply finding a failure to investigate or diversify

does not automatically equate to causation of loss and therefore

liability.”          663    F.3d      at   217.     Rather,     in     order       to   hold

fiduciaries “liable for damages based on their given breach of

[their] fiduciary dut[ies]” described in 29 U.S.C. § 1104, a

                                             61
“court must first determine that the [fiduciaries’] investments

were imprudent.”            Id.; see also id. at 218 (quoting Justice

Scalia’s      opinion      in   Fink).      The    loss,    in   other   words,    must

“result[] from” the breach, 29 U.S.C. § 1109(a), which it cannot

if the investment itself was a prudent one. 1

       Our    sister    circuits     have     also   generally     adopted   Justice

Scalia’s reasoning as to loss causation in Fink.                          See, e.g.,

Renfro       v.   Unisys    Corp.,   671      F.3d   314,    322   (3d    Cir.    2011)

(approving         of   the     objective-prudence          test    for    fiduciary

liability under ERISA); Kuper v. Iovenko, 66 F.3d 1447, 1459-60

(6th       Cir.   1995),   abrogated     on      other   grounds   by    Fifth    Third

Bancorp v. Dudenhoeffer, No. 12-751, 573 U.S. __, slip op. at 8

(June 25, 2014); Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915,

919 (8th Cir. 1994) (“Even if a trustee failed to conduct an

       1
       The majority claims that “in Plasterers’, we turned to the
standard set forth by our sister circuits.     Thus, we explained
that a decision is ‘objectively prudent’ if ‘a hypothetical
prudent fiduciary would have made the same decision anyway.’”
Maj. Op. at 35 (quoting Plasterers’, 663 F.3d at 218). Nothing
could be more in error.    Nothing -- no combination of phrases,
words, or syllables -- in Plasterers’ amounts to an adoption of
a “would have” standard. The quotation the majority treats as a
holding was used merely to demonstrate that “causation of loss
is not an axiomatic conclusion that flows from a breach” of a
procedural duty. 663 F.3d at 218. In actuality, the holding of
the court was that fiduciaries “can only be held liable for
losses to the Plan actually resulting from their failure to
investigate.”   Id.  The brief snippet the majority quotes from
appellants’ brief in Plasterers’, Maj. Op. at 36 n.12, only
fortifies the central point: “Would have” versus “could have”
was not discussed, was not briefed, and was not before the
court.

                                            62
investigation before making a decision, he is insulated from

liability if a hypothetical prudent fiduciary would have made

the same decision anyway.”).                       To be sure, the insufficiently

studious     fiduciary          may    be    (and       quite    possibly         should    be)

relieved of his responsibilities.                      But for monetary liability to

attach, it matters not whether the fiduciary spent a relatively

longer or shorter time on a decision, so long as that investment

decision was prudent in the end.

                                                  B.

     The    requirement          of     loss       causation     has     three      important

corollaries.         First,           loss    causation         remains      part     of    the

plaintiff’s       burden    in        establishing         monetary      liability         under

ERISA.     This is because, as I have noted above, loss causation

is an element of a claim under § 1109, which requires that the

losses “result[] from” the breach of fiduciary duty.                                 29 U.S.C

§ 1109(a);    see    also        Plasterers’,           663    F.3d    at    217    (“[W]hile

certain conduct may be a breach of an ERISA fiduciary’s duties

under [29 U.S.C.] § 1104, that fiduciary can only be held liable

upon a finding that the breach actually caused a loss to the

plan.”).

     Even    if,     as    the        district         court    found,      the    burden    of

production shifts to the defendant once the plaintiff makes a

prima facie case for breach and loss, see Tatum v. R.J. Reynolds

Tobacco    Co.,    926     F.    Supp.       2d    648,   683    (M.D.N.C.         2013),    the

                                                  63
burden of proof (persuasion) must lie with the plaintiff, where,

as here, Congress has not provided for burden shifting to the

defendant.        Leaving the burden of proof with the plaintiff is

consistent with the Supreme Court’s recognition of the “ordinary

default rule that plaintiffs bear the risk of failing to prove

their claims,” including each required element.                                Schaffer ex

rel. Schaffer v. Weast, 546 U.S. 49, 56 (2005).                          It also accords

with this court’s observation that, “[w]hen a statute is silent,

the     burden       of    proof      is    normally       allocated      to    the    party

initiating       the       proceeding       and     seeking      relief.”         Weast   v.

Schaffer ex rel. Schaffer, 377 F.3d 449, 452 (4th Cir. 2004),

aff’d, 546 U.S. 49.

       The weight of circuit precedent supports keeping the burden

of proof on the party bringing suit.                        See, e.g., Silverman v.

Mut.    Ben.     Life      Ins.     Co.,    138    F.3d    98,   105     (2d    Cir.   1998)

(Jacobs,       J.,     with        Meskill,   J.,     concurring)        (“Causation       of

damages    is    . . .        an    element    of    the    [ERISA]      claim,    and    the

plaintiff bears the burden of proving it.”); Kuper, 66 F.3d at

1459 (“[A] plaintiff must show a causal link between the failure

to investigate and the harm suffered by the plan.”); Willett v.

Blue Cross & Blue Shield of Ala., 953 F.2d 1335, 1343 (11th Cir.

1992)    (noting          that     “the    burden    of    proof    on    the     issue   of

causation will rest on the beneficiaries” who must “establish



                                              64
that       their    claimed    losses   were       proximately     caused”     by   the

fiduciary breach).

       The    cases    cited    by    Tatum       and   the    majority   to   justify

shifting      the    burden    of    proof    to    RJR   on    loss   causation    are

distinguishable. 2        Several deal with self-dealing, a far more

serious breach of fiduciary duty than simple lack of prudence.

See, e.g., McDonald v. Provident Indem. Life Ins. Co., 60 F.3d

234, 237 (5th Cir. 1995); N.Y. State Teamsters Council v. Estate

of DePerno, 18 F.3d 179, 182 (2d Cir. 1994); Martin v. Feilen,

965 F.2d 660, 671–72 (8th Cir. 1992).                     The majority’s reliance

on our opinion in Brink v. DaLesio, 667 F.2d 420 (4th Cir.

1982), is also unavailing, since that case not only dealt with

self-dealing, but also concerned the burden of proof regarding

the extent of liability, not the existence of loss causation.

See 667 F.2d at 425-26.              More relevant to this case is United

States Life Insurance Co. v. Mechanics & Farmers Bank, 685 F.2d

887 (4th Cir. 1982), in which we rejected

       the novel proposition that, whenever a breach of the
       obligation by a trustee has been proved, the burden
       shifts to the trustee to establish that any loss
       suffered by the beneficiaries of the trust was not
       proximately due to the default of the trustee, and
       that, unless the trustee meets this burden, recovery


       2
       For clarity, this opinion also refers to the various other
RJR-related entities, such as R.J. Reynolds Tobacco Holdings,
Inc., and the RJR Pension Investment and Employee Benefits
Committees, simply as RJR.

                                             65
       against    the     trustee   for   the       full   loss    follows        in
       course.

685 F.2d at 896.             Our precedent and the first principles of

civil liability indicate that, while the burden of production

may shift as a case progresses, the burden of persuasion should

remain with the plaintiff in a § 1109 action.

       The second notable consequence of § 1109’s requirement of

loss causation is a practical one: it is generally difficult to

establish loss causation when a fiduciary’s substantive decision

is objectively prudent.             This is because objectively prudent

decisions tend not to lead to losses to the plan.                              But even

where they do, they are not the sort of losses contemplated by

the § 1109 remedial scheme, since it is unreasonable to fault a

prudent      investment      strategy   for    the    statistical        reality       that

even   the    best-laid      investment    plans     often    go    awry.         Because

“[t]he    entire    statutory       scheme      of    ERISA     demonstrates           that

Congress’[s]      overriding      concern      in    enacting      the   law      was   to

insure that the assets of benefit funds were protected for plan

beneficiaries,”         it     follows        that     fiduciaries          who        “act

imprudently, but not dishonestly, . . . should not have to pay a

monetary penalty for their imprudent judgment so long as it does

not result in a loss to the [f]und.”                  Plasterers’, 663 F.3d at

217    (internal    quotation       marks      omitted)       (quoting      Brock       v.

Robbins, 830 F.2d 640, 647 (7th Cir. 1987)).


                                          66
      Thirdly,        the    loss-causation                 requirement       shows     how    the

majority has misconceived ERISA’s remedial scheme.                                  Section 1109

sets out the appropriate remedies in those situations where a

fiduciary’s breach of procedural prudence does not result in

losses:   “other       equitable          or    remedial        relief . . . ,         including

removal   of     such       fiduciary.”            29       U.S.C.     § 1109(a);      see     also

Brock, 830 F.2d at 647 (“If [a plaintiff] can prove to a court

that certain trustees have acted imprudently, even if there is

no   monetary       loss     as    a     result        of     the     imprudence,      then    the

interests      of     ERISA        are      furthered          by     entering       appropriate

injunctive relief such as removing the offending trustees from

their    positions.”);            Fink,     772        F.2d    at     962   (“Breach     of     the

fiduciary      duty    to    investigate           and        evaluate      would    sustain    an

action to enjoin or remove the trustee . . . .                                But it does not

sustain     an      action        for       the    damages            arising    from        losing

investments.”)        (citation          omitted).             This     provision      for    such

relief    as     removal      is       in      direct         contrast      to   the    monetary

liability      that     ERISA       imposes        only        upon    a    finding     of    loss

causation.       ERISA is a “comprehensive and reticulated statute,”

Mertens v. Hewitt Assocs., 508 U.S. 248, 251 (1993) (internal

quotation marks omitted), and Congress crafted its provisions

with care.       Removing a fiduciary is one thing; holding that same

fiduciary personally liable for a prudent investment decision is

something else altogether.                     Where, as here, the statutory text

                                                  67
speaks clearly to the proper use of monetary versus other, more

traditionally    equitable      remedies,    it   should   be    followed,    not

flouted.

     The majority gets this all wrong.            It states that § 1109(a)

“provides for both monetary and equitable relief, and does not

(as the dissent claims) limit a fiduciary’s liability for breach

of the duty of prudence to equitable relief.”                   Maj. Op. at 17

(emphasis in original).         Of course it provides for both, but it

provides for monetary liability only to make good losses to the

plan resulting from the breach.            And here the court found after

a month-long trial that such losses did not result, because the

investment   decision     was    itself     objectively    prudent.      It   is

astounding that ERISA fiduciaries are henceforth going to be

held personally liable when losses did not “result from” any

breach on their part.        The majority decision quite simply reads

the words “resulting from” right out of the statute.

                                      C.

     The majority, Tatum, and Tatum’s amici focus on supposed

distinctions    between   whether    a     hypothetical    prudent    fiduciary

“would have” or merely “could have” made the same decision that

the RJR fiduciaries did.         They then fault the district court for

using the latter standard.          Tatum argues that the “could have”

standard used by the district court will turn ERISA’s demanding

fiduciary obligations into a “corporate business judgment rule,”

                                      68
since it “renders irrelevant the prudence or non-prudence of the

fiduciaries’     actions    in     making    those         decisions.”       Br.   of

Appellant at 36, 37.        The Acting Secretary of Labor argues that

a   “could    have”    standard    “creates       too      low   a    bar,   allowing

breaching fiduciaries to avoid financial liability based even on

remote possibilities.”       Br. of Acting Sec’y of Labor at 23.

       The   majority’s    claim   that     the    district      court’s     approach

“encompass[es] even the most remote of possibilities,” Maj. Op.

at 39, is a serious mischaracterization.                   As the district court

observed, this is a “strained reading” of its view, which was

simply that objective prudence does not dictate one and only one

investment decision.         Tatum, 926 F. Supp. 2d at 683.                     ERISA

requires that a fiduciary act “with the care, skill, prudence,

and diligence under the circumstances then prevailing that a

prudent man acting in a like capacity and familiar with such

matters would use in the conduct of an enterprise of a like

character and with like aims.”              29 U.S.C. § 1104(a)(1)(B); see

also 29      C.F.R.   § 2550.404a-1(a).           As   a    result,    the   district

court’s standard would not be satisfied merely by imagining any

single hypothetical fiduciary that might have come to the same

decision.        Rather,    it     asks     whether        hypothetical      prudent

fiduciaries consider the path chosen to have been a reasonable

one.    The Supreme Court recently came to a similar conclusion.

The Court suggested that where a plaintiff alleges that ERISA

                                       69
plan   fiduciaries       should       have    utilized       inside       information      in

administering single-stock funds, courts “should also consider

whether      the    complaint    has     plausibly          alleged      that    a    prudent

fiduciary in the defendant’s position could not have concluded

that” acting on the inside knowledge “would do more harm than

good.”    Fifth Third, slip op. at 20 (emphasis added).

       That ERISA’s duty of prudence allows for the possibility

that there may be several prudent investment decisions for any

given scenario should not be a surprise.                          Investing is as much

art as science, in which there are many options with uncertain

outcomes,     any     number    of    which     may    be    prudent.           Tatum’s   own

experts      conceded    at    trial     that     prudent         minds   may     disagree,

indeed diametrically, over the preferable course of action in a

particular situation.           Tatum, 926 F. Supp. 2d at 683 n.27, 690.

Thus, a decision may be objectively prudent even if it is not

the    one    that    plaintiff,       armed      with      all    the    advantages       of

hindsight, now thinks is optimal.                     Optimality is an impossible

standard.          No investor invariably makes the optimal decision,

assuming we know what that decision even is.

       Ultimately, the majority’s and Tatum’s minute parsings of

the differences between “would have” and “could have” obfuscate

rather than illuminate.              It is semantics at its worst.                   The same

is true of their definition of a reasonable investment decision

as the one that hypothetical prudent fiduciaries would “more

                                             70
likely than not” have come to.                  This provides no legal basis on

which to reverse the district court’s simple finding, after a

month-long     bench        trial,    that      defendants        made    an    objectively

prudent investment decision here.

      What might plaintiffs’ new semantics mean?                               Reading the

plaintiffs’       “would      have”    standard        to    permit       fiduciaries      to

escape monetary liability only if they make the decision that

the   majority       of   hypothetical        prudent       fiduciaries        would    “more

likely than not” have made is all too treacherous.                                 Not only

does the “more likely than not” language insistently urged by

the majority, plaintiff, and his various amici find no support

in statute or regulation.                 Not only is it a transparent gloss

upon the Act.             It seeks to shift the standard of objective

prudence     to       one     of     relative         prudence:          whether    prudent

fiduciaries would “more likely than not” have come to “the same

[investment] decision” that defendants did.                        Maj. Op. at 37; Br.

of Appellant at 7; see also Br. of Acting Sec’y of Labor at 23;

Br. of AARP & Nat’l Emp’t Lawyers Ass’n at 14.                                 The majority

orders   the      district      court      on     remand     to    divine       whether    “a

fiduciary      who    conducted       a      proper     investigation           would     have

reached the same decision.”                  Maj. Op. at 47 (emphasis added).

The only possible effect of such language is to squeeze and

constrict and, once again, to ignore the fact that there is not



                                             71
one and only one “same decision” that qualifies as objectively

prudent.

       Thus plaintiff would substitute for the fiduciary’s duty to

make   a   prudent       decision     a    duty   to     make    the        best    possible

decision, something ERISA has never required.                          Take a scenario

in which 51% of hypothetical prudent fiduciaries would act one

way and 49% would act the other way.                       What sense, let alone

justice, is there in penalizing a fiduciary merely for acting in

accordance       with    a   view   that    happens      to     be    held     by    a   bare

minority?     And how, absent an unhealthy dose of hindsight, could

we ever know the precise breakdown of hypothetical fiduciaries

with regard to a particular investment decision?                              See Br. of

Chamber of Commerce of U.S. of Am. & Am. Benefits Council at 15-

16.

       While the majority protests it has not adopted the most

prudent standard, its actions speak louder than words.                               It has

reversed a “merely” prudent, eminently sensible decision, and

demanded     much       more.       Moreover,     all     its        fuss    over    “would

have/could have” carries us far from the general standard of

objective prudence embodied in § 1104(a)(1)(B).                              That is, of

course,    the    straightforward         test    that    Plasterers’         articulated

when it remanded back to the district court to “determine the

prudence of the [fiduciaries’] actual investments.”                           663 F.3d at

219.    The majority complains that the dissent fails “to define”

                                            72
the objective prudence standard or to say precisely “how this

standard would operate in practice.”                       Maj. Op. at 49.             But the

trial     here    showed      exactly         how     that       standard    operates         in

practice.         Prudence       depends      inescapably         upon     the    particular

circumstances confronting fiduciaries; it is a fool’s errand to

attempt    to     sketch     every      situation       that      might     arise.           Even

without     the    majority’s        linguistic         contortions,         the       law     of

fiduciary obligations under ERISA is complex enough.                               The layer

of   scholasticism         the     majority         adds     to    what     should      be     a

straightforward factual inquiry into objective prudence helps no

one. One can, of course, play the endless permutations of the

“would have”/”could have” game. But the test is one of objective

prudence simpliciter, taking the circumstances as they existed

at the time.

     To    make     matters      worse,       the    majority       all    but    directs      a

finding    of     personal    liability         on    remand.        In     affirming        the

district court’s finding that RJR was procedurally imprudent,

the majority falls over itself in its rush to defer to the

district    court’s     “extensive            factual      findings.”            Id.   at     22.

Fair enough: I have no quarrel with the trial court’s “extensive

factual     findings”        that       the     RJR     fiduciaries          acted      in     a

procedurally       imprudent         fashion.              Yet     when     it     comes      to

substantive       prudence,       the     majority         slams     the    door       on    the

district court’s “extensive factual findings” when the majority

                                              73
even so much as deigns to discuss them.                             Moreover, the majority

minimizes risk as a factor, stressing instead “the timing of the

decision and the requirements of the governing Plan document,”

id.    at       45,    despite      ERISA’s     express        command      that    fiduciaries

“diversify[] the investments of the plan so as to minimize the

risk       of    large     losses,       unless    under       the    circumstances        it   is

clearly         prudent      not    to    do   so.”       29    U.S.C.      §   1104(a)(1)(C)

(emphasis added).                  Further, the majority ignores the Supreme

Court’s         statement     that       § 1104    “makes      clear     that      the   duty   of

prudence trumps the instructions of a plan document.”                                      Fifth

Third,          slip   op.    at    11.        According       to     the   majority,       “plan

documents          [are]     highly       relevant”       to    the    objective         prudence

inquiry, Maj. Op. at 44, but risk is merely “relevant,” id. at

43.        It is difficult to see how fiduciaries can survive this

loaded      calculus,        one     in    which       procedural      imprudence        all    but

ensures the obliteration of the loss causation requirement. 3


       3
       The majority contends that “[u]nder the dissent’s reading
of the statute, any decision assertedly ‘made in the interest of
diversifying   plan  assets’   would  be   automatically  deemed
‘objectively prudent.’”    Maj. Op. at 50.    That statement is
patently incorrect, for if there were any per se rule of the
sort that the majority suggests, there would have been no need
for the district court to conduct an extended trial considering
all the circumstances, including the timing of the decision and
the governing plan document, that bore on the investment
judgment.   In point of fact, it is the majority that minimizes
the importance of asset diversification as one of the factors
bearing upon the objective prudence inquiry despite ERISA’s
clear instruction to the contrary.

                                                  74
                                          D.

     There is one final point.                 The majority tries to justify

what it is doing with the thought that its approach is necessary

to deter fiduciaries from imprudent behavior.                         But that in no

way justifies overriding the statute –- in particular § 1109,

which establishes a requirement of loss causation, and § 1104,

which     establishes       a   standard       of   prudence          under    all   the

circumstances.         This     is    a   rewriting       of    the    statute,      and,

frankly, Congress’s wisdom is a lot more persuasive than the

majority’s.

        Under   the   statute   as    written,      the    standard      used   by    the

district court deters fiduciaries from procedural imprudence by

the threat of removal and from substantive imprudence by the

knowledge that resulting losses to the fund will in fact lead to

liability.       As    we   said     in   Plasterers’,         quoting   the    Seventh

Circuit:

        The only possible statutory purpose for imposing a
        monetary penalty for imprudent but harmless conduct
        would be to deter other similar imprudent conduct.
        However, honest but potentially imprudent trustees are
        adequately deterred from engaging in imprudent conduct
        by the knowledge that imprudent conduct will usually
        result in a loss to the fund, a loss for which they
        will be monetarily penalized.   This monetary sanction
        adequately deters honest but potentially imprudent
        trustees.   Any additional deterrent value created by
        the imposition of a monetary penalty is marginal at
        best.   No ERISA provision justifies the imposition of
        such a penalty.



                                          75
663 F.3d at 217-18 (internal quotation marks omitted) (quoting

Brock, 830 F.2d at 640).

                                              II.

       Even if one thinks that monetary liability should somehow

attach to prudent investment decisions, it should almost never

lie    where    the    decision     was       made,     as    this    one    was,   in   the

interest       of   diversifying         plan       assets.          The    importance    of

diversification        in     retirement        plans    is    reflected       in   ERISA’s

text, which explicitly requires plan fiduciaries to “diversify[]

the investment of the plan so as to minimize the risk of large

losses, unless under the circumstances it is clearly prudent not

to do so.”      29 U.S.C. § 1104(a)(1)(C) (emphasis added).

       “Diversification is fundamental to the management of risk

and is therefore a pervasive consideration in prudent investment

management.”        Restatement (Third) of Trusts § 227 cmt. f (1992).

Diversification’s            ability     to     reduce       risk     while     preserving

returns is a major focus of modern portfolio theory, which has

been    adopted       both    by   the    investment          community       and   by   the

Department of Labor in its implementing regulations for ERISA.

See DiFelice v. U.S. Airways, Inc., 497 F.3d 410, 423 (4th Cir.

2007) (citing 29 C.F.R. § 2550-404a-1).                       Diversification is even

more important in the context of retirement savings, where the

avoidance of downside risk is of paramount concern.                            “A trustee

is not an entrepreneur. . . .                      He is supposed to be careful

                                              76
rather than bold.”         Armstrong v. LaSalle Bank Nat’l Ass'n, 446

F.3d 728, 733 (7th Cir. 2006).

       Although ERISA does not in so many words require every fund

in an investment plan to be fully diversified, each fund, when

considered individually, must be prudent.                     See DiFelice, 497

F.3d at 423.       This is because 401(k) participants could easily

view the inclusion of a fund as an endorsement of it by the plan

fiduciaries and invest a sizeable portion or even the entirety

of their assets in a high-risk fund.               The RJR fiduciaries were

concerned    about     this   very     possibility     when    they    decided    to

maintain     a   prohibition      on   making    new   investments      into     the

Nabisco funds.         See Tatum v. R.J. Reynolds Tobacco Co., 926 F.

Supp. 2d 648, 661-62 (M.D.N.C. 2013).

       In addition, once plan participants allocate their assets

among various funds, there is a substantial risk that inertia

will keep them from carefully monitoring and reallocating their

retirement savings to take into account changing risks.                   Indeed,

a witness for RJR testified at trial that over 40% of plan

participants who had invested in the Nabisco funds did not make

a   single   voluntary     plan   transfer      over   a   five-and-a-half-year

period from 1997 to 2002.              See J.A. 846-48.         Because the RJR

plan    already    contained      an    employer-only      single-stock        fund,

maintaining      the   Nabisco    funds    would   multiply      the   number    of



                                         77
risky, single-stock funds in which RJR plan participants could

invest.      See Tatum, 926 F. Supp. 2d at 685.

       The     requirement           that    management       of     retirement          plans   be

prudent rather           than      aggressive          strongly     supports      diversifying

each fund.         As the district court recognized, a “single stock

fund carries significantly more risk than a diversified fund.”

Id. at 684; see also Summers v. State St. Bank & Trust Co., 453

F.3d 404, 409 (7th Cir. 2006).                          For this reason, single-stock

funds    are    generally          disfavored          as   ERISA    investment          vehicles.

See,    e.g.,     DiFelice,          497     F.3d      at   424    (noting       that    “placing

retirement funds in any single-stock fund carries significant

risk,     and      so        would        seem    generally         imprudent        for     ERISA

purposes”).             To    be     sure,       Congress     has        provided    a     limited

exception from ERISA’s general diversification requirements for

certain      types      of     employer-only           single-stock         funds.         See   29

U.S.C.    §§ 1104(a)(2),             1107(d)(3).            Still,        single-stock      funds

inherently “are not prudently diversified.”                              Fifth Third Bancorp

v. Dudenhoeffer, No. 12-751, 573 U.S. __, slip op. at 5 (June

25,    2014)      (emphasis          in    original).         And        absent     this    narrow

congressional          carve-out          for    employer-only           single-stock       funds,

“[t]here     is    a     sense       in    which,      because      of    risk    aversion,      [a

single-stock fund] is imprudent per se.”                            Armstrong, 446 F.3d at

732.



                                                  78
       In this case, the Nabisco funds were even more dangerous

than an ordinary single-stock fund.                        Because of the “tobacco

taint” and the risk that a massive tobacco-litigation judgment

against    RJR       could    also    harm    Nabisco,      the   performance        of   the

Nabisco    funds       was     potentially         correlated     with    that    of      RJR

itself.         Thus, retirement plans containing the Nabisco funds

were doubly undiversified.              First, they included the stocks of a

single company rather than a range of companies.                              Second, the

same external forces that could harm RJR –- and thus imperil the

employment of plan participants -– could simultaneously tank the

value of the Nabisco funds.                  See Tatum, 926 F. Supp. 2d at 685.

In other words, keeping the Nabisco funds in the RJR plan would

create the risks of an Enron-like situation, in which the health

of an employer and the retirement savings of its employees could

be adversely affected simultaneously.                      See Richard A. Oppel Jr.,

Employees’ Retirement Plan Is a Victim as Enron Tumbles, N.Y.

Times, Nov. 22, 2001, at A1.                   But unlike the employer single-

stock    funds       that     might    have    legislative        sanction,      no       such

congressional approval existed for the Nabisco funds.

       By penalizing the RJR fiduciaries for doing nothing more

than    properly       diversifying      the       plan,    the   majority     and     Tatum

threaten        to    whipsaw        investment       managers      of    pension         and

retirement funds.             The majority’s approach falls into the trap

of     seeing    plan        fiduciaries      and    participants        as    inveterate

                                              79
adversaries.          In fact, nothing could be further from the truth.

Fiduciaries      often      act       to    the       inestimable     benefit      of    plan

participants,         and   they      do    so    most     clearly   when    they       follow

ERISA’s mandate to diversify plan holdings.                          But the majority’s

approach       will     wreak      havoc      upon       this   harmony,      encouraging

opportunistic         litigation       to    challenge       even    the    most   sensible

financial decisions.            Here, the RJR fiduciaries knew they had a

ticking time bomb on their hands.                          Had the plan fiduciaries

failed    to    diversify       and    the       Nabisco    stocks    had    continued     to

decline, the fiduciaries would have been sued for keeping the

stocks.    As the Supreme Court noted:

     [I]n many cases an ESOP fiduciary who fears that
     continuing to invest in company stock may be imprudent
     finds himself between a rock and a hard place: If he
     keeps investing and the stock goes down he may be sued
     for    acting     imprudently    in     violation   of
     § 1104(a)(1)(B), but if he stops investing and the
     stock goes up he may be sued for disobeying the plan
     documents in violation of § 1104(a)(1)(D).

Fifth Third, slip op. at 14.                 Putting plan managers in a cursed-

if-you-do, cursed-if-you-don’t situation is unfair to them and

damaging to ERISA-plan administration generally.

                                             III.

     Even if prudent decisions made in the interest of asset

diversification could ever lead to monetary liability, it is

inconceivable that they could do so on these facts.                                 As the




                                                 80
district court well understood, if monetary liability lies here,

then it will lie for a great many other prudent choices as well.

       “[W]hether      a    fiduciary’s        actions     are   prudent     cannot   be

measured in hindsight . . . .”                 DiFelice v. U.S. Airways, Inc.,

497 F.3d 410, 424 (4th Cir. 2007).                 This is because “the prudent

person standard is not concerned with results; rather it is a

test of how the fiduciary acted viewed from the perspective of

the time of the challenged decision rather than from the vantage

point of hindsight.”              Roth v. Sawyer-Cleator Lumber Co., 16 F.3d

915,   918    (8th   Cir.       1994)    (alteration       and   internal    quotation

marks omitted).            “Because the content of the duty of prudence

turns on ‘the circumstances . . . prevailing’ at the time the

fiduciary acts, § 1104(a)(1)(B), the appropriate inquiry will

necessarily     be     context        specific.”         Fifth     Third   Bancorp    v.

Dudenhoeffer, No. 12-751, 573 U.S. __, slip op. at 15 (June 25,

2014) (alteration in original).

       In   addition       to   the   diversification       imperatives      described

above, there were at least three reasons for the RJR fiduciaries

to eliminate, at the time they had to make the decision, the

Nabisco stocks from the RJR 401(k) plan.                    First, as found by the

district court, there was a substantial threat to the Nabisco

stocks’ share prices from the “tobacco taint.”                         Tatum v. R.J.

Reynolds     Tobacco       Co.,    926   F.   Supp.   2d    648,    659-60   (M.D.N.C.

2013).      Although Nabisco had theoretically insulated itself from

                                              81
liability for RJR’s tobacco-related litigation by entering into

indemnification agreements with RJR, there was always a danger

that holders of judgments against RJR might sue Nabisco for any

amount that RJR could not pay.                   This danger became especially

acute after a Florida jury ruled in July 1999 against RJR in a

class-action lawsuit.              Id. at 659.       As the damages portion of

the trial began in the fall of 1999, RJR began to worry that it

would not be able to fully pay a multibillion dollar award and

that   members     of    the   class    would     sue    Nabisco   for    the   unpaid

remainder.       Id. at 660.           In a June 1999 report to the SEC,

Nabisco acknowledged these very risks.                    Id. at 659.       And when

RJR lost an important punitive-damages ruling in the Florida

suit, the stock prices of RJR and Nabisco both dropped sharply.

Id. at 660.        Indeed, the Florida jury ultimately awarded the

class over $140 billion in punitive damages.                       Id. at 660 n.9.

(Related litigation is ongoing.                  On July 18, 2014, a Florida

jury awarded $23.6 billion in punitive damages against RJR in an

individual case stemming from that class action.)

       Second, Nabisco’s stock prices had been steadily falling

since the two companies split.               Between June 15, 1999, when the

split was finalized, and January 31, 2000, when RJR sold the two

Nabisco   stocks        in   its   401(k)    plan,      their   prices    had   fallen

substantially in value, one by 60% and the other by 28%.                        Id. at

666.    Cautious        fiduciaries     would      naturally       view   optimistic

                                            82
glosses on Nabisco’s continuing stock decline with skepticism.

Not only were analyst reports during the dot-com bubble colored

by “optimism bias,” but even the neutral and positive reports

noted the effect of the tobacco taint and that the current share

price might well be accurate.                Id. at 662-63.            And even had RJR

chosen to keep the Nabisco stocks, there was, as the district

court    noted,    no   reason       to   think    that     the   stocks      would    have

provided above-market returns, given the public nature of the

relevant financial information and the general efficiency of the

stock    market.        Id.    at    686-88.         As   the     Supreme     Court     has

recognized, “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.’”

Fifth Third, slip op. at 17 (quoting Summers v. State Street

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

in original).

       Third, the ultimate cause of the dramatic appreciation in

Nabisco    stock    prices      in    2000   --    the    bidding       war   sparked    by

investor Carl Icahn’s takeover bid -- was totally unexpected by

RJR,    analysts,   and       the    broader      market.       Notably,      when    Icahn

acquired    a   large     block      of   Nabisco     shares      in    November      1999,

Nabisco’s stock prices did not react and analyst reports did not

mention a possible takeover bid.                  Tatum, 926 F. Supp. 2d at 688.

In addition, the RJR-Nabisco split was structured such that the

                                             83
spinoff would be tax-free as long as, broadly speaking, Nabisco

did not initiate a corporate restructuring within two years.

Id. at 653.       Thus, a takeover by Icahn was only feasible if he

initiated it.           This limitation made an Icahn offer, and the

consequent bidding war, even less likely.                 Id. at 688-89.

      Ultimately, the RJR fiduciaries had little reason to think

that the Nabisco stocks in the 401(k) plan would appreciate in

value, and every reason to worry that they would continue to

decline.       The fiduciaries’ decision to liquidate the Nabisco

funds    was     prudent,       and    certainly    not   “clearly      imprudent.”

Plasterers’ Local Union No. 96 Pension Plan v. Pepper, 663 F.3d

210, 219 (4th Cir. 2011).               Arguably, it was the most prudent of

the options available, for it protected plan participants from

the dangers of risky shares held in undiversified plan funds.

To hold otherwise requires viewing the RJR fiduciaries’ actions

through the lens of hindsight, a grossly unfair practice that

our precedent categorically forbids.

                                           IV.

      The      majority     has       reversed   the   most   substantiated       of

district court findings under the most stringent of hindsight

tests.      To impose personal monetary liability upon fiduciaries

for prudent investment decisions made in the interest of asset

diversification makes no sense.                  What this decision will lead

to,   despite     all     the   words     from   the   majority   and    Tatum,   is

                                           84
litigation at every stage behind reasonable investment decisions

by   ERISA-plan      fiduciaries.          Who    would      want     to    serve     as    a

fiduciary given this kind of sniping?

      ERISA was “intended to ‘promote the interests of employees

and their beneficiaries in employee benefit plans.’”                               DiFelice

v.   U.S.    Airways,      Inc.,    497    F.3d       410,   417     (4th    Cir.     2007)

(quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90 (1983)).

Yet far from safeguarding the assets of ERISA-plan participants,

the litigation        spawned      by   the   majority       will    simply    drive       up

plan-administration         and    insurance      costs.        It    will    discourage

plan fiduciaries from fully diversifying plan assets.                              It will

contribute to a climate of second-guessing prudent decisions at

the point of market shift.                It will disserve those whom ERISA

was intended to serve when fiduciaries are hauled into court for

seeking, sensibly, to safeguard retirement savings.

      I     had   always    entertained         the    quaint      thought     that      law

penalized people for doing the wrong thing.                          Now the majority

proposes to penalize those whom the district court found after a

month-long        trial    did     indisputably        the    right        thing    --     in

professional parlance, the objectively prudent thing.

      I would affirm.




                                           85
