![]() ![]() However, then she had questioned whether the corrective disclosure theory satisfied the standard set forth by the Supreme Court in Fifth Third Bancorp v. Having laid out those arguments, Judge Wolfson returned to the previous decision where, as she explains here, she concluded that the plaintiffs had “adequately alleged” that the Individual Defendants were plan fiduciaries, and that J&J could be held vicariously liable for actions committed by the Individual Defendants within the scope of their employment. The plaintiffs also argued that the J&J fiduciaries “could have used the unitized nature of the Plans’ stock funds to increase the cash buffer of the funds rather than invest in new stock purchases until such time as the stock was no longer artificially inflated.” Finally, the plaintiffs claim that “disclosure would not be necessary under the federal securities laws, so any concern Defendants might have about ‘spooking’ Plan participants or the market generally would be unfounded.” To finish that thought, they claim that “nce the truth came out about Johnson & Johnson’s talc products-as it inevitably would-Plan participants would have been spared significant harm.” District Court for the District of New Jersey) the plaintiffs alleged that the J&J defendants (including, by the way Chief Human Resources Officer Peter Fasolo and retired Chief Financial Officer Dominic Caruso) had the “opportunity to correct the record and make the truth about asbestos in Johnson & Johnson’s talc products known to the public” and if they had done so, “the Plans’ participants could have avoided millions of dollars in purchases of artificially inflated J&J shares, and subsequent losses in the value of the Johnson & Johnson stock in their Plan accounts when the truth was revealed to the market.” Johnson & Johnson et al., case number 3:19-cv-00923, in the U.S. Judge Wolfson noted that this time around ( Michael Perrone v. Which they subsequently did-but not sufficiently to satisfy Judge Wolfson-for the reasons that follow. Wolfson (who also ruled on the case at hand) granted the J&J defendants’ motion to dismiss the original complaint for failure to meet that standard-but then gave the plaintiffs leave to amend their claims. In this case, the plaintiffs ave already been rebuffed once-in April 2020, when U.S. Dudenhoeffer-has been that in order to successfully assert a breach of the duty of prudence in these cases “a plaintiff must plausibly allege an alternative action that the defendant could have taken that would have been consistent with the securities laws and that a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the fund than to help it.” And, as we have noted previously, that has turned out to be a difficult standard to meet. ![]() ![]() Supreme Court in 2014 in the case of Fifth Third Bancorp v. The standard in these cases-established by the U.S. An inflation that all came crashing down when that situation came to light-which had a decidedly negative impact on the value of participant holdings in the ESOP-which led to this “stock drop” litigation. So, how might that apply in a fiduciary suit?Īs it turns out, in a recent case three participant-plaintiffs allege that the fiduciary defendants breached their fiduciary duties to participants in the Johnson & Johnson Savings Plan, the Johnson & Johnson Savings Plan for Union Represented Employees, and the Johnson & Johnson Retirement Savings Plan because J&J’s senior leadership were aware for decades that J&J’s talc-based products, including J&J’s Baby Powder, contained asbestos and concealed that information from investors, resulting in an artificial inflation of the value of the Company’s stock. It’s often said that “if at first you don’t succeed, try, try again.” Of course, it’s also said that doing the same thing and expecting a different result is the definition of insanity. ![]()
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