October Term 2019 · Docket 18-1165
Can ESOP fiduciaries delay disclosing bad news to protect fund value?
IBM argues that disclosing negative inside information would immediately harm the fund. Jander argues that delay harms both current holders and potential buyers.
Verified source milestones
- — An official oral-argument transcript was verified.
- — An official oral-argument transcript was verified.
The arguments, in order
This case may have been argued more than once. Each entry below uses that session's official transcript. Later arguments do not erase earlier ones.
Argument 1 ·
What happened at the argument
Paul Clement argued that Dudenhoeffer recognized a specific pleading standard. He stated that disclosure of negative information can harm the fund. He emphasized the conflict between disclosure and fund value.
Jander's counsel argued that ESOP fiduciaries owe the same duty of prudence. They stated that this duty requires action based on inside information. They argued that delay harms both current holders and potential buyers.
Justice Gorsuch questioned why insider trustees should receive special rules. He asked what employees gain from encouraging such trustees. He noted the possibility of information leaks.
Justice Sotomayor emphasized that both holders and buyers are harmed by delay. She stated that the securities laws do not govern fiduciary duties. She challenged the argument for special treatment of ESOPs.
Read the official transcript for this argument · Official argument details
Sources used for this argument breakdown
- Official Supreme Court Transcript — file page 10, lines 19-33 — Transcript, file page 10, lines 19-33
- Official Supreme Court Transcript — file page 10, lines 37-43 — Transcript, file page 10, lines 37-43
- Official Supreme Court Transcript — file page 10, lines 47-1 — Transcript, file page 10, lines 47-1
- Official Supreme Court Transcript — file page 10, lines 7-7 — Transcript, file page 10, lines 7-7
- Official Supreme Court Transcript — file page 11, lines 29-45 — Transcript, file page 11, lines 29-45
- Official Supreme Court Transcript — file page 12, lines 31-39 — Transcript, file page 12, lines 31-39
- Official Supreme Court Transcript — file page 15, lines 9-9 — Transcript, file page 15, lines 9-9
- Official Supreme Court Transcript — file page 16, lines 31-7 — Transcript, file page 16, lines 31-7
- Official Supreme Court Transcript — file page 28, lines 19-11 — Transcript, file page 28, lines 19-11
- Official Supreme Court Transcript — file page 39, lines 11-15 — Transcript, file page 39, lines 11-15
- Official Supreme Court Transcript — file page 4, lines 11-21 — Transcript, file page 4, lines 11-21
- Official Supreme Court Transcript — file page 4, lines 23-21 — Transcript, file page 4, lines 23-21
- Official Supreme Court Transcript — file page 6, lines 53-15 — Transcript, file page 6, lines 53-15
- Official Supreme Court Transcript — file page 65, lines 13-7 — Transcript, file page 65, lines 13-7
- Official Supreme Court Transcript — file page 66, lines 31-33 — Transcript, file page 66, lines 31-33
- Official Supreme Court Transcript — file page 66, lines 9-27 — Transcript, file page 66, lines 9-27
- Official Supreme Court Transcript — file page 69, lines 19-21 — Transcript, file page 69, lines 19-21
- Official Supreme Court Transcript — file page 7, lines 23-37 — Transcript, file page 7, lines 23-37
- Official Supreme Court Transcript — file page 7, lines 53-13 — Transcript, file page 7, lines 53-13
- Official Supreme Court Transcript — file page 9, lines 23-51 — Transcript, file page 9, lines 23-51
A citizen's guide to the whole case
What this case is about
This case tests the pleading standard for ERISA fiduciary duty claims. The core dispute involves whether fiduciaries must disclose negative inside information. IBM claims disclosure would reduce fund value. Jander claims delay harms participants.
Official sources for this section
- Official Supreme Court Transcript — file page 28, lines 19-11 — Transcript, file page 28, lines 19-11
- Official Supreme Court Transcript — file page 39, lines 11-15 — Transcript, file page 39, lines 11-15
- Official Supreme Court Transcript — file page 4, lines 23-21 — Transcript, file page 4, lines 23-21
- Official Supreme Court Transcript — file page 65, lines 13-7 — Transcript, file page 65, lines 13-7
How the case got here
The Supreme Court heard oral argument in this case on November 6, 2019.
Official sources for this section
- Official Supreme Court Transcript — file page 4, lines 11-21 — Transcript, file page 4, lines 11-21
- Official Supreme Court Transcript — file page 69, lines 19-21 — Transcript, file page 69, lines 19-21
What each side wants
IBM wants the Court to affirm the lower court's application of the Dudenhoeffer standard. IBM argues that disclosing negative information would immediately reduce fund value. IBM seeks to maintain the current pleading requirements for fiduciary claims.
Jander wants the Court to reject the argument that delay is permissible. Jander argues that both current holders and potential buyers suffer from delayed disclosure. Jander seeks a standard that prioritizes participant harm over fund value.
Official sources for this section
- Official Supreme Court Transcript — file page 28, lines 19-11 — Transcript, file page 28, lines 19-11
- Official Supreme Court Transcript — file page 39, lines 11-15 — Transcript, file page 39, lines 11-15
- Official Supreme Court Transcript — file page 4, lines 23-21 — Transcript, file page 4, lines 23-21
- Official Supreme Court Transcript — file page 65, lines 13-7 — Transcript, file page 65, lines 13-7
What each side says
IBM contends that Dudenhoeffer established a specific pleading standard. This standard acknowledges that insider disclosure can harm the plan. IBM argues that fiduciaries face a conflict between disclosure and fund value.
Jander contends that ESOP fiduciaries owe the same duty of prudence as other ERISA fiduciaries. Jander argues that this duty requires action based on inside information. Jander asserts that delay harms all participants.
Official sources for this section
- Official Supreme Court Transcript — file page 28, lines 19-11 — Transcript, file page 28, lines 19-11
- Official Supreme Court Transcript — file page 39, lines 11-15 — Transcript, file page 39, lines 11-15
- Official Supreme Court Transcript — file page 4, lines 23-21 — Transcript, file page 4, lines 23-21
- Official Supreme Court Transcript — file page 65, lines 13-7 — Transcript, file page 65, lines 13-7
What the justices asked
Justice Kavanaugh asked if different beneficiary classes create a duty conflict. He questioned whether prudence can be violated when some are harmed and others helped.
Justice Sotomayor asked why the fiduciary duty should not apply. She noted that both holders and buyers are harmed by delay. She distinguished fiduciary duties from securities laws.
Official sources for this section
- Official Supreme Court Transcript — file page 10, lines 19-33 — Transcript, file page 10, lines 19-33
- Official Supreme Court Transcript — file page 10, lines 37-43 — Transcript, file page 10, lines 37-43
- Official Supreme Court Transcript — file page 10, lines 47-1 — Transcript, file page 10, lines 47-1
- Official Supreme Court Transcript — file page 10, lines 7-7 — Transcript, file page 10, lines 7-7
- Official Supreme Court Transcript — file page 11, lines 29-45 — Transcript, file page 11, lines 29-45
- Official Supreme Court Transcript — file page 12, lines 31-39 — Transcript, file page 12, lines 31-39
- Official Supreme Court Transcript — file page 15, lines 9-9 — Transcript, file page 15, lines 9-9
- Official Supreme Court Transcript — file page 16, lines 31-7 — Transcript, file page 16, lines 31-7
- Official Supreme Court Transcript — file page 6, lines 53-15 — Transcript, file page 6, lines 53-15
- Official Supreme Court Transcript — file page 66, lines 31-33 — Transcript, file page 66, lines 31-33
- Official Supreme Court Transcript — file page 66, lines 9-27 — Transcript, file page 66, lines 9-27
- Official Supreme Court Transcript — file page 69, lines 19-21 — Transcript, file page 69, lines 19-21
- Official Supreme Court Transcript — file page 7, lines 23-37 — Transcript, file page 7, lines 23-37
- Official Supreme Court Transcript — file page 7, lines 53-13 — Transcript, file page 7, lines 53-13
- Official Supreme Court Transcript — file page 9, lines 23-51 — Transcript, file page 9, lines 23-51
Why it matters
This case defines the scope of fiduciary duties for employee stock ownership plans. It determines when insiders must disclose negative information. The outcome shapes the balance between fund stability and participant transparency. It sets the standard for future ERISA litigation involving inside information.
Official sources for this section
- Official Supreme Court Transcript — file page 28, lines 19-11 — Transcript, file page 28, lines 19-11
- Official Supreme Court Transcript — file page 39, lines 11-15 — Transcript, file page 39, lines 11-15
- Official Supreme Court Transcript — file page 4, lines 23-21 — Transcript, file page 4, lines 23-21
- Official Supreme Court Transcript — file page 65, lines 13-7 — Transcript, file page 65, lines 13-7
What happens next
This article currently covers the argument record. Use the official docket link for later case activity.
Official sources for this section
- Official Supreme Court Transcript — file page 10, lines 19-33 — Transcript, file page 10, lines 19-33
- Official Supreme Court Transcript — file page 10, lines 37-43 — Transcript, file page 10, lines 37-43
- Official Supreme Court Transcript — file page 10, lines 47-1 — Transcript, file page 10, lines 47-1
- Official Supreme Court Transcript — file page 10, lines 7-7 — Transcript, file page 10, lines 7-7
- Official Supreme Court Transcript — file page 11, lines 29-45 — Transcript, file page 11, lines 29-45
- Official Supreme Court Transcript — file page 12, lines 31-39 — Transcript, file page 12, lines 31-39
- Official Supreme Court Transcript — file page 15, lines 9-9 — Transcript, file page 15, lines 9-9
- Official Supreme Court Transcript — file page 16, lines 31-7 — Transcript, file page 16, lines 31-7
- Official Supreme Court Transcript — file page 4, lines 11-21 — Transcript, file page 4, lines 11-21
- Official Supreme Court Transcript — file page 6, lines 53-15 — Transcript, file page 6, lines 53-15
- Official Supreme Court Transcript — file page 66, lines 31-33 — Transcript, file page 66, lines 31-33
- Official Supreme Court Transcript — file page 66, lines 9-27 — Transcript, file page 66, lines 9-27
- Official Supreme Court Transcript — file page 69, lines 19-21 — Transcript, file page 69, lines 19-21
- Official Supreme Court Transcript — file page 7, lines 23-37 — Transcript, file page 7, lines 23-37
- Official Supreme Court Transcript — file page 7, lines 53-13 — Transcript, file page 7, lines 53-13
- Official Supreme Court Transcript — file page 9, lines 23-51 — Transcript, file page 9, lines 23-51
Official Court provenance
Official docket and case history · Official Supreme Court oral-argument detail page
Title and summary sources
- Official Supreme Court Transcript — file page 28, lines 19-11 — Transcript, file page 28, lines 19-11
- Official Supreme Court Transcript — file page 39, lines 11-15 — Transcript, file page 39, lines 11-15
- Official Supreme Court Transcript — file page 4, lines 23-21 — Transcript, file page 4, lines 23-21
- Official Supreme Court Transcript — file page 65, lines 13-7 — Transcript, file page 65, lines 13-7
- Official Supreme Court Transcript — file page 28, lines 19-11 — Transcript, file page 28, lines 19-11
- Official Supreme Court Transcript — file page 39, lines 11-15 — Transcript, file page 39, lines 11-15
- Official Supreme Court Transcript — file page 4, lines 23-21 — Transcript, file page 4, lines 23-21
- Official Supreme Court Transcript — file page 65, lines 13-7 — Transcript, file page 65, lines 13-7
Revision history
- Revision 1 · Official Transcript ·
Correction: Rewritten to the concise citizen-facing editorial standard.
- Revision 2 · Official Transcript ·
Correction: Migrated to the dated official Court activity contract without model use.