Several Baker Hostetler attorneys were mentioned in a recent Bureau of National Affairs Pension & Benefits Daily alert for their role in securing an ERISA litigation victory for client KeyCorp.
The Baker Hostetler team of Cleveland partners Daniel R. Warren, Scott C. Holbrook and James A. Slater, along with Cleveland associates David A. Carney and Gretchen L. Lange, were named in the August 17 article, “Court Says KeyCorp Worker Has No Standing Where She Reaped Profit From Inflated Stock.”
At issue was whether the named plaintiff could bring breach of fiduciary duty claims against the company for the reduction in value of her retirement plan, which included investments in KeyCorp stock, after the stock price dropped.
The article called the court’s decision “a significant ruling” and further explained: “Granting KeyCorp’s motion to dismiss, Judge Donald C. Nugent found that KeyCorp employee Ann I. Taylor realized a profit from her investment in KeyCorp stock, and as such she suffered no injury that would support her claim that the stock was an imprudent investment for the company’s defined contribution pension plan.”
According to the article, the issue ultimately came down to how to measure damages. “The court rejected Taylor’s contention that the court should measure her damages by employing an ‘alternative investment’ damages model, rather than an out-of-pocket measure of damages… The court found that the out-of-pocket model is the appropriate model to use when measuring damages in cases where plaintiffs claim that stock was artificially inflated.
“When the out-of-pocket model was used in this case, it showed that Taylor reaped a profit of over $6,000 through her investment in KeyCorp’s allegedly inflated stock,” the article noted, quoting the court’s explanation that “‘In these types of cases, plaintiffs who benefit from the alleged artificial inflation of a security do not have standing to sue over it, regardless of how their claim is paid.’”