Sixth Circuit Requires a Net Loss to Sue in Certain ERISA Stock-Drop Cases

By on June 21, 2012

by John A. Litwinski and Chris C. Scheithauer

Recently, the U.S. Court of Appeals for the Sixth Circuit held that a 401(k) plan participant who sued under the Employee Retirement Income Security Act (ERISA) for losses in connection with a company stock fund that suffered a drop must show losses on a “net basis” during the class period to have constitutional standing.  This decision has great significance in addressing plaintiffs’ standing and class certification in so-called ERISA “stock-drop” cases, often filed after a company’s stock price falls.

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