No. 13-15155, Non-Argument Calendar.

DENNIS SMITH, Individually and on behalf of all others similarly situated, Plaintiff-Appellant, JACKLIN TOMA, Consol. Plaintiff, IVONNE BERMUDEZ, Intervenor Plaintiff, v. DELTA AIR LINES INC., GERALD GRINSTEIN, LEON PIPER, ADMINISTRATIVE COMMITTEE OF DELTA AIR LINES, INC., BENEFIT FUND INVESTMENT COMMITTEE, et al., Defendants-Appellees, PERSONNEL & COMPENSATION COMMITTEE, et al., Defendants.

United States Court of Appeals, Eleventh Circuit.

April 17, 2014.



This appeal involves a punitive class action brought under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., against defendants Delta Air Lines, Inc. and the fiduciaries of a benefit plan offered by Delta to its employees that provided for investment in Delta stock. Dennis Smith, the class representative, is a former Delta employee who participated in the Plan and lost money when the price of Delta stock declined between 2000 and 2004.

In March 2006, the district court dismissed Smith's complaint for failure to state a claim. While an appeal of that decision was pending, this court decided Lanfear v. Home Depot, Inc., 679 F.3d 1267 (11th Cir. 2012), which clarified the legal standard for evaluating ERISA claims against plan fiduciaries arising out of investments in employer stock as envisioned in an employee stock ownership program ("ESOP"). Because the district court did not have the benefit of Lanfear when it issued its order, we remanded the case with instructions to apply Lanfear to Smith's complaint. The district court complied with our mandate and applied Lanfear to the allegations in Smith's complaint and once again concluded that Smith had failed to state a claim. It is from that order of dismissal that Smith perfects this appeal.

The district court's grant of a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) is reviewed de novo. See Edwards v. Prime, Inc. 602 F.3d 1276, 1291 (11th Cir. 2010). The allegations in the complaint must be taken as true and construed in the light most favorable to the plaintiff. Id. Dismissal for failure to state a claim is proper if the factual allegations are not "enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 1965 (2007). "[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss." Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 1950 (2009).

After reviewing the record and reading the parties briefs, we conclude that the district court correctly applied the highly deferential abuse of discretion standard as set forth in Lanfear to the allegations contained in Smith's complaint. Lanfear, 679 F.3d at 1279. The Lanfear standard applies to fiduciaries of ESOP plans as well as other ERISA plans that "encourage or require investment in employer stock." Id. at 1278 n.14. Here, the Plan required defendants to offer a Delta Common Stock Fund as an investment option for participants' voluntary contributions and required that company matching contributions be made in Delta stock. We agree with defendants that at the very least, the Plan's many provisions addressing investments in Delta stock made clear that defendants were "encouraged" to offer employer stock as an investment option for participants. That is all that is required to bring this case within the scope of Lanfear.

Although it is uncontroverted that during the period in question Delta faced business challenges, the Plan required defendants to offer participants investments in Delta stock, and defendants continued to abide by those provisions. Smith contends that with the benefit of hindsight, defendants should have known Delta's turnaround efforts would fail. But that was not at all obvious at the time, as underscored by market movements during the class period. Because a reasonable fiduciary could have concluded that investments in Delta stock during the class period remained appropriate, Smith's prudence claim fails.

Accordingly, for the reasons stated above, as well as those contained in the district court's well-reasoned order filed on November 1, 2013, we affirm the judgment of dismissal.



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