Issue: Breach of fiduciary duty
Lieff Cabraser serves as Co-Lead Trial Counsel in Tatum v. R.J. Reynolds Tobacco Company, a class action brought in federal court in North Carolina on behalf of over 3,500 employees of R.J. Reynolds Tobacco Company (“RJR”) under the Employment Retirement Income Security Act (ERISA).
Plaintiffs allege that RJR breached its duty of prudence in administering the employee 401(k) retirement plan when it liquidated two funds held by the plan on an arbitrary timeline without conducting a thorough investigation, thereby causing a substantial loss to the plan. The 6-week bench trial occurred in January-February 2010 and December 2010, and post-trial briefing concluded in February 2011.
In February 2013, the District Court issued a decision in favor of RJR. The District Court found that RJR breached its fiduciary duty of procedural prudence but concluded that a reasonable and prudent fiduciary could have made the same decision as RJR made. Plaintiffs appealed.
In August 2014, the U.S. Court of Appeals for the Fourth Circuit affirmed the holding that RJR breached its duty of procedural prudence and therefore bore the burden of proof as to causation. The Court of Appeals found that the District Court failed to apply the correct legal standard in assessing RJR’s liability, reversed the judgment in favor of RJR, and remanded the case to the District Court for further proceedings. Following a new judgment from the District Court in February 2016, the case has been appealed again and has not yet been resolved.