Langbecker, et al. v. Electronic Data Systems Corporation, et al.

Case Updates

The Fifth Circuit reversed certification for the class of employees.

Following a fall in the EDS stock price during the market-wide drop in technology stocks in 2000, plaintiffs filed a class action lawsuit claiming that EDS and others violated ERISA by offering EDS stock as an investment option under the EDS 401(k) plan. Among other things, the lower court held that because this case was brought as a class action on behalf of the Plan, neither the releases signed by individual plaintiffs nor section 404(c) of ERISA, which made the plan participants responsible for their own 401(k) investment decisions, applied to the case. On an interlocutory basis, the Fifth Circuit agreed to review these and other rulings. NCLC argued that both the releases signed by plaintiffs and the 404(c) defense bar a recovery by the plaintiffs in the case. NCLC also pointed out that the lower court rulings serve to undermine the favored status federal law confers on participant-directed investment in company stock via 401(k) plans.