Harris v. Amgen, Inc.
| Decision Date | 30 October 2014 |
| Docket Number | No. 10–56014.,10–56014. |
| Citation | 770 F.3d 865 |
| Parties | Steve HARRIS ; Dennis F. Ramos, aka Dennis Ramos ; Donald Hanks; Jorge Torres; Albert Cappa, On Behalf of Themselves and All Others Similarly Situated, Plaintiffs–Appellants, v. AMGEN, INC.; Amgen Manufacturing, Limited; Frank J. Biondi, Jr.; Jerry D. Choate; Frank C. Herringer; Gilbert S. Omenn; David Baltimore; Judith C. Pelham; Kevin W. Sharer; Frederick W. Gluck; Leonard D. Schaeffer; Charles Bell; Jacqueline Allred; Amgen Plan Fiduciary Committee; Raul Cermeno; Jackie Crouse; Fiduciary Committee Of The Amgen Manufacturing Limited Plan; Lori Johnston ; Michael Kelly, Defendants–Appellees, Dennis M. Fenton; Richard Nanula; The Fiduciary Committee; Amgen Global Benefits Committee; Amgen Fiduciary Committee, Defendants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Stephen J. Fearon, Jr. and Garry T. Stevens, Jr., Squitieri & Fearon, LLP, New York, N.Y.; Stephen M. Fishback and Daniel L. Keller, Keller, Fishback & Jackson, LLP, Tarzana, CA; Francis M. Gregorek, Betsy C. Manifold, and Rachele R. Rickert, Wolf Haldenstein Adler Freeman & Herz, LLP, San Diego, CA, Mark C. Rifkin (argued), Wolf Haldenstein Adler Freeman & Herz, LLP, New York, N.Y.; and Thomas James McKenna, Gainey & McKenna, New York, N.Y., for Appellants.
Emily Seymour Costin, Sheppard Mullin Richter & Hampton, LLP, Washington, D.C.; Steven Oliver Kramer and Jonathan David Moss, Sheppard Mullin Richter & Hampton, LLP, Los Angeles, CA; Jonathan Rose, Alston & Bird, LLP, Washington, D.C.; John Nadolenco, Mayer Brown, LLP, Los Angeles, CA; Brian David Netter, Mayer Brown, LLP, Washington, D.C.; and Robert P. Davis (argued), Mayer Brown, LLP, New York, N.Y., for Appellees.
On Remand From The United States Supreme Court. D.C. No. 2:07–cv–05442–PSG–PLA.
Before: JEROME FARRIS and WILLIAM A. FLETCHER, Circuit Judges, and EDWARD R. KORMAN, Senior District Judge.*
Plaintiffs, current and former employees of Amgen, Inc. (“Amgen”) and its subsidiary Amgen Manufacturing, Limited (“AML”), participated in two employer-sponsored pension plans, the Amgen Retirement and Savings Plan (the “Amgen Plan”) and the Retirement and Savings Plan for Amgen Manufacturing, Limited (the “AML Plan”) (collectively, “the Plans”). The Plans were employee stock-ownership plans that qualified as “eligible individual account plans” (“EIAPs”) under 29 U.S.C. § 1107(d)(3)(A). All of the plaintiffs' EIAPs included holdings in the Amgen Common Stock Fund, one of the investments available to plan participants. The Amgen Common Stock Fund held only Amgen common stock.
After the value of Amgen common stock fell, plaintiffs filed a class action under the Employee Retirement Income Security Act (“ERISA”) against Amgen, AML, Amgen's board of directors, and the Fiduciary Committees of the Plans (collectively, “defendants”), alleging that defendants breached their fiduciary duties under ERISA. The district court dismissed the complaint against Amgen under Federal Rule of Civil Procedure 12(b)(6) on the ground that Amgen was not a fiduciary. It dismissed the complaint against the other defendants, who were fiduciaries, after applying the “presumption of prudence” articulated in Quan v. Computer Sciences Corp., 623 F.3d 870 (9th Cir.2010). Alternatively, even assuming the absence of the presumption, the district court dismissed the complaint on the ground that defendants had not violated their fiduciary duties.
In an earlier opinion, we reversed the district court's dismissal of the complaint. Harris v. Amgen, Inc., 738 F.3d 1026 (9th Cir.2013). Applying Quan, we held that the presumption of prudence did not apply. We held, further, that, in the absence of the presumption, plaintiffs had sufficiently alleged violation of the defendants' fiduciary duties. Finally, we held that Amgen was an adequately alleged fiduciary of the Amgen Plan.
Defendants petitioned for a writ of certiorari. The Supreme Court deferred ruling on the petition while it considered Fifth Third Bancorp v. Dudenhoeffer, ––– U.S. ––––, 134 S.Ct. 2459, 189 L.Ed.2d 457 (2014), another ERISA case in which the presumption of prudence was at issue. In Quan, we had held that the presumption of prudence was available to ERISA fiduciaries for both EIAPs and employee stock ownership plans (“ESOPs”) “when the plan terms require or encourage the fiduciary to invest primarily in employer stock.” Quan, 623 F.3d at 881. Overruling Quan and similar decisions by our sister circuits, the Supreme Court held in Fifth Third that there was no presumption of prudence for ESOP fiduciaries beyond the statutory exemption from the otherwise applicable duty to diversify. Fifth Third, 134 S.Ct. at 2467 ; 29 U.S.C. § 1104(a)(2). After deciding Fifth Third, the Court granted certiorari, and vacated and remanded for reconsideration in light of its decision. Amgen, Inc. v. Harris, ––– U.S. ––––, 134 S.Ct. 2870, –––L.Ed.2d –––– (2014).
On reconsideration in light of Fifth Third, we again reverse the district court's dismissal.
The following narrative is taken from the complaint and documents that provide uncontested facts. On a motion to dismiss, we assume the allegations of the complaint to be true. See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007).
Amgen is a global biotechnology company that develops and markets pharmaceutical drugs. AML, a wholly owned subsidiary of Amgen, operates a manufacturing facility in Puerto Rico. To provide retirement benefits to their employees, Amgen set up the Amgen Plan on April 1, 1985. AML set up the AML Plan in 2002 and it became effective on January 1, 2006.
The Plans are covered by the Employee Retirement Income Security Act (“ERISA”). Both qualify as “individual account plans.” See 29 U.S.C. § 1002(34). Plan participants contribute a portion of their pre-tax compensation to individual investment accounts. They receive benefits based solely upon their contributions, adjusted for any gains and losses in assets held by the Plans. Participants may contribute up to thirty percent of their pre-tax compensation. They may select from a number of investment funds offered by the Plans. One of those is the Amgen Common Stock Fund, which holds only Amgen stock. Amgen stock constituted the largest single asset of both Plans in 2004 and 2005.
This litigation arises out of a controversy concerning Amgen drugs used for the treatment of anemia
. Anemia is a condition in which blood is deficient in red blood cells or hemoglobin. Causes of anemia include an iron-deficient diet, excessive bleeding, certain cancers and cancer treatments, and kidney or liver failure. In the early 1980s, Amgen scientists discovered how to make artificial erythropoietin, a protein formed in the kidneys that stimulates erythropoiesis, the formation of red blood cells. After this discovery, Amgen commercialized the manufacture of a class of drugs known as erythropoiesis-stimulating agents (“ESAs”) to treat anemia.
In 1989, the Federal Drug Administration (“FDA”) approved Amgen's first commercial ESA, epoetin alfa
, for the treatment of anemia associated with chronic kidney failure. Amgen marketed epoetin alfa for approved uses under the brand name EPOGEN (“Epogen ”), and licensed patents to Johnson & Johnson (“J & J”) to develop additional marketable uses. J & J obtained FDA approval between 1991 and 1996 to market epoetin alfa under the brand name PROCRIT (“Procrit ”) for anemia associated with chemotherapy and HIV therapies, for chronic kidney diseases, and for pre-surgery support of anemic patients. J & J had exclusive marketing rights for Procrit under its licensing agreement with Amgen.
Sometime before 2001, Amgen developed a new ESA, darbepoetin alfa
, whose sales by Amgen were not restricted by J & J's exclusive marketing rights for Procrit. Darbepoetin alfa, marketed as Aranesp, lasts longer in the bloodstream than epoetin alfa. The FDA approved Aranesp for treatment of anemia associated with chronic kidney failure and cancer chemotherapy. Aranesp has taken significant market share from J & J's Procrit. At the time the complaint was filed, Aranesp “control[led] half the market” for non-dialysis ESA. Sales of EPOGEN and Aranesp have been “core to [Amgen's] survival and success,” making up roughly half of Amgen's $14.3 billion in revenue in 2006.
In the late 1990s and early 2000s, several clinical trials raised safety concerns regarding the use of ESAs for particular anemic populations. In 1998, the Normal Hematocrit Study tested the efficacy of ESAs on anemia
patients with pre-existing heart disease. The study was terminated because the test group experienced statistically significant higher rates of blood clotting. In 2003 and early 2004, two trials—ENHANCE and BEST—tested ESAs on cancer patients in Europe. The ENHANCE trial showed shorter progression-free survival and shorter overall survival of head and neck cancer patients for the ESA group than the placebo group. The BEST trial was terminated after four months because breast cancer patients in the group taking epoetin alfa had a higher rate of death than those in the placebo group.
ENHANCE and BEST did not test the safety of ESAs for the specific uses and doses for which they had been approved in the United States. In March 2004, the FDA published notice in the Federal Register that the Oncology Drug Advisory Committee (“ODAC”), an FDA-sponsored group of oncology experts, would convene in May 2004 to discuss safety concerns about Aranesp
. In April, before the ODAC meeting, an Amgen spokesperson stated during a conference call with investors, analysts, and plan participants that “the focus [of the ODAC meeting] was not on Aranesp ” and that “the safety for Aranesp has been comparable to placebo.”
During its two-day meeting with ODAC, the FDA urged Amgen to conduct further clinical trials to test the safety of ESAs for uses that had already been approved by the FDA. Amgen made a...
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Jander v. Ret. Plans Comm. Ibm
...claims based, in part, on alleged breaches of the duty of prudence in light of the fiduciaries’ inside information. Harris v. Amgen, Inc. , 770 F.3d 865 (9th Cir. 2014), amended and superseded , 788 F.3d 916 (9th Cir. 2015), rev’d , ––– U.S. ––––, 136 S.Ct. 758, 193 L.Ed.2d 696 (2016). The ......