Diane Burke , et al., as participants in v. the Boeing Company

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 20-3389
D IANE BURKE , et al., as participants in and on behalf of the
Boeing Voluntary Investment Plan, and on behalf of a class
of all others who are similarly situated,
Plaintiffs-Appellants,
v.
T HE BOEING C OMPANY, et al.,
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:19-cv-02203 — Virginia M. Kendall, Judge.
____________________
A RGUED MAY 21, 2021 — D ECIDED A UGUST 1, 2022
____________________
Before SYKES, Chief Judge, and R IPPLE and H AMILTON, Cir-
cuit Judges.
HAMILTON, Circuit Judge. This appeal presents new varia-
tions on issues that often arise when the value of employer
stock held by an employee stock ownership plan drops sub-
stantially. The Employee Retirement Income Security Act
(ERISA) allows company insiders to serve as fiduciaries of

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2 No. 20-3389
employee benefit plans, so that they owe fiduciary duties both
to plan participants and to the company. See Pub. L. No. 93-
406, 88 Stat. 829 (1974) (codified in various sections of
29 U.S.C.); see also 29 U.S.C. § 1108(c)(3); Halperin v. Richards,
7 F.4th 534, 542 (7th Cir. 2021). Such insiders also have obliga-
tions to all shareholders under securities laws.
For decades, employees unhappy about dropping stock
values in employee stock ownership plans have tried to use
ERISA to obtain relief from the ERISA fiduciaries and their
employers. At the foundation of the early efforts was a theory
that when an employer’s business ran into serious trouble that
would cause the stock value to drop, company insiders with
fiduciary duties under ERISA were obliged to use inside in-
formation about those troubles for the benefit of employee-
shareholders at the (implicit) expense of other shareholders.
That theory would conflict directly with federal securities
laws. The Supreme Court made clear in Fifth Third Bancorp v.
Dudenhoeffer, 573 U.S. 409 (2014), that ERISA does not require
fiduciaries to violate securities laws on insider trading.
In trying to reconcile ERISA and federal securities laws,
however, Dudenhoeffer left open at least a theoretical possibil-
ity for employees to seek relief under ERISA on a theory that
plan fiduciaries had a duty to disclose bad news to everyone.
Yet as part of the balance between ERISA and securities law,
Dudenhoeffer imposed demanding pleading standards for
such claims, requiring plaintiffs to plausibly allege an alterna-
tive action the defendant could have taken that would have
been consistent with securities law and that a prudent fiduci-
ary in the same circumstances would not have viewed as
more likely to harm the employee stock ownership fund than
to help it. 573 U.S. at 428. Since Dudenhoeffer, plaintiffs in

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No. 20-3389 3
ERISA stock-drop cases have been trying to satisfy, limit, or
avoid those pleading standards.
This court and others have long responded to ERISA fidu-
ciaries’ sometimes-conflicting interests by suggesting that the
conflicted fiduciaries step aside in favor of new, independent
fiduciaries who can focus exclusively on the interests of
ERISA plan participants and beneficiaries. E.g., Leigh v. Engle,
727 F.2d 113, 125 (7th Cir. 1984); Donovan v. Bierwirth, 680 F.2d
263, 271−72 (2d Cir. 1982).
Many years ago, The Boeing Company adopted that ap-
proach for its employee stock ownership plan, also known as
an “ESOP.” Boeing plan fiduciaries delegated to an independ-
ent outside fiduciary the selection and management of invest-
ment options for the ESOP. The central question here is
whether the delegation of those investment responsibilities
protects the company and company insiders from liability for
the plan’s continued offering of Boeing stock as an investment
option for employees before and during a time when the
value of Boeing stock dropped significantly. The drop oc-
curred after two fatal crashes of new Boeing 737 MAX airlin-
ers led to a worldwide grounding of those planes and a halt
to production. We agree with the district court that the dele-
gation of investment decisions to an independent fiduciary
means that neither Boeing nor the other defendants acted in
an ERISA fiduciary capacity in connection with the continued
investments in Boeing stock. We affirm the district court’s dis-
missal of the action.

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4 No. 20-3389
I. Factual and Procedural Background
A. The Boeing Company’s Employee Stock Ownership Plan
The Boeing Company designs and manufactures commer-
cial jets and defense, space, and security systems. Plaintiffs are
Boeing employees who participated in the Boeing Voluntary
Investment Plan (the “Plan”), a 401(k) plan that Boeing spon-
sors for eligible employees.
The Plan is an employee benefit plan and employee pen-
sion benefit plan covered by ERISA. See 29 U.S.C.
§ 1002(2)(A). Boeing employees may allocate a percentage of
their earnings to be invested in the Plan. See §§ 1002(34) &
1107(d)(3). At all relevant times, one investment option has
been the Boeing Stock Fund. Plaintiffs are Plan participants
whose savings were invested in the Boeing Stock Fund be-
tween November 7, 2018, and December 16, 2019 (the “Class
Period”). The defendants are Boeing itself, its Employee Ben-
efit Plans Committee (the “Plans Committee”), which is the
Plan Administrator under 29 U.S.C. § 1002(16)(A), responsible
for administering the Plan, and the Employee Benefit Invest-
ment Committee (the “Investment Committee”), which over-
sees the Plan’s investment options, plus named and unnamed
Boeing officials who served on one or both committees.
B. The Third-Party Delegation
In December 2007, the Investment Committee began con-
tracting with an outside trust company to manage the Plan’s
investments in Boeing stock. During the Class Period for this
case, the outside fiduciary was Newport Trust Company. The
operative agreement between the Investment Committee and
Newport Trust provided:

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No. 20-3389 5
As investment manager, [Newport Trust] will at
all times have the exclusive fiduciary authority
and responsibility, in its sole discretion, to de-
termine whether the continuing investment in
the [Boeing] Stock Fund is prudent under
ERISA (either with respect to permitting new in-
vestments in the [Boeing] Stock Fund, continu-
ing to hold [Boeing] Stock, or both).
The agreement further provided:
In exercising its authority and responsibility [as
investment manager], [Newport Trust has] the
authority to exercise any and all of the following
powers, and to instruct the trustee of the Plan
accordingly:
(i) to suspend or prohibit the investment of
new participant or employer contributions
in the [Boeing] Stock Fund;
(ii) to suspend or prohibit the transfer of par-
ticipant account balances into the [Boeing]
Stock Fund;
(iii) in connection with the determination that
holding [Boeing] Stock is no longer pru-
dent under ERISA, to liquidate the [Boe-
ing] Stock Fund and to sell or otherwise
dispose of all of the [Boeing] Stock held in
the [Boeing] Stock Fund ….

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6 No. 20-3389
The 2017 Financial Statements for the Plan said that the Plan
had
authorized Newport with sole responsibility for
deciding whether to restrict investment in the
Boeing Stock Fund, or to sell or otherwise dis-
pose of all or any portion of the stock held in the
Boeing Stock Fund. In the event Newport deter-
mined to sell or dispose of stock in the Boeing
Stock Fund, Newport would designate an alter-
native investment fund under the Plan for the
temporary investment of any proceeds from the
sale or other disposition of the Company’s com-
mon stock.
Newport is not named as a defendant in this case.
C. Plaintiffs’ Allegations
In October 2018, Boeing had for at least a year been selling
the new 737 MAX version of its best-selling 737 series of air-
liners. On October 29, 2018, a Lion Air 737 MAX airliner
crashed into the Java Sea, killing everyone aboard. Plaintiffs
here allege that soon after the crash, and especially once the
flight data recorder was retrieved, defendants knew or should
have known that all 737 MAX planes were unsafe to fly be-
cause of known problems with a new automated flight control
system that Boeing had added to the 737 MAX. On March 10,
2019, another 737 MAX crashed in Ethiopia, again killing eve-
ryone aboard. Plaintiffs here allege that the second crash also
resulted from the known problems with the automated flight
control system. The 737 MAX fleet was soon grounded world-
wide. On December 16, 2019—the close of the Class Period—

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No. 20-3389 7
Boeing announced that it would suspend production of new
737 MAX jets beginning in January 2020.
The human, financial, and legal consequences of the 737
MAX crashes have been huge. This lawsuit presents a small
and relatively narrow set of questions about whether Boeing
employees are entitled to relief from some of the financial con-
sequences of the 737 MAX disasters.
Plaintiffs allege here that defendants breached several du-
ties imposed on plan fiduciaries by ERISA: (i) the duties of
prudence and loyalty under ERISA § 404(a)(1); (ii) the duty to
monitor investments under ERISA § 404(a)(1); and (iii) the co-
fiduciary duty under ERISA § 405(a)(1)–(3). Plaintiffs’ allega-
tions rest on the theory that by November 7, 2018—one week
after recovery of the flight data recorder from the first 737
MAX crash—defendants should have issued a corrective pub-
lic disclosure saying that the 737 MAX was not safe to fly.
D. Proceedings Before the District Court
Plaintiffs filed this putative class action in March 2019,
shortly after the second 737 MAX crash. The operative second
amended complaint alleges that throughout the Class Period,
from November 7, 2018 to December 16, 2019, Boeing’s con-
tinuous concealment of material facts relating to the 737 MAX
jets caused the price of Boeing stock to be artificially inflated.
By November 7, 2018, plaintiffs allege, defendants knew or
should have known that public disclosure of these safety is-
sues was inevitable and should have taken steps to disclose
them to the public immediately.
In Count One, plaintiffs allege that the individual defend-
ants, the Plans Committee, and the Investment Committee, as
fiduciaries of the Boeing Stock Fund, breached the duty of

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8 No. 20-3389
prudence under ERISA § 404(a), 29 U.S.C. § 1104(a). Because
these defendants failed to promptly disclose safety issues
with the 737 MAX, plaintiffs and other Class members contin-
ued to acquire and hold Boeing stock at an artificially inflated
price. With respect to Boeing, plaintiffs allege that the corpo-
ration knew about and encouraged individual defendants’
continued concealment of material facts relating to the 737
MAX jets—and that the concealment itself was a corporate
strategy. Under the same theory of failure to disclose correc-
tive information, plaintiffs also allege that defendants
breached their duty of loyalty under ERISA § 404(a), 29 U.S.C.
§ 1104(a).
In Count Two, plaintiffs allege that defendants breached
the duty to monitor investments under ERISA § 404(a),
29 U.S.C. § 1104(a). In Count Three, plaintiffs allege that de-
fendants are liable as co-fiduciaries for the breaches of other
Boeing Stock Fund fiduciaries under ERISA § 405(a), 29 U.S.C.
§ 1105(a).
The district court granted defendants’ motion to dismiss
under Federal Rule of Civil Procedure 12(b)(6), holding that
plaintiffs’ allegations were lacking in two key respects. First,
the court held that none of the defendants were acting as fi-
duciaries of the Boeing Stock Fund. Burke v. Boeing Co., 500 F.
Supp. 3d 717, 725 (N.D. Ill. 2020). Second, the court held that
plaintiffs otherwise failed to state a claim for breach of the
duty of prudence by failing to meet the “demanding” stand-
ard for duty of prudence claims set forth in Fifth Third Bancorp
v. Dudenhoeffer, 573 U.S. 409 (2014). Id. at 725–27.
The district court also held that plaintiffs failed to state a
claim for failure to monitor investments insofar as that claim
was subject to the same pleading standard as the imprudence

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No. 20-3389 9
claim, and that plaintiffs failed to state a claim for breach of
co-fiduciary duties insofar as that claim was derivative of the
imprudence and failure-to-monitor claims. The court did not
separately address plaintiffs’ disloyalty claim. Id. at 727–28.
The court dismissed the second amended complaint without
prejudice, granting plaintiffs leave to file a third amended
complaint. Id. at 728. Plaintiffs did not take advantage of that
opportunity. The district court entered final judgment dis-
missing the action with prejudice, and plaintiffs have ap-
pealed based on the second amended complaint.
II. Standard of Review
We review de novo the district court’s dismissal for failure
to state a claim, and we may affirm the district court’s decision
on any ground for dismissal contained in the record, at least
as long as the losing parties had a fair opportunity to be heard
on it. E.g., Larson v. United Healthcare Ins. Co., 723 F.3d 905, 910
(7th Cir. 2013); see also Ewell v. Toney, 853 F.3d 911, 919 (7th
Cir. 2017); Dibble v. Quinn, 793 F.3d 803, 807 (7th Cir. 2015).
We construe the complaint in the light most favorable to
plaintiffs, accepting all well-pleaded facts as true and draw-
ing reasonable inferences in plaintiffs’ favor. Bator v. District
Council 4, 972 F.3d 924, 928 (7th Cir. 2020).
III. Analysis
A. Defendants’ Fiduciary Obligations Under the Plan
ERISA imposes on plan fiduciaries duties of prudence and
loyalty. Plan fiduciaries have a duty to manage plan assets un-
der a “prudent man standard of care,” that is, “solely in the
interest of the participants and beneficiaries,” and “with the
care, skill, prudence, and diligence … that a prudent man act-
ing in a like capacity and familiar with such matters would

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10 No. 20-3389
use” under the circumstances. 29 U.S.C. § 1104(a)(1)(B). One
fiduciary may also be held liable for another’s breach if the
first one knowingly participated in or enabled the other’s
breach, or knew about it and failed to make reasonable efforts
to remedy that breach. § 1105(a). In this case, plaintiffs allege
that defendants breached four fiduciary duties: (i) the duty of
prudence; (ii) the duty of loyalty; (iii) the duty to monitor in-
vestments; and (iv) the co-fiduciary duty to monitor other fi-
duciaries.
The core of the case is plaintiffs’ imprudence and disloy-
alty claims, which revolve around a theory of failure to dis-
close corrective information. We focus on the duties of pru-
dence and loyalty and the tensions that employee stock own-
ership plans create at the intersection of ERISA, corporation
law, and securities law. See generally Dudenhoeffer, 573 U.S. at
427−30 (explaining reasons for demanding pleading standard
in ESOP stock-drop cases); Halperin v. Richards, 7 F.4th 534,
542 (7th Cir. 2021) (addressing tension between fiduciary du-
ties under ERISA and state corporation law).
1. The Duty of Prudence
In Dudenhoeffer, the Supreme Court adopted a demanding
pleading standard for duty of prudence claims involving fi-
duciaries for benefit plans invested in employer stock. 573
U.S. 409. A plaintiff must “plausibly allege an alternative ac-
tion that the defendant could have taken that would have
been consistent with the securities laws and that a prudent
fiduciary in the same circumstances would not have viewed
as more likely to harm the fund than to help it.” Id. at 428. The
Court explained that this standard reflected the competing
congressional purposes of ERISA: to encourage the creation
of employee stock ownership plans while ensuring that plan

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No. 20-3389 11
participants could fairly and promptly enforce their rights un-
der a plan. Id. at 424–25.
To guide lower courts in applying the “more harm than
good” standard, the Court emphasized three principles. 573
U.S. at 428. First, the duty of prudence does not demand that
a fiduciary break the law: the duty of prudence “cannot re-
quire an ESOP fiduciary to perform an action—such as divest-
ing the fund’s holdings of the employer’s stock on the basis of
inside information—that would violate the securities laws.”
Id. Second, where a complaint faults fiduciaries for failure to
act on the basis of inside information or to disclose inside in-
formation to the public, courts should consider whether
ERISA-based obligations implicating insider information
“could conflict with the complex insider trading and corpo-
rate disclosure requirements imposed by the federal securities
laws.” Id. at 429. Third, courts should consider whether the
complaint has plausibly alleged that a prudent fiduciary in
the defendant’s position could not have concluded that halt-
ing investment in the employer’s stock or publicly disclosing
damaging insider information would spook the market, caus-
ing the stock price to drop. Id. at 429–30.
2. The Duty of Loyalty
ERISA’s more general duty of loyalty requires that plan
fiduciaries perform their duties with respect to a plan solely
in the interest of plan participants and beneficiaries. 29 U.S.C.
§ 1104(a)(1). ESOP stock-drop plaintiffs can and frequently do
plead disloyalty claims alongside their imprudence claims—
as plaintiffs do here. We agree with the Eighth Circuit that
plaintiffs “cannot use the duty of loyalty ‘to circumvent the
demanding Dudenhoeffer standard’ for duty of prudence
claims.” Dormani v. Target Corp., 970 F.3d 910, 917 (8th Cir.

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12 No. 20-3389
2020), quoting Allen v. Wells Fargo & Co., 967 F.3d 767, 777 (8th
Cir. 2020).
B. Effects of the Delegations on Defendants’ Duties to the Plan
Before we wade more deeply into the duties owed by plan
fiduciaries to plan participants, we must address a threshold
question: whether any defendant was acting in a fiduciary ca-
pacity at the time he, she, or it took the actions that are the
subject of the complaint. Pegram v. Herdrich, 530 U.S. 211, 226
(2000); Leimkuehler v. American United Life Ins. Co., 713 F.3d
905, 913 (7th Cir. 2013).
ERISA provides in relevant part that a person or entity is
an ERISA fiduciary only
to the extent that he: (i) exercises any discretion-
ary authority or discretionary control respect-
ing management of such plan or exercises any
authority or control respecting management or
disposition of its assets, (ii) he renders invest-
ment advice for a fee or other compensation, di-
rect or indirect, with respect to any moneys or
other property of such plan, or has any author-
ity or responsibility to do so, or (iii) he has any
discretionary authority or discretionary respon-
sibility in the administration of such plan.
29 U.S.C. § 1002(21)(A). In other words, fiduciary status under
§ 1002(21)(A) is not “all-or-nothing.” Coleman v. Nationwide
Life Ins. Co., 969 F.2d 54, 61 (4th Cir. 1992). A fiduciary who
wears two hats—as a corporate fiduciary and an ERISA fidu-
ciary—“wear[s] only one at a time,” wearing “the fiduciary
hat when making fiduciary decisions.” Pegram, 530 U.S. at 225.
ERISA “does not describe fiduciaries simply as

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No. 20-3389 13
administrators of the plan, or managers or advisers. Instead,
it defines an administrator, for example, as a fiduciary “only
‘to the extent’ that he acts in such a capacity in relation to a
plan.” Id. at 225–26, quoting 29 U.S.C. § 1002(21)(A).
Fiduciary status thus depends not on formal titles but on
“functional terms of control and authority over the plan.”
Mertens v. Hewitt Assocs., 508 U.S. 248, 262 (1993). To that ef-
fect, two types of fiduciaries exist under ERISA: “named” fi-
duciaries and “functional” fiduciaries. See id. at 251. Named
fiduciaries refers to persons who are “named in the plan in-
strument, or who, pursuant to a procedure specified in the
plan” are given express “authority to control and manage the
operation … of the plan.” 29 U.S.C. § 1102(a)(1)–(2). Func-
tional fiduciaries might not be named in the plan document
but still exercise “discretionary control or authority over the
plan’s management, administration, or assets.” Mertens, 508
U.S. at 251, citing § 1002(21)(A). As part of their express au-
thority and control to manage the plan, named fiduciaries
may also designate an individual, committee, or professional
plan administrator to carry out fiduciary responsibilities.
§ 1105(c)(1).
Here, plaintiffs allege that defendants are or were either
named or functional fiduciaries under ERISA and therefore
owed “strict fiduciary duties of loyalty and prudence to the
Plan and the participants in and beneficiaries of the Plan.” We
divide our discussion into four principal parts: (1) the role of
defendant Plans Committee; (2) the role of defendant Boeing;
(3) defendant Investment Committee’s delegation to Newport
of fiduciary authority over the Boeing Stock Fund; and
(4) plaintiffs’ theory that the Investment Committee retained

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14 No. 20-3389
a non-delegable duty under ERISA to make immediate public
disclosures of inside information.
1. The Plans Committee
Plaintiffs contend that defendant Plans Committee was
identified as the Plan Administrator in the Summary Plan De-
scription, and that the “Plan Administrator” was identified in
the Plan document as the Plan’s named fiduciary under
ERISA § 402(a), 29 U.S.C. § 1102(a). Plaintiffs argue it is “be-
yond dispute” that the Plans Committee was a named fiduci-
ary with “presumptive general authority with respect to the
Plan.” The premise is correct but the conclusion is not.
As the district court correctly found, the Plans Committee
had no fiduciary responsibility over the investment choices of
the Boeing Stock Fund. As the Plan Administrator under
ERISA § 3(16), 29 U.S.C.A. § 1002(16), the Plans Committee’s
responsibilities over the Boeing Stock Fund are limited to “all
matters related to administration of the Plan.” Its administra-
tive responsibilities included the full discretionary authority
to: (i) interpret the Plan; (ii) determine questions of participa-
tion eligibility and benefits entitlement related to the Plan;
(iii) establish rules and procedures for Plan administration;
(iv) maintain accounts; and (v) generate annual reports. The
Plans Committee was also tasked with “provid[ing] infor-
mation to Members regarding the Investment Funds available
under the Plan, including a description of the investment ob-
jectives and types of investments of each such Investment
Fund.”
As the Plan document states, the Plans Committee’s role
as Plan Administrator did not vest it with any responsibility,
authority, or discretion to make investment decisions with

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No. 20-3389 15
respect to the Boeing Stock Fund. Plaintiffs’ reliance on the
Plans Committee’s “presumptive general authority with re-
spect to the Plan,” does not establish a basis for these plain-
tiffs’ claims arising from the 737 MAX stock drop because fi-
duciary status under ERISA is defined in “functional terms of
control and authority over the plan.” See Mertens, 508 U.S. at
262. In the case of a plan administrator such as the Plans Com-
mittee, ERISA defines it as a fiduciary “only ‘to the extent’”
that it acts in such a capacity in relation to the plan. See Pe-
gram, 530 U.S. at 225–26, quoting 29 U.S.C. § 1002(21)(A).
Here, plaintiffs have failed to allege facts indicating that the
Plans Committee or any of its individual members were act-
ing in a fiduciary capacity related to managing the invest-
ments and investment options of the Boeing Stock Fund.
2. The Claims Against The Boeing Company
Plaintiffs argue that the district court erred in concluding
that the remaining defendants—Boeing itself and the Invest-
ment Committee—were not fiduciaries in any relevant capac-
ity because the Investment Committee had previously dele-
gated to Newport its fiduciary duties over the investment
choices of the Boeing Stock Fund. We first address the claims
against Boeing and then those against the Investment Com-
mittee and its members.
There were two steps to the key delegation of responsibil-
ity here to Newport, the third party that plaintiffs have not
sued, for the Plan’s investments and the choices available to
plan participants. The first step occurred when The Boeing
Company, as plan sponsor, delegated to the Investment Com-
mittee its authority to invest, reinvest, and manage assets of
all Boeing employee benefit plans, and to select and monitor
investment options for the Plan. Under the Independent

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16 No. 20-3389
Fiduciary Agreement that effected that delegation, Boeing re-
tained “responsibility in its corporate capacity to comply with
the requirements of applicable securities laws and ERISA
with respect to the offering of Company Stock under the
Plan.” Those requirements, as defendants correctly note, in-
clude filing an annual report required for employee stock pur-
chase, savings, and similar plans (SEC Form 11-K) and a reg-
istration statement allowing Boeing to issue shares of its stock
to employees through the Plan (SEC Form S-8).
We see no legal problem with that first delegation of in-
vestment responsibilities from Boeing as plan sponsor to the
Investment Committee, giving the committee the authority to
manage assets of all Boeing employee benefit plans, and to se-
lect and monitor investment options for the Plan. That first
delegation was subject, of course, to duties of prudence and
loyalty on the part of Boeing. A plan sponsor could not dele-
gate its duties to people or entities if it had reason to doubt
their ability to carry out their duties competently or honestly.
But there is no plausible claim here that the first delegation
violated either of those duties.
Contrary to plaintiffs’ theories here, the mere exercise of
some authority over Boeing employee benefit plans—here
Boeing’s retention of administrative corporate compliance
duties with respect to Boeing stock—did not mean that
Boeing was exercising fiduciary authority over the investment
choices and holdings of the Boeing Stock Fund. Those powers
and duties were clearly delegated to the Investment
Committee. Boeing, like the Plans Committee, lacked

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No. 20-3389 17
fiduciary authority with respect to the investments of the
Boeing Stock Fund during the Class Period.1
3. The Investment Committee’s Delegation
The central issues in this case concern the second delega-
tion at issue here: the Investment Committee’s decision to del-
egate to an outside third party responsibility for choosing and
managing the investments of the Boeing Stock Fund. In deter-
mining that the Investment Committee lacked fiduciary au-
thority with respect to the investments of the Boeing Stock
Fund, the district court relied on language in the Independent
Fiduciary Agreement delegating to Newport “exclusive fidu-
ciary authority and responsibility, in its sole discretion, to de-
termine whether the continuing investment in the [Boeing
Stock Fund] is prudent under ERISA.” Burke, 500 F. Supp. 3d
at 725. The district court further noted that Newport, as the
fiduciary responsible for the investments of the Boeing Stock
Fund, was required to “communicate with participants con-
cerning their investment in the Boeing Stock Fund at such
times as Newport reasonably determined to be necessary un-
der ERISA or desirable in the discharge of Newport’s duties
and responsibilities under the Independent Fiduciary Agree-
ment.” Id. (cleaned up).
Plaintiffs argue that the Independent Fiduciary Agree-
ment was much more limited than the district court thought.
1 To the extent that plaintiffs’ claims against defendant Verbeck, who
was responsible for signing Boeing’s SEC filings during the Class Period,
allege fiduciary responsibility over the Boeing Stock Fund by virtue of
similar “corporate duties,” plaintiffs’ allegations fall short at the threshold
question of whether Verbeck retained fiduciary authority over the Boeing
Stock Fund.

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18 No. 20-3389
Plaintiffs claim that any duty not expressly delegated to New-
port in the Independent Fiduciary Agreement remained with
the Investment Committee, including, most importantly in
plaintiffs’ view, “the duty to make public disclosures of non-
public information.” Plaintiffs’ theory of liability is that Boe-
ing insiders, such as members of the Investment Committee,
had access to material non-public information concerning
safety issues with the 737 MAX. These insiders failed to dis-
close that information to Newport (and all other shareholders
and potential investors), rendering Newport incapable of per-
forming its obligations under the Independent Fiduciary
Agreement. Plaintiffs argue that this duty to disclose is part
of the broader duty of loyalty that cannot be delegated. We
are not persuaded that ERISA imposes such a duty that would
be layered on top of federal securities laws governing public
disclosures of information material to investors.
The Independent Fiduciary Agreement clearly delegated
to Newport the decisions that are usually the focus of ESOP
stock-drop cases: the decisions to allow the Plan and employ-
ees to continue to hold employer stock, and the decision to
allow employees to continue making new investments in em-
ployer stock. In making those decisions, Newport was not a
Boeing insider. It was making decisions like any outside in-
vestor, albeit one holding a massive, $11 billion stake in the
company, on the basis of public information about the com-
pany and its prospects. As noted, a person is an ERISA fidu-
ciary “only ‘to the extent’” that she acts in such a capacity in
relation to the plan. Pegram, 530 U.S. at 225–26, quoting
29 U.S.C. § 1002(21)(A). During the Class Period, the Invest-
ment Committee did not exercise “discretionary control or au-
thority” over the Boeing Stock Fund’s “management, admin-
istration, or assets.” See Mertens, 508 U.S. at 251, citing

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No. 20-3389 19
§ 1002(21)(A). Instead, Newport exercised that discretionary
authority, and plaintiffs have not sued Newport.
The delegation to Newport anticipated exactly this sort of
case, in which Boeing insiders would be accused of facing
conflicting fiduciary loyalties. The delegation was designed to
remove the dilemma that plaintiffs’ theory would force upon
corporate insiders who exercise fiduciary responsibilities over
ERISA plans invested in the employer’s stock. We see no legal
barrier to such a delegation, and decades of ESOP stock-drop
litigation have provided powerful reasons for employers and
fiduciaries for ESOPs to take this step.2
Newport retained “exclusive fiduciary authority and re-
sponsibility, in its sole discretion” (i) to restrict new invest-
ments into the Boeing Stock Fund; (ii) to prohibit transfers
into and out of the Boeing Stock Fund; and (iii) in connection
with the determination that holding Boeing Stock is no longer pru-
dent under ERISA, to liquidate the Boeing Stock Fund and to
designate an alternative temporary investment for the pro-
ceeds. Accordingly, the Investment Committee and its indi-
vidual members, including defendants Dohnalek and Ver-
beck and the John Doe defendants, cannot be liable for breach-
ing fiduciary duties that they simply did not have.
2 We should acknowledge how extraordinary this delegation was.
Boeing insiders delegated to an outsider virtually complete authority to
decide when the Boeing Stock Fund should abandon current and future
investments in Boeing stock on behalf of Boeing employees. Yet given the
decades of ESOP stock-drop litigation, the delegation to avoid an impos-
sible dilemma under ERISA was certainly understandable.

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20 No. 20-3389
4. A Duty of Immediate Public Disclosure?
Plaintiffs, perhaps anticipating this result, lean more
heavily on their theory that the defendants’ duty of loyalty
included a non-delegable duty under ERISA (as opposed to
federal securities law) to disclose non-public information to
Plan participants, which after Dudenhoeffer would require full
public disclosure—to all shareholders and potential investors.
Defendants point out that plaintiffs’ own allegations
recognize that the proposed disclosure would have caused
“massive disruptions in the demand for the 737 MAX,” which
plaintiffs themselves characterized as Boeing’s “flagship”
aircraft. And since the Plan held nearly $11 billion in Boeing
stock in November 2018, even a modest ten percent decline
would have caused a billion-dollar loss. Defendants argue
that a prudent fiduciary could have readily concluded that
immediate public disclosure of negative information would
do more harm than good to the Boeing Stock Fund, especially
in light of the multiple investigations—internal and external,
foreign and domestic—that were just beginning in November
2018. See Allen v. Wells Fargo & Co., 967 F.3d 767, 773−76 (8th
Cir. 2020) (affirming dismissal of claims based on theory that
ERISA imposed duty to disclose adverse information about
employer’s business).
Plaintiffs have failed to identify any stand-alone fiduciary
duty under ERISA to disclose non-public information about
the employer’s business to Plan participants or the general
public. As we have said before, a “violation of ERISA’s disclo-
sure requirement, which arises under the general fiduciary
duties imposed by ERISA § 404(a)(1), 29 U.S.C. § 1104(a)(1),
requires evidence of either an intentionally misleading state-
ment, or a material omission where the fiduciary’s silence can

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No. 20-3389 21
be construed as misleading.” Howell v. Motorola, Inc., 633 F.3d
552, 571 (7th Cir. 2011). We see no support in this language for
plaintiffs’ position—and we have found none elsewhere—
that these general fiduciary duties are non-delegable. Because
the Investment Committee was not serving as an ERISA fidu-
ciary with respect to the Boeing Stock Fund’s investment
choices during the Class Period, it cannot be liable for breach
of general fiduciary duties.
Further, even if the Investment Committee and its mem-
bers were deemed to have been serving as ERISA fiduciaries
during the Class Period, plaintiffs’ argument would encoun-
ter a second roadblock. In Howell, we explicitly rejected the
plaintiffs’ view that plan fiduciaries were required to provide
all information about the defendant corporation’s business
decisions in real time to plan participants. 633 F.3d at 572. We
also explicitly rejected those plaintiffs’ view that a plan fidu-
ciary’s failure to provide information about a bad business
decision was sufficient to make the omission of information a
violation of ERISA. Id.
Most critically for our purposes here, we emphasized that
adopting such a rule would create at least one problem: in-
sider trading in violation of federal securities laws. 633 F.3d
at 572. Federal securities law has long governed corporate in-
siders’ duties of disclosure of material information to inves-
tors and their duties when they trade corporate stock them-
selves. Securities laws try to balance several competing poli-
cies and duties, and we see no sound basis for saying that
ERISA adds additional layers of duties to disclose inside in-
formation, at least to the extent plaintiffs contend any duty to
disclose that might survive the Dudenhoeffer pleading stand-
ard also cannot be satisfied by delegating investment choices

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22 No. 20-3389
to an independent outsider. And federal securities laws
simply do not require immediate disclosure of all bad news.
At its core, that’s what plaintiffs would demand of defend-
ants. Defendants possessed material insider information,
plaintiffs allege, so the ERISA duties of prudence and loyalty
required that they disclose this information to plan partici-
pants and the public. According to plaintiffs, no later than No-
vember 7, 2018—a week after recovery of the flight data re-
corder from the Lion Air crash—defendants knew or should
have known that the truth about safety issues with the 737
MAX’s flight control software would eventually become pub-
lic. Plaintiffs contend that a prudent fiduciary in defendants’
position would therefore have immediately come forward
with this inside information to correct artificial inflation of
Boeing’s stock price and to minimize long-term reputational
harm to the company caused by delayed disclosure of mate-
rial safety defects of the 737 MAX. Under Dudenhoeffer, plain-
tiffs must allege and later prove that a prudent fiduciary fac-
ing that situation could not have concluded that prompt cor-
rective disclosure to the public would have done more harm
than good to the Boeing Stock Fund. Put another way, plain-
tiffs contend that defendants, to comply with ERISA, should
have published inside information immediately—regardless
of any obligations imposed by the federal securities laws.
Indeed, plaintiffs go so far as to contend that corrective
disclosure not only would not conflict with the federal secu-
rities laws, but that those laws actually required such imme-
diate disclosure. While we do not express an opinion on the
merits of this argument, we recognize that these plaintiffs are
not alone in taking the position that the duties of prudence
and loyalty require an ESOP fiduciary to publicly disclose

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No. 20-3389 23
inside information or to take some action—e.g., divest the
fund’s holdings or freeze new investment in the fund—on the
basis of inside information. After Dudenhoeffer, similar theo-
ries have been argued in a number of ESOP stock-drop cases.3
ESOP fiduciaries, who as Dudenhoeffer recognized are of-
ten company insiders, can find themselves in a double bind.
See 573 U.S. at 423; see also Coburn v. Evercore Trust Co., N.A.,
844 F.3d 965, 974 (D.C. Cir. 2016) (Rogers, J., concurring in
3 See, e.g., In re Allergan ERISA Litig., 975 F.3d 348, 351–53 (3d Cir.
2020) (plan participants alleged plan fiduciaries breached duty of pru-
dence by failing to publicly disclose inside information concerning alleged
price-fixing conspiracy); Dormani, 970 F.3d at 914–15 (plan participants al-
leged plan fiduciaries breached duty of prudence by failing to publicly
disclose or act on inside information concerning Target Canada’s supply-
chain management); Allen, 967 F.3d at 773–75 (plan participants alleged
plan fiduciaries breached duty of prudence by failing to publicly disclose
or act on inside information concerning unethical sales practices); Jander v.
Retirement Plans Committee of IBM, 910 F.3d 620, 622–23 (2d Cir. 2018), judg-
ment reinstated, 962 F.3d 85 (2d Cir. 2020) (plan participants alleged plan
fiduciaries breached duty of prudence by failing to publicly disclose or act
on insider information concerning troubled microelectronics business);
Saumer v. Cliffs Natural Res. Inc., 853 F.3d 855, 858 (6th Cir. 2017) (plan par-
ticipants alleged plan fiduciaries breached duty of prudence by failing to
publicly disclose or act on inside information concerning purchase of an
iron-ore mine); Whitley v. BP, P.L.C., 838 F.3d 523, 529 (5th Cir. 2016) (plan
participants alleged plan fiduciaries breached duty of prudence by failing
to publicly disclose or act on inside information concerning “numerous
undisclosed safety breaches” prior to Deepwater Horizon explosion);
Varga v. General Elec. Co., 834 F. App’x 686, 686–87 (2d Cir. 2021) (plan par-
ticipant alleged plan fiduciaries breached duty of prudence by failing to
publicly disclose or act on inside information concerning liabilities of its
two insurance subsidiaries); Laffen v. Hewlett-Packard Co., 721 F. App’x 642,
644 (9th Cir. 2018) (plan participant alleged plan fiduciaries breached duty
of prudence by failing to publicly disclose or act on inside information
concerning prior knowledge of whistleblower’s allegations).

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24 No. 20-3389
judgment) (“The Supreme Court has confirmed that the role
of ESOP fiduciaries gives rise to the ‘tension’ between the
‘general duty of prudence’ required of ERISA fiduciaries and
the authorization of non-diversified, high-risk ESOPs.”) (in-
ternal citation omitted).
This double bind is precisely why the Investment Com-
mittee had a strong incentive to delegate the fiduciary power
over investment decisions for the Boeing Stock Fund to an in-
dependent third-party fiduciary. By appointing Newport to
manage the Boeing Stock Fund, the Investment Committee—
and all other defendants, for that matter—extracted them-
selves from the bind. Of course, the Investment Committee
did not extract itself from the bind altogether. Nor could it.
Appointing fiduciaries, like the Investment Committee, have
an ongoing fiduciary duty to monitor the activities of their ap-
pointees. See 29 U.S.C. §§ 1104(a)(1), 1105(a), & 1105(c); How-
ell, 633 F.3d at 573; Leigh v. Engle, 727 F.2d 113, 134–35 (7th Cir.
1984). “The duty exists so that a plan administrator or sponsor
cannot escape liability by passing the buck to another person
and then turning a blind eye.” Howell, 633 F.3d at 573. But
there is no allegation that the Investment Committee or other
defendants did that here. Plaintiffs do not allege that defend-
ants breached the duty to monitor their appointees or that
there were any issues concerning Newport’s honesty or com-
petence.
Plaintiffs argue instead that defendants, as company insid-
ers, failed to disclose to Newport inside information about
safety issues with the 737 MAX, rendering Newport incapable
of performing its fiduciary obligations under the Independent
Fiduciary Agreement. In Howell, as noted above, we rejected
plaintiffs’ argument that the duty to monitor appointees

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No. 20-3389 25
should require appointing fiduciaries to review all business
decisions of appointed plan administrators. 633 F.3d at 573.
We emphasized that imposing such a standard would defeat
the purpose of having a trustee appointed to run a benefits
plan in the first place. Id.
The same logic applies here. The point of having an inde-
pendent fiduciary is of course to give the fiduciary independ-
ence from the appointing fiduciaries. If the independent fidu-
ciary relies on insider information to make investment deci-
sions concerning the employer’s stock, then the independent
fiduciary would become mired in the very conflict of interest
that she was appointed to avoid. The Second Circuit has thus
explained that the duty to monitor appointees does not in-
clude a “duty to keep the plan managers apprised of material,
non-public information regarding the soundness of [appoint-
ing fiduciaries’ company] as an investment.” Rinehart v. Leh-
man Bros. Holdings Inc., 817 F.3d 56, 68 (2d Cir. 2016) (declin-
ing to alter this view in light of Dudenhoeffer) (citation omit-
ted). After the Supreme Court noted in Dudenhoeffer that the
SEC’s views “may well be relevant” on an ERISA-based duty
to disclose, the United States and the SEC responded: “In the
view of the SEC and the United States, it would generally be
inconsistent with the objectives of the securities laws to im-
pose an ERISA-based duty to publicly disclose inside infor-
mation in the absence of a securities-laws duty. And the De-
partment of Labor concurs in the conclusion that ERISA does
not impose a duty to disclose in those circumstances.” Brief
for the United States, including the Securities and Exchange
Commission, as Amicus Curiae Supporting Neither Party at
18, Retirement Plans Committee of IBM v. Jander, 140 S. Ct. 592
(2020) (No. 18-1165).

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26 No. 20-3389
If the Investment Committee—composed of Boeing insid-
ers—had not appointed an independent fiduciary to select
and manage the Plan’s investments under these circum-
stances, we could easily imagine a different case in which
plaintiffs alleged that defendants breached the duty of pru-
dence by failing to appoint an independent fiduciary. Cf. Pfeil
v. State Street Bank & Trust Co., 806 F.3d 377, 380 (6th Cir. 2015)
(observing that State Street served as an independent fiduci-
ary of General Motors ESOP during period of “severe” diffi-
culties, including bankruptcy, for General Motors); Bunch v.
W.R. Grace & Co., 555 F.3d 1, 8 (1st Cir. 2009) (during reorgan-
ization proceedings, corporate management “took the emi-
nently correct decision of insulating itself” from potential con-
flict of interest with respect to fiduciary duties by “dele-
gat[ing] the relevant decisional power to an independent
third party” to execute its autonomous determination of
whether retention or sale of company stock was appropriate);
DiFelice v. U.S. Airways, Inc., 497 F.3d 410, 421 (4th Cir. 2007)
(“[A]lthough appointment of an independent fiduciary does
not ‘whitewash’ a prior fiduciary’s actions, timely appoint-
ment of an independent fiduciary, prompted by concerns
about the continued prudence of holding company stock un-
der an ERISA plan, does provide some evidence of ‘proce-
dural’ prudence and proper monitoring during the relevant
period.”); Leigh, 727 F.2d at 134–35 (emphasizing that duty of
prudence obliges appointing fiduciaries to consider and at-
tempt to minimize known conflicts of interest faced by their
appointed fiduciaries); Donovan, 680 F.2d at 271 (observing
that duties of prudence and loyalty require insider-fiduciaries
“to avoid placing themselves in a position where their acts as
officers or directors of the corporation will prevent their

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No. 20-3389 27
functioning with the complete loyalty to participants de-
manded of them” under ERISA).
Independent fiduciaries like Newport can serve a valuable
and legitimate purpose in managing the tension between
ERISA and federal securities laws. As plaintiffs’ arguments
and defendants’ counterarguments in this case show, the
“right” choice is fraught with the potential to make several
“wrong” ones. For example, would it have done more harm
than good for defendants to publish negative information
about the 737 MAX just as several investigations were picking
up speed in early November 2018? Plaintiffs themselves
acknowledge that such a disclosure would have caused “mas-
sive disruptions in the demand for the 737 MAX,” leading to
a sharp drop in the value of Boeing stock. The far more im-
portant practical concerns about safety overshadow concerns
about stock prices and finances, but whether Boeing failed to
comply with other legal duties concerning safety will be re-
solved in other forums.
It is not surprising that the practice by corporate insiders
of delegating fiduciary duties under ERISA to professional,
independent third-party firms—like Newport—has grown in
“prevalence and scope,” according to a 2014 report from the
U.S. Department of Labor’s Advisory Council on Employee
Welfare & Pension Benefit Plans. Outsourcing Employee Benefit
Plan Services at 4 (2014), http://www.dol.gov/sites/de-
fault/files/ebsa/about-ebsa/about-us/erisa-advisory-council/
2014ACreport3.pdf (last accessed Aug. 1, 2022). The Advisory
Council explained that the increased use of third-party firms
as ERISA fiduciaries coincided, in part, with the “increasing
complexity of employee benefit plan investment and admin-
istration which requires specific expertise that in many cases

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28 No. 20-3389
can only be provided by third parties.” Id. According to the
Advisory Council, plan sponsors most frequently cited the
following as benefits of delegating fiduciary responsibilities:
(i) cost and economies of scale; (ii) access to technology; (iii)
access to legal and compliance expertise; and, most notably
for our purposes, (iv) limiting plan sponsor fiduciary risk. Id.
at 5–6.4
“Limiting plan sponsor risk” is a practical and prudent ob-
jective for ESOP sponsors and corporate insiders. The ap-
pointment of an independent fiduciary does not completely
release appointing fiduciaries of all responsibility. But where
4 Published guidance from lawyers who represent and advise
employers concerning state and federal securities laws, as well as ERISA,
reflects similar support for delegation of investment choices. 1 Lee T. Polk,
Operational principles of fiduciary conduct—Management of plan assets,
ERISA Practice & Litigation § 3:25 (2021) (“Although independent
fiduciaries have been a longstanding aspect of ERISA fiduciary law and
practice, the phenomenon of independent fiduciaries has increased with
the recent wave of company securities litigation. For participants in ERISA
plans whose accounts hold company stock, the independent fiduciary
may mean an extra layer of protection.”); Michael S. Hines and David C.
Olstein, Dudenhoeffer: An Effective Tool to ‘Weed Out Meritless’ Employer
Stock Drop Claims?, Practitioner Insights Commentaries (2015)
(suggesting, post-Dudenhoeffer, that “plan sponsors should re-evaluate the
practice of appointing investment committee members who are in
possession of nonpublic information, and consider whether they should
engage an independent fiduciary to manage employer stock funds”); see
also Frank P. VanderPloeg, Role-Playing Under ERISA: The Company as
“Employer” and “Fiduciary,” 9 DePaul Bus. L.J. 259, 278 (1997)
(“Traditionally, an employer … may make investment decisions under a
conflict of interest and may derive an incidental benefit, but the employer
must still have acted with an ‘eye single’ to the interests of participants
and their beneficiaries…. The best solution is for the employer … to let the
decision be made by an independent fiduciary.”) (footnote omitted).

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No. 20-3389 29
company insiders who manage ESOPs are willing to give up
control to avoid potential conflicts between duties under
ERISA and their duties under corporation and federal securi-
ties laws, we see no legal obstacles. Quite the opposite. We see
important benefits associated with the practice of corporate
insiders appointing independent fiduciaries to make the
choices about investments, particularly in employer stock.
It may be that some other source of law imposed a duty on
Boeing and other defendants to come forward sooner by pub-
licly disclosing information about the problems with the 737
MAX automated flight control system. No doubt the tort
claims by the families of those who died in the second 737
MAX crash in Ethiopia contend that there were duties to pro-
spective passengers to disclose such information earlier. We
are not persuaded, however, that the combination of ERISA
and an employee stock ownership plan plausibly required
such public disclosures. Under the reasoning of Dudenhoeffer,
plaintiffs have not pled circumstances under which a prudent
fiduciary could not have concluded that such disclosures
would do more harm than good to Plan participants.
The remainder of plaintiffs’ arguments against the Invest-
ment Committee’s delegation to Newport of fiduciary author-
ity over the Boeing Stock Fund may be dealt with briefly.
Plaintiffs argue that the district court did not adequately con-
sider their duty of loyalty claim. Plaintiffs’ allegations about
the duty of loyalty add nothing to their flawed duty of pru-
dence theory. As noted, we agree with our colleagues on the
Eighth Circuit that plaintiffs cannot use the broader and more
general duty of loyalty “‘to circumvent the demanding
Dudenhoeffer standard’ for duty of prudence claims.” Dormani,
970 F.3d at 917, quoting Allen, 967 F.3d at 777.

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30 No. 20-3389
Plaintiffs also asserted during oral argument that if the In-
vestment Committee (or Plans Committee) had consisted of
lower-level employees not privy to the kind of information
that senior executives were privy to, committee members
would have been absolved of the purported non-delegable
duty to disclose inside information. Notwithstanding the fact
that plaintiffs have not persuaded us there is a stand-alone,
non-delegable fiduciary duty under ERISA to disclose non-
public information to Plan participants and the general pub-
lic, plaintiffs’ position is simply unrealistic, especially as ap-
plied to managing an $11 billion stake in the company. In any
event, appointing a third-party independent fiduciary
achieves the same goal without imposing a potential conflict
of interest on employees at any level.
The judgment of the district court is AFFIRMED.

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