Another Federal Court Adopts More “Defense-Friendly” Position on Damages in Stock Drop Cases

A key issue in ERISA “stock drop” litigation is how to measure alleged losses. Plaintiffs typically argue that alleged losses should be measured by the gap between what the plan actually earned on its company stock investments and what the plan purportedly would have earned had the same money instead been invested in an alternative fund within the plan. A recent decision from the United States District Court for the Northern District of Ohio rejected this “alternative investment” methodology and held instead that the appropriate measure of damages in an ERISA case premised on allegations that the market price of company stock was artificially inflated is the difference between what the plaintiff paid for the stock and the stock’s value. Taylor v. KeyCorp, No. 1:08 CV 1927 (N.D. Ohio Aug. 12, 2010).