No. 11-11608-G

IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

WILLIAM B. FISCH, ET AL. v. SUNTRUST BANKS, INC., ET AL.

On Appeal From The United States District Court

For The Northern District of Georgia

Civil Action No. 1:08-CV-3384-RWS

BRIEF OF AMICUS CURIAE AARP IN SUPPORT OF APPELLANTS URGING REVERSAL

MARY ELLEN SIGNORILLE AARP FOUNDATION LITIGATION MELVIN RADOWITZ AARP 601 E Street, NW Washington, DC 20049 Telephone (202) 434-2060 msignorille@aarp.org Attorneys for Amicus Curiae AARP

Fisch, et al. v. Suntrust Banks, Inc., et al. Case No. 11-11608-G

c-1

CERTIFICATE OF INTERESTED PERSONS AND CORPORATE DISCLOSURE STATEMENT

Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure and Rule

26.1-1 of the Rules of the Court of Appeals for the Eleventh Circuit, Amicus

Curiae AARP hereby advises the Court that:

(1) to the best of Amicus’ information and belief, the Certificate of

Interested Persons filed with Appellants’ Opening Brief is complete;

(2) AARP does not have a parent corporation;

(3) AARP does not issue stock; and

(4) The following persons have an interest in the outcome of the above-

captioned matter:

AARP

AARP Foundation

Mary Ellen Signorille, Counsel for AARP

Melvin Radowitz, Counsel for AARP

___________________________ Mary Ellen Signorille

July 14, 2011

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TABLE OF CONTENTS

CERTIFICATE OF INTERESTED PERSONS AND CORPORATE DISCLOSURE STATEMENT ................................................... c-1

TABLE OF AUTHORITIES ................................................................................... v

INTEREST OF AMICUS CURIAE .......................................................................... 1

SUMMARY OF ARGUMENT ............................................................................... 2

ARGUMENT ........................................................................................................... 3

I. BECAUSE THE DEFINED CONTRIBUTION RETIREMENT PLAN

PARTICIPANT COMMUNITY DEPENDS UPON PLAN INVESTMENTS

TO FUND THEIR RETIREMENT, PLAN FIDUCIARIES’ ROLE IN THE

INVESTMENT SELECTION PROCESS IS CENTRAL TO PLAN

EFFECTIVENESS ........................................................................................ 3

A. Retirement Plan Participants Are Adapting To A New Retirement

Savings Regime ................................................................................... 3

B. Plan Fiduciaries’ Investment Selections Must Be Considerate Of

Participants’ Limited Opportunity To Make Suitable Investment

Decisions In Their Plans ..................................................................... 5

ii

II. BECAUSE EMPLOYEES BEAR ALL OF THE RISKS IN CONNECTION

WITH FUNDING THEIR RETIREMENT, PLAN FIDUCIARIES MUST

ABIDE BY THE STATUTORY REQUIREMENTS OF PRUDENCE AND

LOYALTY TO SELECT AND MONITOR RETIREMENT PLAN

INVESTMENT OPTIONS ............................................................................ 7

A. Because Defined Contribution Retirement Plans Are A Central

Component Of Employees’ Compensation, Fiduciaries’ Failure To

Act In The Best Interests Of Plan Participants Deprives Employees Of

Critical Elements of Their Earned Compensation .............................. 7

B. Because Participants Generally Lack Financial Literacy,

They Rely On Fiduciaries To Select And Monitor Plan

Investment Choices ............................................................................. 9

1. Even though most Americans graduate high school,

a large number have poor literacy skills ................................... 9

2. Americans’ financial literacy skills are even

lower than their general literacy skills .................................... 10

3. Many employees erroneously believe employer stock is safer

than other investments ............................................................ 12

iii

4. Because participants are not confident of their

investment abilities they rely on plan fiduciaries

to chose and manage investment options

prudently, loyally, and in their best interests .......................... 14

III. CONGRESS ENACTED ERISA’S FIDUCIARY

STANDARDS TO PROTECT PENSION PLAN ASSETS

AND THEREBY PROTECT PARTICIPANTS’

RETIREMENT SECURITY ....................................................................... 16

A. ERISA Was Enacted To Prevent Mismanagement Of Pension Assets,

Not To Promote Employee Ownership Of Employer Stock ............. 16

B. Legislative History Confirms That ERISA Contains No Exception To

The Duties Of Loyalty And Prudence ............................................... 18

C. Employers Receive Significant Advantages, Including Tax

And Cost Savings, From Using Employer Stock For

Matching Contributions ..................................................................... 21

IV. IN ORDER TO PROTECT PLAN ASSETS AND PARTICIPANTS’

RETIREMENT SECURITY, ERISA REQUIRES THAT THERE BE A

PLAN FIDUCIARY WITH RESPONSIBILITY FOR PLAN ASSETS AND

INVESTMENTS .......................................................................................... 22

CONCLUSION ...................................................................................................... 25

iv

TABLE OF AUTHORITIES

Federal Cases Bank of America Nat. Ass'n v. Colonial Bank, 604 F.3d 1239 (11th Cir. 2010) ... 20 Bannistor v. Ullman, 287 F.3d 394 (5th Cir. 2002) ............................................... 25 Donovan v. Cunningham, 716 F.2d 1455 (5th Cir. 1983) ..................................... 21 Eaves v. Penn, 587 F.2d 453 (10th Cir. 1978) ....................................................... 19 LaRue v. DeWolff, Boberg & Assocs., Inc. 552 U.S. 248 (2008) ............................ 3 Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134 (1985)...................................... 15 Mertens v. Hewitt Assocs., 508 U.S. 248 (1993) ................................................... 25 United States v. Steele, 147 F.3d 1316 (11th Cir.1998) .................................. 20, 21 Varity Corp. v. Howe, 516 U.S. 489 (1996) .......................................................... 25

Federal Statutes, Rules and Regulations Employee Retirement Income Security Act (ERISA),

29 U.S.C. § 1001 et seq. (2006) .................................................................... 3, 17

§ 2(b), 29 U.S.C. § 1001(b) .........................................................7, 15, 16, 21

§ 3(21)(A), 29 U.S.C. § 1002(21)(A) .......................................................... 25

§ 402(a)(1), 29 U.S.C. § 1102(a)(1) ............................................................ 23

§ 403(a), 29 U.S.C. § 1103(a) ...................................................................... 24

§ 403(a)(1), 29 U.S.C. § 1103(a)(1) ............................................................ 24

§ 403(a)(2), 29 U.S.C. § 1103(a)(2) ............................................................ 24

v

§ 404, 29 U.S.C. § 1104 .............................................................................. 19

§ 404(a), 29 U.S.C. § 1104(a) ...................................................................... 21

§ 404(a)(1), 29 U.S.C. § 1104(a)(1) .............................................................. 8

§ 404(a)(1)(A), 29 U.S.C. § 1104(a)(1)(A) ................................................. 15

§ 404(c), 29 U.S.C. § 1104(c) ...................................................................... 20

§ 502(a), 29 U.S.C. § 1132(a) ...................................................................... 15

Internal Revenue Code

§ 162 ............................................................................................................ 21

§ 212 ............................................................................................................ 21

§404(a)(9) .................................................................................................... 21

§ 404(k) ........................................................................................................ 22

§ 409(e) ........................................................................................................ 22

29 C.F.R. § 2509.75-5 ............................................................................................ 23

29 C.F.R. § 2509.75-8 ............................................................................................ 25

29 C.F.R. § 2550.404c-1(2007) ............................................................................. 20

vi

Legislative History

Employee Retirement Income Security Act, Pub. L. No. 93-406, reprinted in

SUBCOMM. ON LABOR OF THE COMM. ON LABOR AND PUBLIC WELFARE, 93rd

CONG., Legislative History of the Employee Retirement Income Security

Act of 1974, Vol. III (1976) .................................................................... 8, 17

H.R. REP. NO. 90-1867 (1968) ......................................................................... 18, 19

H.R. CONF. REP. NO. 93-1280 (1974),

reprinted in 1974 U.S.C.C.A.N. 5038 .............................................19, 20, 21

Senate Report 93-127, 93 Cong., 1st Sess.,

reprinted in 1974 U.S.C.C.A.N 4838 .......................................................... 19

Strengthening Worker Retirement Security Before the H. Comm. on Education and

Labor, 111th Cong. (2009), available at http://frwebgate.access.gpo.gov/cgi-

bin/getdoc.cgi?dbname=111_house_hearings&docid=f:47491.wais ........... 5

Miscellaneous

AARP, 401(k) Participants’ Awareness and Understanding of Fees (July 2007),

available at http://assets.aarp.org/rgcenter/econ/401k_fees.pdf ................... 6

AARP, Investor Perceptions and Preferences Toward Selected Stock Market

Conditions and Practices: An AARP Survey of Stock Owners Ages 50 and

Older (Mar. 2004), available at http://assets.aarp.org/rgcenter/econ/

investor.pdf .............................................................................................. 7, 15

vii

D. Baker, R. Parker, M. Williams, S. Clark, and J. Nurss, The Relationship of

Patient Reading Ability to Self-Reported Health and Use of Health Services,

87(6) AM. J. PUB. HEALTH 1027-30 (1997) ................................................. 10

J.R. Brown, 401(K) Matching Contributions in Company Stock: Costs and Benefits

for Firms and Workers, 90 J. PUB. ECON. 1315 (2006) ............................... 22

Andrea Coombes, U.S. Retirement Income Deficit: $6.6 Trillion, MARKETWATCH,

Sept. 15, 2010, http://www.marketwatch.com/story/us-retirement-income-

deficit-66-trillion-2010-09-15 ..................................................................... 13

Fin. Ind. Regulatory Auth. Investor Educ. Found.: Financial Capability in the

United States: National Survey-Executive Summary Report (Dec. 2009),

http://www.finrafoundation.org/resources/research/p120478 ..................... 11

Financial Capability in the United States: Initial Report of Research Findings

from the 2009 National Survey (Dec. 2009), http://www

.finrafoundation.org/we/idcplg?IdcService=GET_PROBLEMPAGE

&ssDocName=p120478&siteId=www.finrafoundation.org&siteRelativeUrl=

/resources/research/p120478 ................................................................. 10, 11

Investment Company Inst., The Economics of Providing 401(k) Plans: Services,

Fees, and Expenses, 19(5) RES. FUNDAMENTALS (Sept. 2010) ..................... 8

Eleanor Laise, Despite Risks, Workers Guzzle Company Stock, WALL ST. J., Mar.

5, 2009, http://online.wsj.com/article/SB12362137271003518 3.html ...... 13

viii

Anne Marie Lofaso, Toward a Foundational Theory of Workers’ Rights: The

Autonomous Dignified Worker, 76 UMKC L. Rev. 1 (2007) ....................... 7

Annamaria Lusardi, et al., Financial Literacy and Financial Sophistication in the

Older Population: Evidence from the 2008 HRS (Univ. Mich. Ret. Res. Ctr.

Working Paper 2009-216, 2009), http://www.mrrc.isr.umich.edu

/publications/papers/pdf/wp216.pdf ............................................................ 13

Annamaria Lusardi, NBER Working Paper No. 13824, Household Saving

Behavior: The Role of Financial Literacy, Information and

Financial Education Programs (Feb. 2008), http://www

.nber.org/papers/w13824 ....................................................................... 10, 11

Matthew Martin, Literature Review on the Effectiveness of Financial Education 3

(June 2007), Fed. Reserve Bank of Richmond Working Paper No. 07-3,

http://www.richmondfed.org/publications/research/working_papers/

2007/wp_07-3.cfm ........................................................................................ 10

MetLife, Eighth Annual Study of Employee Benefits Trends: Findings from the

National Survey of Employers and Employees (2010) .................................. 8

Dr. Allen Michel & Dr. Israel Shaked, Fiduciary Responsibility in the Case of

Defined Contribution Plans, 23-JAN Am. Bankr. Inst. J. 46 (2005) ............ 4

ix

Joe Mont, The Dangers of Investing in Your Company Stock, NEWSWEEK, JULY 9,

2010, http://www.newsweek.com/blogs/jobbed/2010/07/09/the-dangers-of-

investing-in-your-company-stock.html ....................................................... 14

Steven J. Sacher, et al., Regulation of Qualified Income Plans, EMPLOYEE

BENEFITS LAW (2d ed. 2000) ....................................................................... 22

Ben Steverman, Sell Your Employer’s Stock. Now. March 19, 2008,

http://www.businessweek.com/investing/insights/blog/archives/2008/

03/sell_your_employers_stock_now.html ................................................... 14

U.S. Dep’t of Educ., Nat’l Ctr. for Educ. Statistics, Digest of Education Statistics,

2009 (Apr. 2010), http://nces.ed.gov/ programs/digest/d09/tables/dt09_008

.asp?referrer=list ............................................................................................ 9

U.S. Dep’t of Educ., Nat’l Ctr. for Educ. Statistics, Inst. of Educ. Sci., Literacy in

Everyday Life: Results From the 2003 National Assessment of Adult

Literacy (Apr. 2007), available at http://nces.ed.gov/naal/kf_demo

graphics.asp ................................................................................................... 9

U.S. Dep’t of Educ., Nat’l Ctr. for Educ. Statistics, National Adult Literacy Survey

(1992), available at http://www.nces.ed.gov/pubs93/93275.pdf .................. 9

U.S. DEP’T OF LABOR, EMPLOYEE BENEFITS SECURITY ADMIN., What You Should

Know About Your Retirement (Nov. 2006), available at http://www.dol.gov

/ebsa/publications/wyskapr.html ................................................................... 8

x

U.S. DEP’T OF LABOR, PENSION & WELFARE BENEFITS ADMIN., STUDY OF 401(K)

PLAN FEES AND EXPENSES §1.1 (1998), available at http://www.dol.gov/

ebsa/pdf/401krept.pdf .................................................................................... 5

U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-07-530T, PRIVATE PENSIONS:

INCREASED RELIANCE ON 401(K) PLANS CALLS FOR BETTER INFORMATION ON

FEES (March 2007), available at http://www.gao.gov/new.items/

d07530t.pdf ............................................................................................ 4, 5, 6

U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-08-774, PRIVATE PENSIONS:

FULFILLING FIDUCIARY OBLIGATIONS CAN PRESENT CHALLENGES FOR 401(K)

PLAN SPONSORS (July 2008), available at http://www.gao.govnew

.items/d08774.pdf .......................................................................................... 4

Wall Street Employee Owners Shudder As Bear Stearns Implodes,

MARKETWATCH, Mar. 17, 2008, http://www.marketwatch.com/

story/wall-street-employee-owners-shudder-as-bear-stearns-implodes?

pagenumber=2 ............................................................................................. 12

Kimberly Lynn Weiss, Directors’ Liability for Corporate Mismanagement of

401(k) Plans: Achieving the Goals of ERISA in Effectuating Retirement

Security, 38 IND. L. REV. 817 (2005) ........................................................... 23

James A. Wooten, THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974: A

POLITICAL HISTORY (2004) .................................................................... 17, 18

1

INTEREST OF AMICUS CURIAE1 AARP is a nonpartisan, nonprofit organization dedicated to representing the

needs and interests of persons aged 50 and older. Nearly half of AARP’s members

are employed full or part-time, with many working for employers which provide

pension and health plans covered by ERISA. One of AARP’s primary objectives

is to foster the economic security of individuals as they age by attempting to ensure

the availability, security, equity, and adequacy of public and private pension,

health, disability, and other employee benefits through educational and advocacy

efforts

Participants in private, employer-sponsored employee benefit plans rely on

ERISA to protect their rights under those plans. In particular, ERISA’s

protections, and plan participants’ opportunities to enforce the statute’s protections,

are of vital concern to workers of all ages and to retirees, since the quality of

workers’ lives in retirement depends heavily on their retirement plan benefits.

Given the primacy of Defined Contribution plans in the American workplace

landscape, it is imperative that fiduciaries of ERISA-governed plans be held to a

high standard of duty to manage plans prudently. The resolution of the issues in

this case will have a direct and vital bearing on individuals’ ability to obtain those

1 Pursuant to Fed. R. App. P. 29(c)(5), amicus curiae AARP certifies that the parties have consented to the filing of this brief.

2

benefits which will foster their economic security. AARP, therefore, submits its

brief amicus curiae to facilitate a full consideration by this Court of these issues.

SUMMARY OF ARGUMENT

Because the employer-sponsored retirement plan landscape has shifted

radically from the standard defined benefit plan regime to the defined contribution

plan regime, employees bear an entirely new set of responsibilities for attending to

their retirement security. In the main employees are ill-equipped to make the wide

array of financial decisions that retirement financial planning entails. They are

heavily dependent upon the fiduciaries of their respective defined contribution

retirement plans to steward the plan investment options in a manner that limits the

risk of investment decisions based upon too little information and knowledge.

Employees’ attitudes about holding employer stock in their defined

contribution plans are often founded on misapprehensions about the risk-reward

calculus of doing so, and as a consequence employees frequently make bad

decisions pertaining to holding employer stock in their retirement savings plan

accounts.

ERISA’s duties of prudence and loyalty by which ERISA employee benefit

plan fiduciaries are bound entertain no exception for fiduciaries of employer stock

plans. Rather, the duties of prudence and loyalty take precedence and override the

ERISA provisions permitting plan holdings of employer stock.

3

Vigilance by defined benefit plan fiduciaries in connection with the selection

and monitoring of investments in defined contribution retirement savings plans is

critical to the fulfillment of ERISA’s retirement security provisions for the

generation of employer-sponsored defined contribution plan savers under the new

retirement plan regime. Employer stock plans pose no exception to the vigilance

requirement.

ARGUMENT

I. BECAUSE THE DEFINED CONTRIBUTION RETIREMENT PLAN PARTICIPANT COMMUNITY DEPENDS UPON PLAN INVESTMENTS TO FUND THEIR RETIREMENT, PLAN FIDUCIARIES’ ROLE IN THE INVESTMENT SELECTION PROCESS IS CENTRAL TO PLAN EFFECTIVENESS.

A. Retirement Plan Participants Are Adapting To A New Retirement

Savings Regime.

Private retirement pension benefit programs were established to provide a

stable source of income to employees and their families upon retirement. In the

period since the passage of the Employee Retirement Income Security Act of 1974

(“ERISA”), and particularly in the past two decades, 29 U.S.C. § 1001 et seq.

(2006), there has been a marked shift from defined benefit plans to defined

contribution plans. LaRue v. DeWolff, Boberg & Assocs., Inc. 552 U.S. 248

(2008). Defined contribution plans have so eclipsed defined benefit plans that

“[b]y 2005 . . . roughly 21 million active participants [were] covered by defined

4

benefit plans and approximately 55 million active participants [were covered by]

defined contribution plans.” U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-07-

530T, PRIVATE PENSIONS: INCREASED RELIANCE ON 401(K) PLANS CALLS FOR

BETTER INFORMATION ON FEES 5 (March 2007), available at

http://www.gao.gov/new.items/d07530t.pdf [hereinafter GAO REPORT: PRIVATE

PENSIONS: INCREASED RELIANCE ON 401(K) PLANS]. Of the various types of

defined contribution plans available, 401(k) plans have become the most popular.

See Dr. Allen Michel & Dr. Israel Shaked, Fiduciary Responsibility in the Case of

Defined Contribution Plans, 23-JAN Am. Bankr. Inst. J. 46, 46 (2005). As of

2005, there were approximately “436,000 401(k) plans that held about $2.4 trillion

in assets for the retirement savings of more than 54 million plan participants—

more than any other type of employer-sponsored pension plan in the United

States.” U.S. GOV’T ACCOUNTABILITY OFFICE, GAO-08-774, PRIVATE PENSIONS:

FULFILLING FIDUCIARY OBLIGATIONS CAN PRESENT CHALLENGES FOR 401(K) PLAN

SPONSORS 1 (July 2008), available at http://www.gao.gov/new.items/d08774.pdf.

In contrast to the predictable retirement income stream that flows from a defined

benefit plan, in a defined contribution plan employer and/or employee

contributions invested in a tax-deferred qualified plan determine the dollar amount

a participant will receive in retirement, completely subject to the investment

performance-driven accumulation that results over the life of the account. U.S.

5

DEP’T OF LABOR, PENSION & WELFARE BENEFITS ADMIN., STUDY OF 401(K) PLAN

FEES AND EXPENSES §1.1 (1998), available at http://www.dol.gov/ebsa/pdf/401

krept.pdf; see also LaRue,, 552 U.S. 248, 250 n.1. (2008) (contrasting defined

benefit and defined contribution plans). Accordingly, employees bear a far greater

responsibility for the ultimate funding of their retirement income than previously.

GAO REPORT: PRIVATE PENSIONS: INCREASED RELIANCE ON 401(K) PLANS, supra,

at 9; Strengthening Worker Retirement Security Before the H. Comm. on Education

and Labor, 111th Cong. 3 (2009) (statement of John C. Bogle, Founder and

Former Chief Executive of the Vanguard Group), available at

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_house_hearings

&docid=f:47491.wais (describing this transition to defined contribution plans as “a

massive transfer from business enterprises to their employees of both investment

risk (and return) and the longevity risk of retirement funding”).

B. Plan Fiduciaries’ Investment Selections Must Be Considerate Of Participants’ Limited Opportunity To Make Suitable Investment Decisions In Their Plans.

For the majority of individuals now saving for retirement through 401(k)

plans, the amount contributed and accumulated is critically important, as it is often

their only source of private retirement income. “[M]ore than 60 percent of workers

with pension coverage in 2003 had only a 401(k) plan or other defined contribution

plan, which suggests that worker reliance on defined contribution plans has

6

increased considerably since 1981.” AARP, 401(k) Participants’ Awareness and

Understanding of Fees 2 (July 2007), available at http://assets

.aarp.org/rgcenter/econ/401k_fees.pdf .

Moreover, most 401(k) account balances are not high to start with: “While

some participants have account balances of greater than $100,000, most have

smaller balances. Based on industry estimates for 2005, 37 percent of participants

had balances of less than $10,000, while 16 percent had balances greater than

$100,000.” GAO REPORT: PRIVATE PENSIONS: INCREASED RELIANCE ON 401(K)

PLANS, supra, at 9-10. In this environment, a fiduciary’s duty of selecting prudent

investments rises to critical significance because participants’ investment

selections are limited by the plan fiduciary’s selection of available fund options.

Research indicates that participants are not confident of their abilities to

select prudently from among the investment options available to them, which

emphasizes the significance of a plan fiduciary’s role to prudently select funds.

For example, a survey of stock owners age 50 to 70 indicates that:

close to three in four respondents (72-76%) have more confidence in the abilities of mutual fund managers or stock brokers to conduct transactions for them than they have in their own abilities to conduct transactions. In contrast, only one in three (33%) are confident in their ability to buy and sell individual stocks without the assistance of stock brokers.

7

AARP, Investor Perceptions and Preferences Toward Selected Stock Market

Conditions and Practices: An AARP Survey of Stock Owners Ages 50 and Older

(Mar. 2004), available at http://assets.aarp.org/rgcenter/econ/investor.pdf. The

rapid growth and primacy of such plans to fund retirement makes it vital that

defined contribution retirement plan participants be protected.

II. BECAUSE EMPLOYEES BEAR ALL OF THE RISKS IN CONNECTION WITH FUNDING THEIR RETIREMENT, PLAN FIDUCIARIES MUST ABIDE BY THE STATUTORY REQUIREMENTS OF PRUDENCE AND LOYALTY TO SELECT AND MONITOR RETIREMENT PLAN INVESTMENT OPTIONS.

A. Because Defined Contribution Retirement Plans Are A Central

Component Of Employees’ Compensation, Fiduciaries’ Failure To Act In The Best Interests Of Plan Participants Deprives Employees Of Critical Elements of Their Earned Compensation.

A simple equation exists in the workplace: an employer is able to operate its

business with the benefit of an employee’s labor in exchange for paying that

employee a salary and other benefits. See generally Anne Marie Lofaso, Toward a

Foundational Theory of Workers’ Rights: The Autonomous Dignified Worker, 76

UMKC L. Rev. 1 (2007). The benefits exchanged for the employee’s labor often

includes pension and other employee benefits.2 See ERISA § 2(b), 29 U.S.C.

2 One of the primary factors motivating employers to offer retirement savings plans is the need to attract, and retain desirable workers and maintain productivity in a high quality workforce with competitive compensation packages. Investment Company Inst., The Economics of Providing 401(k) Plans: Services, Fees, and Expenses, 19(5) RES. FUNDAMENTALS at 2 (Sept. 2010), available at

8

§ 1001(b) ([benefit plans] “have become an important factor affecting the stability

of employment ….”); Employee Retirement Income Security Act, Pub. L. No. 93-

406, reprinted in SUBCOMM. ON LABOR OF THE COMM. ON LABOR AND PUBLIC

WELFARE, 93rd CONG., Legislative History of the Employee Retirement Income

Security Act of 1974, Vol. III, at 4751 (1976).

Employees who participate in defined contribution plans contribute a portion

of their salaries to those plans and may receive matching contributions from their

employers as part of their compensation package. U.S. DEP’T OF LABOR,

EMPLOYEE BENEFITS SECURITY ADMIN., What You Should Know About Your

Retirement at 3 (Nov. 2006), http://www.dol.gov/ebsa/publications/wyskapr.html.

They participate based on the assumption that “someone is minding the store,” that

is, fiduciaries are administering the plans prudently and solely in the best interests

of plan participants. ERISA § 404(a)(1), 29 U.S.C. § 1104(a)(1). A holding that

plan fiduciaries are not liable for fiduciary breaches that cause losses to

participants’ accounts and the plan as a whole threatens to seriously undermine the

confidence employees have in these plans to provide for their retirement security.

Such a holding undermines the assumptions and understandings underlying the

http://www.ici.org/pdf/fm-v15n7.pdf. Accord, MetLife, Eighth Annual Study of Employee Benefits Trends: Findings from the National Survey of Employers and Employees at 8, 18 (2010).

9

employer-employee relationship, not to mention the language and purpose of

ERISA.

B. Because Participants Often Lack Financial Literacy, They Rely On Fiduciaries To Select And Monitor Plan Investment Choices.

1. Even though most Americans graduate high school,

a large number have poor literacy skills.

Although 84.6% of adults over age 25 had a high school or higher degree in

2003, U.S. Dep’t of Educ., Nat’l Ctr. for Educ. Statistics, Digest of Education

Statistics, 2009 at Table 8 (Apr. 2010), http://nces.ed.gov/programs/digest/d09

/tables/dt09 _008. asp?referrer =list, 43% of adults fell into the Basic or Below

Basic literacy level, signifying difficulty in reading, comprehension, computation,

communication, writing, and problem solving.3 See U.S. Dep’t of Educ., Nat’l

Ctr. for Educ. Statistics, Inst. of Educ. Sci., Literacy in Everyday Life: Results

From the 2003 National Assessment of Adult Literacy at 13 (Apr. 2007),

http://nces.ed.gov/naal/kf_demographics.asp.

Some experts estimate that literacy levels can lag behind educational

attainment by at least four years so that high school graduates effectively have the

3 A person who has proficient literacy would be able to explain the difference between two types of employee benefit plans, use a table to determine a pattern in oil exports across years, and using information in a news article, calculate the amount of money that should go to raising a child. U.S. Dep’t of Educ., Nat’l Ctr. for Educ. Statistics, National Adult Literacy Survey at 10-11 (1992), http://www.nces.ed.gov/pubs93/93275.pdf.

10

literacy skills of ninth-graders. See D. Baker, R. Parker, M. Williams, S. Clark,

and J. Nurss, The Relationship of Patient Reading Ability to Self-Reported Health

and Use of Health Services, 87(6) AM. J. PUB. HEALTH 1027-30 (1997).

2. Americans’ financial literacy skills are even lower than their general literacy skills.

As 401(k) plans became more predominant in the workplace, scholars began

looking at the impact of financial literacy on participants’ saving and investing

behavior. What they found was sobering. Early research warned of the lack of

financial literacy among savers and investors and the implications for individuals’

economic security. See Annamaria Lusardi, NBER Working Paper No. 13824,

Household Saving Behavior: The Role of Financial Literacy, Information and

Financial Education Programs at 7 (Feb. 2008), http://www.nber.org/papers

/w13824. In response to these findings, financial education programs were

developed and promoted. Matthew Martin, Literature Review on the Effectiveness

of Financial Education 3 (June 2007), Fed. Reserve Bank of Richmond Working

Paper No. 07-3, http://www.richmondfed.org/publications/research/working

_papers/2007/wp_07-3.cfm; Financial Literacy, supra at 10. Even after significant

attempts to promote financial education, financial literacy is still frighteningly low.

Id. at 21; see Fin. Ind. Regulatory Auth. Investor Educ. Found., Financial

Capability in the United States: Initial Report of Research Findings from the 2009

11

National Survey (Dec. 2009), http://www.finrafoundation.org/web

/idcplg?IdcService=GET_PROBLEM_PAGE&ssDocName=p120478&siteId=ww

w.finrafoundation.org&siteRelativeUrl=/resources/research/p120478.

In a recently completed study to evaluate financial knowledge, respondents

were exposed to a battery of questions covering fundamental concepts of

economics and finance impacting everyday life, such as calculations involving

interest rates and inflation, principles relating to risk and diversification, the

relationship between bond prices and interest rates, and the impact that a shorter

term can have on total interest payments over the life of a mortgage. While the

correct response to any single question sometimes exceeded 60%, fewer than half

of respondents (46%) correctly answered both a question about interest rates and a

question about inflation. Less than one-third (30%) correctly answered those

questions plus a question about risk and diversification. And, fewer than 10% of

respondents were able to answer all questions correctly. Fin. Ind. Regulatory

Auth. Investor Educ. Found.: Financial Capability in the United States: National

Survey-Executive Summary Report at 17, 18 (Dec. 2009), http://www

.finrafoundation.org/web/groups/foundation/@foundation/documents/foundation/p

120535.pdf. For example, only two thirds of respondents (64%) were able to

correctly identify that the money in an account earning 1% interest during a year

with 2% inflation would be able to buy less than it would today. Only one in five

12

respondents (21%) knew that if interest rates rise, bond prices will typically fall.

See Fin. Ind. Regulatory Auth. Investor Educ. Found., Financial Capability in the

United States; Initial Report.

A more disturbing finding is that a many defined contribution plan

participants could not describe how their retirement assets were invested. For

example, 17% did not know whether the assets in their retirement plan were

invested in stocks or stock mutual funds, and 37% did not know whether their

assets were invested primarily in a life-cycle or target-date fund. Id. at 27-28.

3. Many employees erroneously believe employer stock is safer than other investments.

Of particular significance to this case is that 47% of respondents answered

that the statement “[b]uying a single company’s stock usually provides a safer

return than a stock mutual fund” was either true or they didn’t know. Id. at 40.

In contrast, most, if not all, economists would agree that an excess of employer

stock or any other single stock is too risky and potentially devastating to a

participant’s retirement security due to the lack of diversification. Even after

Enron and Worldcom and the enactment of the Pension Protection Act, employees

still tend to own too much employer stock. E.g., Wall Street Employee Owners

Shudder As Bear Stearns Implodes, MARKETWATCH, Mar. 17, 2008,

http://www.marketwatch.com/story/wall-street-employee-owners-shudder-as-bear-

13

stearns-implodes?pagenumber=2; Eleanor Laise, Despite Risks, Workers Guzzle

Company Stock, WALL ST. J., Mar. 5, 2009, at D-1, http://online.wsj.com

/article/SB123621372710035183.html.

Indeed, a recent research paper showed that persons over age 55 expressed a

preference for having company stock. And, depending on the manner of the

question, most rejected the idea of holding little or no money in company stock.

See Annamaria Lusardi, et al., Financial Literacy and Financial Sophistication in

the Older Population: Evidence from the 2008 HRS 6-7 (Univ. Mich. Ret. Res. Ctr.

Working Paper 2009-216, 2009), http://www.mrrc.isr.umich.edu/pub

lications/papers/pdf/wp216.pdf. A partial explanation as to why participants are

willing to stuff their plans with their company stock may be due to a misplaced

sense of employee loyalty or a desire to emulate the success of their corporate

leaders. Andrea Coombes, U.S. Retirement Income Deficit: $6.6 Trillion,

MARKETWATCH, Sept. 15, 2010, http://www.marketwatch.com/story/us-

retirement-income-deficit-66-trillion-2010-09-15. Whatever the explanation,

where the employer stock crashes and participants have not properly diversified

their accounts, participants may lose not only their jobs, but their retirement

security as well.

It is beyond argument that employees having a sizable percentage of their

retirement savings in employer stock are at excessive risk. Joe Mont, The Dangers

14

of Investing in Your Company Stock, NEWSWEEK, JULY 9, 2010, http://www.new

sweek .com /blogs/jobbed/2010/07/09/the-dangers-of-investing-in-your-company-

stock.html.

And one investment savvy market commentator urges that it is never a good

idea to own employer stock because it involves what the investment world calls

unrewarded risk – risk that doesn’t pay off with higher returns over the long-term.

Ben Steverman, Sell Your Employer’s Stock. Now. March 19, 2008,

http://www.businessweek.com/investing/insights/blog/archives/2008/03/sell_your_

employers_stock_now.html.

4. Because participants are not confident of their investment abilities they rely on plan fiduciaries to chose and manage Investment options prudently, loyally, and in their best interests.

It is not surprising, then, that research indicates participants lack confidence

in their abilities to select from among the investment options available to them.

For example, a survey of stock owners age 50 to 70 indicates that -

close to three in four respondents (72-76%) have more confidence in the abilities of mutual fund managers or stock brokers to conduct transactions for them than they have in their own abilities to conduct transactions. In contrast, only one in three (33%) are confident in their ability to buy and sell individual stocks without the assistance of stock brokers.

AARP, Investor Perceptions and Preferences Toward Selected Stock Market

Conditions and Practices: An AARP Survey of Stock Owners Ages 50 and Older 4

15

(2004), http://assets.aarp.org/rgcenter/econ/investor.pdf. In the same manner as

stockholders outside of plans feel that they must rely on investment professionals

to assist them in their investment selection, to an even greater extent are retirement

plan participants captive to the investment selection process that rests in the hands

of defined contribution plan administrators because of the far reaching control the

plan administrator has in defining the universe of investment options available to

plan participants. Therefore, it is important that fiduciaries are held accountable for

their selection and retention of options from which participants may choose to

invest. ERISA §§ 2(b), 404(a)(1)(A), 502(a), 29 U.S.C. §§ 1001(b),

1104(a)(1)(A), 1132(a); cf. Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 140-

43 & n.8 (1985) (ERISA was passed to prevent the misuse and mismanagement of

plan assets).

Given these studies, Congress appeared prescient when it enacted ERISA

and refused to provide exemptions to ERISA’s overarching fiduciary demands of

prudence and loyalty.

16

III. CONGRESS ENACTED ERISA’S FIDUCIARY STANDARDS TO PROTECT EMPLOYEE BENEFIT PLAN ASSETS AND THEREBY PROTECT PARTICIPANTS’ RETIREMENT SECURITY.

A. ERISA Was Enacted To Prevent Mismanagement Of Plan Assets, Not To Promote Employee Ownership Of Employer Stock.

After assembling a record that showed a history and pattern of employees

failing to receive their promised employee benefits, a lack of disclosure and

transparency, and varied and numerous financial abuses, Congress enacted ERISA.

By “establishing standards of conduct, responsibility, and obligation for

fiduciaries” and “by providing for appropriate remedies [and] sanctions” for

violations of those fiduciary standards, ERISA § 2(b), 29 U.S.C. § 1001(b),

Congress sought to protect “the interests of employees and their beneficiaries in

employee benefit plans.” Id.

Citing the extensive legislative history from the Congressional Record, the

Supreme Court recognized in Massachusetts Mutual Life Insurance Co. v. Russell,

that “[t]he floor debate also reveals that the crucible of congressional concern was

misuse and mismanagement of plan assets by plan administrators and that ERISA

was designed to prevent these abuses in the future.” 473 U.S. 134, 140 (1985).

The Court’s recognition of congressional concern was not surprising given

the history leading up to ERISA’s enactment. Among the events that precipitated

Congress to regulate retirement plans were the failure of Studebaker and the

17

termination of its pension plan, the trial of Jimmy Hoffa alleging (and later finding

him guilty of) fraud of the Central States Pension Fund, and instances of other

trustees embezzling or using pension funds for their own benefit. See, e.g., James

A. Wooten, THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974: A

POLITICAL HISTORY at 8-10, 51-80, 112-113, 118 (2004).

Because employer stock was not at the forefront of congressional concern, it

is not surprising that ERISA’s legislative findings do not mention the goal of

promotion of “employee ownership of employer stock.”4 Accordingly, promoting

employee ownership of company stock is merely ancillary to the Act’s stated

policies – the principal of which is the “Protection of Employee Benefit Rights” as

stated at the beginning of Title I of ERISA. See ERISA § 2, 29 U.S.C. § 1001

(reviewing the need to protect participants and beneficiaries).

4 A review of ERISA’s legislative history shows little discussion concerning the importance of employee ownership of employer stock. Instead, the legislative history shows discussions concerning the percentage of employer stock that defined benefit plans should be permitted to hold. See Employee Retirement Income Security Act, Pub. L. No. 93-406, reprinted in SUBCOMM. ON LABOR OF THE COMM. ON LABOR AND PUBLIC WELFARE, 93rd CONG., Legislative History of the Employee Retirement Income Security Act of 1974, Vol. II at 1665, Vol. III at 3774, 4743 (1976).

18

B. Legislative History Confirms That ERISA Contains No Exception To The Duties Of Loyalty And Prudence.

Significantly, both the 1974 House and Senate bills created similar general

standards for fiduciaries – the duties of prudence and loyalty. However, a major

difference between the two bills was the provision concerning self-dealing

transactions. The provision in the two bills was a mirror image. The House

version generally permitted party-in-interest transactions prohibiting only

extraordinary transactions. In contrast, the Senate bill banned all self-dealing, but

exempted certain common transactions. Because the Senate bill hampered

employee stock ownership plans, Senator Russell Long -- a big supporter of

ESOPs -- favored the House bill. However, after Senator Jacob Javits circulated a

list of various abuses that the House bill would not regulate, the Senate version was

endorsed. This resulted in stronger fiduciary requirements concerning ESOPs, by

categorically banning self-dealing and not providing ESOPs with any exception to

the general fiduciary requirements. See Wooten, supra, at 257-58.

Additional legislative history confirms that this understanding of the statute

is correct. The pertinent statutory provisions all have their origins in ERISA’s first

progenitor, H.R. REP. NO. 90-1867, at 7-8 (1968). The Committee Report

accompanying the original House legislation explained the interaction of these

provisions, categorically rejecting the reading adopted by the district court:

19

…. this proviso [exempting the diversification requirement for employer stock] is not intended to insulate such plans from other applications of the prudent man rule. Thus, if investment by a profit sharing plan in the employer is completely unsound the prudent man rule should operate to preclude such investment. All that the proviso says is that if investment in the employer is sound, no profit sharing or similar plan shall be precluded by virtue of a diversification requirement from investing part or all of the plan funds in the stock or securities of the employer to the extent the plan so requires. (emphasis added).

Id. at 7-8 (emphasis added).

The legislative history closer in time to ERISA’s enactment is equally

definitive. Eaves v. Penn, 587 F.2d 453, 460 (10th Cir. 1978) (“It is emphasized,

however, that even with respect to the transactions [involving employer stock]

expressly allowed, the fiduciaries’ conduct must be consistent with the prudent

man standard.”) (quoting Senate Report 93-127, at 93 Cong., 1st Sess., reprinted in

1974 U.S.C.C.A.N 4838, 4867). Nowhere in the statutory language or legislative

history did Congress indicate an exception to the prudence rules. E.g., H.R. CONF.

REP. NO. 93-1280, at 305 (1974), reprinted in 1974 U.S.C.C.A.N. 5038, 5086

(“[A]ll plan fiduciaries must act, with respect to the plan, in accordance with a

‘prudent man’ rule.”); Eaves, 587 F.2d at 460 (“the legislative history combined

with a natural and clear reading of § 404, lead to the inexorable conclusion that

ESOP fiduciaries are subject to the same fiduciary standards as any other fiduciary

except to the extent that the standards require diversification of investments.”).

20

There is simply nothing in ERISA or its legislative history to show that Congress

intended to exclude investments in employer stock, even those required by the

plan, from the duty of prudence. The holding that congressional intent to

encourage employee stock ownership requires courts to permit the imprudent

acquisition or retention of employer stock cannot be squared with the statutory

language and legislative history of ERISA. Nor does it follow that Congress’s

specific and cabined willingness to tolerate a lack of diversification in employer

stock investments suggests a willingness to tolerate imprudent investments

mandated by the plan document. If anything, Congress showed particular concern

for plans which used employer securities by indicating that it barred the use of

section 404(c) as a defense to fiduciary breaches.5 H.R. CONF. REP. NO. 93-1280, at

305 (1974), reprinted in 1974 U.S.C.C.A.N. 5038, 5086.

As this Court has acknowledged, “we must presume that Congress said what

it meant and meant what it said.” Bank of America Nat. Ass'n v. Colonial Bank,

604 F.3d 1239, 1244 (11th Cir. 2010), quoting United States v. Steele, 147 F.3d

1316, 1318 (11th Cir.1998) (en banc). Consequently, a court should not disregard

the plain language of a statute unless a literal application of the statutory language 5 Moreover, section 404(c), exempting fiduciaries from liability for losses caused by participants' exercise of control over assets in their individual accounts, would be superfluous if a plan sponsor could simply relieve fiduciaries from any liability for losses in an individual account. 29 U.S.C. § 1104(c); see also 29 C.F.R. § 2550.404c-1 (2007).

21

“would lead to absurd results . . . or would thwart the obvious purpose of the

statute.” Id. Here, literal application of ERISA’s language clearly furthers

ERISA’s purpose of protecting participants and beneficiaries and the financial

integrity and stability of retirement plans. See ERISA § 2, 29 U.S.C. § 1001.

Indeed, to hold otherwise would create a perverse incentive for plan sponsors to

disregard ERISA fiduciary responsibilities so as to avoid ERISA’s pervasive reach

and thwart its requirements. These principles and ERISA’s plain language, applied

to the facts as alleged in the Complaint, make unmistakably clear that nothing in

the statute exempts fiduciaries of plans investing in company stock, or any other

investment for that matter, from ERISA § 404(a)’s requirements of loyalty and

prudence. See Donovan v. Cunningham, 716 F.2d 1455, 1467 (5th Cir. 1983)

(“ESOP fiduciaries remain subject to the general requirements of Section 404”).

C. Employers Receive Significant Advantages, Including Tax And Cost Savings, From Using Employer Stock For Matching Contributions.

To be sure, ERISA allows employers to offer employer stock as a plan

investment option. But the reasons companies choose to do so is hardly altruistic

and has little to do with enhancing the security of participants’ retirement savings.

On the contrary, employers receive significant advantages from providing the

employer matching contribution in employer stock, not the least of which is that

matching in company stock is far less expensive that matching in cash, IRC

22

§§ 162, 212, 404(a)(9), provides tax benefits for companies that pay dividends,

IRC § 404(k), and puts a block of the stock in employer friendly hands, IRC

§ 409(e), which can help thwart takeovers. See generally Steven J. Sacher, et al.,

Regulation of Qualified Income Plans at 245-50, EMPLOYEE BENEFITS LAW (2d ed.

2000); J.R. Brown, 401(K) Contributions in Company Stock: Costs and Benefits

for Firms and Workers, 90 J. PUB. ECON. 1315, 1319-21 (2006).

Because the reasons for allowing plan investment in employer securities has

little if anything to do with the promotion of ERISA’s primary purpose –

protecting retirement savings, and, indeed, often undermines this purpose, it is

incumbent on this and other courts to ensure that the employers’ interests in

promoting company stock is properly constrained. The district court erred by

elevating this ancillary purpose above the primary objective of Congress when

enacting ERISA. ERISA’s permissiveness with respect to investments in employer

stock is a subset of the fiduciary principles applicable to ERISA fiduciary status,

and strictly subject to those principles. The trial court erred in interpreting

ERISA’s employer stock provisions as trumping the statute’s entire fiduciary

scheme. There is simply no basis upon which to conclude that Congress intended

ERISA § 404(a)(2) to swallow § 404(a)(1) whole.

23

IV. IN ORDER TO PROTECT PLAN ASSETS AND PARTICIPANTS’ RETIREMENT SECURITY, ERISA REQUIRES THAT THERE BE A PLAN FIDUCIARY WITH RESPONSIBILITY FOR PLAN ASSETS AND INVESTMENTS. Under ERISA, fiduciary status may be conferred in one of two ways. The

first is that an individual or entity may be named a fiduciary directly in the

governing plan documents or pursuant to a procedure specified in those

documents. The second is by meeting the statute’s functional definition of a

fiduciary. See generally Kimberly Lynn Weiss, Directors’ Liability for Corporate

Mismanagement of 401(k) Plans: Achieving the Goals of ERISA in Effectuating

Retirement Security, 38 IND. L. REV. 817, 826 (2005).

Congress required a plan to identify a named fiduciary in the plan instrument

so that responsibility to control and manage the operation and administration of the

plan and liability for its mismanagement would be established with a degree of

certainty. ERISA § 402(a)(1), 29 U.S.C. § 1102(a)(1); see H.R. CONF. REP. NO.

1280, 93rd Cong., 2d Sess., reprinted in 1974 U.S.C.C.A.N. 5038, 5076 (“[A]

written plan is required so the employee may know who is responsible for

operating the plan. Therefore, the plan document is to provide for the “named

fiduciaries” who have authority to control and manage the plan operations and

administration.”); see also 29 C.F.R. § 2509.75-5, FR-1.

24

Along with ensuring that there is at least one fiduciary which is always

responsible for administration of the plan, Congress also established statutory

requirements to guarantee that some entity is responsible for the management of

plan assets. Under ERISA § 403(a), 29 U.S.C. § 1103(a), plan assets must be held

in trust by one or more trustees. Those trustees must either be named in a plan

document or trust instrument, or appointed by a named fiduciary of the plan. Id.

These trustees will always be fiduciaries, see 29 C.F.R. § 2509.75-8, D-3, and

unless one of two exceptions is met, they will have exclusive authority and

discretion to manage and control all plan assets. The first exception is where the

written plan document instructs that the trustee is subject to the direction of a

named fiduciary who is not a trustee. ERISA § 403(a)(1), 29 U.S.C. § 1103(a)(1).

The second exception is where there has been a proper delegation to an investment

manager. ERISA § 403(a)(2), 29 U.S.C. § 1103(a)(2). If the employer is

identified in the plan document as a named fiduciary with the responsibility for

directing the trustee, then the employer clearly is a fiduciary with regard to plan

assets, including plan assets invested in the employer’s stock. If so, then the

employer may have the duty to direct the plan trustee to cease investment in the

employer’s stock, regardless of the plan provisions. The employer has a duty to

override the plan documents, if it is prudent to do so. The court’s opinion

overlooks this principle.

25

Alternatively, even though ERISA specifies that there must be a trustee and

a named fiduciary to ensure that some entity has responsibility for the plan and its

assets, the statute provides another method for determining fiduciary status.

ERISA provides a functional definition of fiduciary, which depends on the facts of

a particular situation. Varity Corp. v. Howe, 516 U.S. 489, 527 (1996) (Congress

“define[d] ‘fiduciary’ not in terms of formal trusteeship, but in functional terms of

control and authority over the plan.”) (quoting Mertens v. Hewitt Assocs., 508 U.S.

248, 262 (1993)). ERISA provides that “a person is a fiduciary with respect to a

plan to the extent (i) he exercises any discretionary authority or discretionary

control respecting management of such plan or exercises any authority or control

respecting management or disposition of its assets, . . . . or (iii) he has any

discretionary authority or discretionary responsibility in the administration of such

plan.” ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A); see also 29 C.F.R. § 2509.75-

8, at D-3. The term fiduciary must be broadly construed in order to fulfill the

remedial purposes of ERISA. See Bannistor v. Ullman, 287 F.3d 394, 401 (5th

Cir. 2002).

Under the plain language of the statute, the district court erred in its

imposition upon plaintiffs of a pleading standard that attaches a presumption of

reasonableness that flies in the face of ERISA’s fiduciary mandates. The court’s

holding is the functional equivalent of a license for fiduciaries of employer stock

26

plans to look the other way in circumstances in which common investing sense

dictates that it is utterly irresponsible for the plan to invest in employer stock.

Appellees here fall within the definition of ERISA plan fiduciary. Any other

analysis would necessarily create a gulf between ERISA’s language and fiduciary

practices under the statute.

CONCLUSION

For the reasons stated above, AARP respectfully submits that the district

court’s judgment should be reversed and the case should be remanded for further

proceedings.

Respectfully submitted,

Dated: July 14, 2011 ______________________ Mary Ellen Signorille

AARP Foundation Litigation

Melvin Radowitz

AARP 601 E Street, NW Washington, DC 20049 Counsel for Amicus Curiae AARP

CERTIFICATE OF COMPLIANCE WITH RULE 32(a)

Pursuant to Fed. R. App. P. 32(a)(7)(B), I hereby certify that this brief

contains 5,599 words, excluding the portions of the brief exempted by Fed. R.

App. P. 32(a)(7)(B)(iii), and has been prepared in a proportionally spaced typeface

using Microsoft Word 2007 in Times New Roman 14-point font.

________________________

Mary Ellen Signorille

CERTIFICATE OF SERVICE

I certify that on this 14th day of July, 2011, I mailed by first class mail the

foregoing brief to the following counsel:

David Tetrick, Jr. Darren A. Shuler Michael B. Wakefield King & Spalding LLP 1180 Peachtree Street Atlanta, GA 30309

Edward W. Ciolko Mark K. Gyandoh Kessler Topaz Meltzer & Check LLP 280 King of Prussia Road Radnor, PA 19087

Stephen J. Fearon, Jr. Caitlin Duffy Squitieri & Fearon, LLP 32 East 57th St., 12th Floor New York, NY 10022

Michael I. Fistel, Jr. William W. Stone Holzer Holzer & Fistel, LLC 200 Ashford Center North Suite 300 Atlanta, GA 30338

Edwin J. Mills Michael J. Klein Stull, Stull & Brody 6 East 45th St. New York, NY 10017

__________________________ Mary Ellen Signorille