Thondukolam v. Corteva, Inc.

Background

Krishnan R. Thondukolam, Stephen W. Records, William C. Mallonee, and David L. Everett brought a putative class action arising from the merger and restructuring of E. I. du Pont de Nemours and Company and The Dow Chemical Company. The restructuring temporarily created DowDuPont, Inc., followed by spin-offs that produced Corteva, Inc., New Dow, and DuPont de Nemours, Inc. Historical DuPont remained the sponsor of the U.S. DuPont Pension and Retirement Plan.

Plaintiffs alleged that the defendants moved business operations and assets away from Historical DuPont and made it a subsidiary of Corteva, which they characterized as under-capitalized and over-burdened. They alleged that the transactions were intended to relieve DuPont and Dow of obligations relating to the Plan and were carried out without proper disclosures to Plan participants. The first amended complaint asserted seven causes of action under the Employee Retirement Income Security Act, including fiduciary-duty, plan-document, disclosure, funding, prohibited-transaction, and co-fiduciary-liability claims.

Court’s Analysis

The court applied Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint alleges enough facts, assuming the factual allegations are true, to state a legally valid and plausible claim.

Count I: Breach of fiduciary duty. The court held that the claim failed to the extent it challenged decisions to merge, restructure, or spin off the businesses because those decisions were corporate business decisions, not fiduciary acts under the employee-benefit statute. The court also found that the plaintiffs had not alleged sufficient facts to support a claim based on implementing the spin-offs or on the ability of Historical DuPont or Corteva to fulfill the Plan’s obligations.

Count V: Funding and fiduciary duty. The court dismissed the portion of the claim based on inadequate funding because an employer’s failure to make contributions does not, by itself, trigger fiduciary obligations before the contributions become Plan assets. The court recognized that allegations about allocating contributions within the Plan could implicate fiduciary duties, but held that the claim still failed because the plaintiffs conceded that the defendants met the statute’s minimum funding requirements and identified no legal basis for imposing a higher fiduciary funding obligation.

Claims against individual and Dow defendants. The court stated that it was dismissing Counts I, III, IV, and V on other grounds and therefore did not need to resolve separately whether the individual defendants were fiduciaries. The plaintiffs also conceded at the hearing that they had not alleged sufficient facts to support the claims against the Dow defendants, and those claims were dismissed.

Count II: Failure to follow Plan documents. The court held that the plaintiffs had not identified Plan provisions violated by the restructuring, spin-offs, or management of the Plan. Their claim that Historical DuPont would be unable to make required contributions was also speculative, particularly because they conceded that the defendants had technically contributed to the Plan and met the statute’s minimum funding requirements.

Counts III and IV: Disclosure and notice duties. The court held that the plaintiffs had not alleged facts showing that the Plan was underfunded or that the defendants’ statements about continuing to fund the Plan according to legal requirements were misleading. The court also found no plausible conflict between statements that contributions above minimum requirements could be made at Historical DuPont’s discretion and a later statement that Historical DuPont did not make contributions exceeding tax-deductible limits.

Count VI: Prohibited transaction. The court dismissed the claim because the complaint did not adequately allege fiduciary acts or facts showing that the Plan or its assets were involved in a prohibited transaction with a party in interest. Several allegations instead appeared to concern transfers of Historical DuPont’s corporate assets rather than Plan assets.

Count VII: Co-fiduciary liability. Because the plaintiffs failed to state a claim for a breach of fiduciary duty, the court dismissed the related co-fiduciary-liability claim.

Disposition

The court granted the defendants’ motion to dismiss. It granted the plaintiffs leave to amend all claims because amendment would not be futile. A second amended complaint had to be filed within 28 days of the order’s issuance. The court barred adding new claims or parties without court permission or the defendants’ stipulation, required an electronic redline comparing the amended complaints, and stated that defendants could not raise new arguments that could have been presented in the motion. The order terminated Docket Number 48.