Barchock, et al v. CVS Health Corporation, et al
Court Docket Sheet

1st Circuit Court of Appeals

2017-01515 (ca1)

MOTION for leave to file amicus curiae brief in support of Appellee filed by Movant(s) The Securities Industry and Financial Markets Association. Certificate of service dated 10/10/2017. [17-1515] (BDN) [Entered: 10/10/2017 03:03 PM]

Case: 17-1515 Document: 00117209313 Page: 1 Date Filed: 10/10/2017 Entry ID: 6124650 No. 17–1515 __________________________________________________________________ UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT __________________________________________________________________ MARY BARCHOCK; THOMAS WASECKO; and STACY WELLER, Plaintiffs-Appellants, v. CVS HEALTH CORP.; THE BENEFITS PLAN COMMITTEE OF CVS HEALTH CORP.; and GALLIARD CAPITAL MANAGEMENT, INC., Defendants-Appellees. __________________________________________________________________ On Appeal from The U.S. District Court for the District of Rhode Island No. 1:16-cv-00061-ML-PAS __________________________________________________________________ MOTION OF THE SECURITIES INDUSTRY AND FINANCIAL MARKETS ASSOCIATION FOR LEAVE TO FILE BRIEF AS AMICUS CURIAE IN SUPPORT OF APPELLEES AND AFFIRMANCE __________________________________________________________________ Kevin Carroll Brian D. Netter SECURITIES INDUSTRY AND bnetter@mayerbrown.com FINANCIAL MARKETS MAYER BROWN LLP ASSOCIATION 1999 K Street, NW 1101 New York Avenue, NW Washington, DC 20006 Washington, DC 20005 (202) 263-3000 Nancy G. Ross MAYER BROWN LLP 71 South Wacker Drive Chicago, Illinois 60606 Counsel for The Securities Industry and Financial Markets Association Case: 17-1515 Document: 00117209313 Page: 2 Date Filed: 10/10/2017 Entry ID: 6124650 MOTION OF THE SECURITIES INDUSTRY AND FINANCIAL MARKETS ASSOCIATION FOR LEAVE TO FILE BRIEF AS AMICUS CURIAE IN SUPPORT OF APPELLEES AND AFFIRMANCE The Securities Industry and Financial Markets Association (SIFMA) respectfully moves this Court for leave to file a brief as amicus curiae in support of Appellees and affirmance. SIFMA is the voice of the U.S. securities industry, representing the broker-dealers, banks, and asset managers whose nearly 1 million employees provide access to the capital markets, raising over $2.5 trillion for businesses and municipalities in the United States, serving clients with over $20 trillion in assets, and managing more than $67 trillion in assets for individual and institutional clients, including mutual funds and retirement plans. This case concerns a matter within SIFMA’s area of interest and expertise. SIFMA’s members manage stable value funds and offer them in the defined-contribution plans that they sponsor and administer for their employees. SIFMA has a strong interest, on behalf of its members, in clarifying the fiduciary obligations of investment managers and plan fiduciaries in selecting and managing investment options. Case: 17-1515 Document: 00117209313 Page: 3 Date Filed: 10/10/2017 Entry ID: 6124650 The proposed amicus brief explains three errors in Plaintiffs’ reasoning. First, because of the inherent uncertainty of financial decision making, asset management must be judged based on its contemporaneous process; hindsight has no meaningful role to play. Second, an asset manager need not employ the approach suggested by the calculated average of its peers to be prudent. Third, because ERISA allocates to plan participants the decision to elect among reasonable risk-return tradeoffs, courts cannot countenance claims by plaintiffs who later come to regret their elections. These errors are central to Plaintiffs’ thesis; illuminating the errors will therefore materially advance this Court’s consideration of the underlying appeal. Defendants-Appellees have consented to the filing of SIFMA’s amicus brief, but Plaintiffs-Appellants have withheld their consent. This motion is accompanied by the proposed amicus brief. Wherefore, the motion for leave to file a brief as amicus curiae should be granted. 2 Case: 17-1515 Document: 00117209313 Page: 4 Date Filed: 10/10/2017 Entry ID: 6124650 Dated: October 10, 2017 s/Brian D. Netter Kevin Carroll Brian D. Netter SECURITIES INDUSTRY AND 1st Cir. Bar #1172960 FINANCIAL MARKETS bnetter@mayerbrown.com ASSOCIATION MAYER BROWN LLP 1101 New York Avenue, NW 1999 K Street, NW Washington, DC 20005 Washington, DC 20006 (202) 263-3000 Nancy G. Ross nross@mayerbrown.com MAYER BROWN LLP 71 South Wacker Drive Chicago, Illinois 60606 (312) 782-0600 3 Case: 17-1515 Document: 00117209313 Page: 5 Date Filed: 10/10/2017 Entry ID: 6124650 CERTIFICATE OF COMPLIANCE 1. This motion complies with the type-volume limitations of Fed. R. App. P. 27(d)(2)(A) because it contains 322 words, excluding the parts of the motion exempted by Fed. R. App. P. 32(a)(7)(B)(iii). 2. This motion complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because this brief has been prepared in a proportionally spaced typeface using Microsoft Office Word 2007 in Bookman Old Style 14-point font. s/Brian D. Netter 4 Case: 17-1515 Document: 00117209313 Page: 6 Date Filed: 10/10/2017 Entry ID: 6124650 CERTIFICATE OF SERVICE I hereby certify that on October 10, 2017, I electronically filed the foregoing with the Clerk of the Court for the United States Court of Appeals for the First Circuit by using the CM/ECF system, which will electronically serve all registered counsel of record. s/Brian D. Netter 5 Case: 17-1515 Document: 00117209314 Page: 1 Date Filed: 10/10/2017 Entry ID: 6124650 No. 17–1515 __________________________________________________________________ UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT __________________________________________________________________ MARY BARCHOCK; THOMAS WASECKO; and STACY WELLER, Plaintiffs-Appellants, v. CVS HEALTH CORP.; THE BENEFITS PLAN COMMITTEE OF CVS HEALTH CORP.; and GALLIARD CAPITAL MANAGEMENT, INC., Defendants-Appellees. __________________________________________________________________ On Appeal from The U.S. District Court for the District of Rhode Island No. 1:16-cv-00061-ML-PAS __________________________________________________________________ BRIEF FOR THE SECURITIES INDUSTRY AND FINANCIAL MARKETS ASSOCIATION AS AMICUS CURIAE IN SUPPORT OF APPELLEES AND AFFIRMANCE __________________________________________________________________ Kevin Carroll Brian D. Netter SECURITIES INDUSTRY AND bnetter@mayerbrown.com FINANCIAL MARKETS MAYER BROWN LLP ASSOCIATION 1999 K Street, NW 1101 New York Avenue, NW Washington, DC 20006 Washington, DC 20005 (202) 263-3000 Nancy G. Ross MAYER BROWN LLP 71 South Wacker Drive Chicago, Illinois 60606 Counsel for The Securities Industry and Financial Markets Association Case: 17-1515 Document: 00117209314 Page: 2 Date Filed: 10/10/2017 Entry ID: 6124650 TABLE OF CONTENTS Page TABLE OF AUTHORITIES.............................................................. ii STATEMENT OF THE IDENTITY AND INTEREST OF THE AMICUS CURIAE................................................................... 1 ARGUMENT.................................................................................. 3 I. ASSET MANAGEMENT MUST BE JUDGED BY PROCESS, NOT HINDSIGHT................................................. 5 A. Hindsight can play no role in the assessment of asset management........................................................ 5 B. Process is the touchstone for evaluating asset management................................................................. 8 II. TO ENGAGE IN A PRUDENT PROCESS, AN ASSET MANAGER NEED NOT FOLLOW THE HERD....................... 10 A. Asset managers reasonably differentiate their investment offerings from competitors’ funds.............. 11 B. Investing in longer-duration bonds does not provide an opportunity for stable value funds to achieve additional returns without additional risk................... 14 III. ERISA DOES NOT PERMIT A CAUSE OF ACTION FOR CHAGRIN............................................................................ 15 CONCLUSION............................................................................. 17 CERTIFICATE OF COMPLIANCE................................................. 18 CERTIFICATE OF SERVICE......................................................... 19-i-Case: 17-1515 Document: 00117209314 Page: 3 Date Filed: 10/10/2017 Entry ID: 6124650 TABLE OF AUTHORITIES Page(s) Cases Bunch v. W.R. Grace & Co., 555 F.3d 1 (1st Cir. 2009)...................................................... 8, 9 DeBruyne v. Equitable Life Assurance Soc’y of the U.S., 920 F.2d 457 (7th Cir. 1990)................................................ 7, 11 DiFelice v. U.S. Airways, Inc., 497 F.3d 410 (4th Cir. 2007)...................................................... 8 Hughes Aircraft Co. v. Jacobson, 525 U.S. 432 (1999)................................................................. 16 Rinehart v. Lehman Bros. Holdings Inc., 817 F.3d 56 (2d Cir. 2016)......................................................... 7 Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915 (8th Cir. 1994)........................................................ 8 PBGC ex rel. St. Vincent Catholic Med. Centers Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705 (2d Cir. 2013)....................................................... 9 Sweda v. Univ. of Pa., 2017 WL 4179752 (E.D. Pa. Sept. 21, 2017)......................... 7, 17 Tibble v. Edison Int’l, 729 F.3d 1110 (9th Cir. 2013), vacated and remanded on other grounds, 135 S. Ct. 1823 (2015).................................. 16 Tussey v. ABB, Inc., 746 F.3d 327 (8th Cir. 2014)...................................................... 5 In re Unisys Sav. Plan Litig., 74 F.3d 420 (3d Cir. 1996)......................................................... 9-ii-Case: 17-1515 Document: 00117209314 Page: 4 Date Filed: 10/10/2017 Entry ID: 6124650 TABLE OF AUTHORITIES (continued) Page(s) Other Authorities 29 C.F.R.: § 2550.404a-1(b)(1).................................................................. 10 § 2550.404c-1(b)(3)(i)(A)........................................................... 16 Andrew Apostol, How to Evaluate Stable Value Funds and Their Managers......................................................................... 12 Fed. R. App. P.: Rule 29(a)(4)(D).......................................................................... 1 Rule 29(a)(4)(E)........................................................................... 1 Inv. Co. Inst., Frequently Asked Questions About 401(k) Plan Research, https://www.ici.org/policy/retirement/plan/401k/faqs_401k................................................................ 7-iii-Case: 17-1515 Document: 00117209314 Page: 5 Date Filed: 10/10/2017 Entry ID: 6124650 STATEMENT OF THE IDENTITY AND INTEREST OF THE AMICUS CURIAE1 The Securities Industry and Financial Markets Association (SIFMA) is the voice of the U.S. securities industry. SIFMA represents the broker-dealers, banks, and asset managers whose nearly 1 million employees provide access to the capital markets, raising over $2.5 trillion for businesses and municipalities in the United States, serving clients with over $20 trillion in assets, and managing more than $67 trillion in assets for individual and institutional clients, including mutual funds and retirement plans. SIFMA has offices in New York and Washington, D.C., and is the regional member of the Global Financial Markets Association for the United States. Additional information about SIFMA is available at http://www.sifma.org. 1Pursuant to Fed. R. App. P. 29(a)(4)(E), no party’s counsel authored this brief in whole or in part; no party or party’s counsel contributed money that was intended to fund preparing or submitting this brief; and no person—other than the amicus curiae, its members, or its counsel—contributed money that was intended to fund preparing or submitting the brief. Pursuant to Rule 29(a)(4)(D), this brief is accompanied by a motion for leave to file. Case: 17-1515 Document: 00117209314 Page: 6 Date Filed: 10/10/2017 Entry ID: 6124650 Virtually all companies that offer participant-directed retirement plans permit their participants to elect an income-producing, low risk, liquid fund, such as a money market fund or a stable value fund. SIFMA members manage such funds, and also offer them in the defined-contribution plans that they sponsor and administer for their employees. The rise in the use of defined contribution plans has spawned a rise in lawsuits like this one, in which participants allege that plan fiduciaries or plan service providers breached their respective duties to plan participants by including investment options that proved, with the benefit of hindsight, to be too risky—or not risky enough. Decision makers for defined contribution plans must make their decisions, however, before it is known how the investment markets will fare. SIFMA has a strong interest, on behalf of its members, in clarifying the fiduciary obligations of investment managers and plan fiduciaries in selecting and managing investment options in retirement plans governed by ERISA. 2 Case: 17-1515 Document: 00117209314 Page: 7 Date Filed: 10/10/2017 Entry ID: 6124650 ARGUMENT When asset managers decide how to manage their portfolios, they do not know how the markets will perform. They do not know whether, in the coming years, the markets will reward or punish risk-taking in any particular market segment. Even the most sophisticated asset managers cannot reliably predict which sectors will thrive and which will falter—or when the market has reached its apex or its trough. At the point of decision, uncertainty reigns. As a result, sound investment management requires risk management. Investment professionals develop and implement processes for scrutinizing assets before selecting them for their portfolios. The objective is to formulate a portfolio with a chosen risk profile that provides opportunities for returns concomitant with that level of risk. In this case, three participants in the 401(k) Plan and Employee Stock Ownership Plan of CVS Health Corporation and Affiliated Companies (the "Plan") are challenging the Plan’s Stable Value Fund. As the name suggests, a stable value fund is a conservative investment option that is designed to provide stability, as opposed to growth. Plaintiffs do not claim that the Stable Value 3 Case: 17-1515 Document: 00117209314 Page: 8 Date Filed: 10/10/2017 Entry ID: 6124650 Fund lacked stability, nor that it failed to maintain its value. Rather, their theory is that ERISA required the Stable Value Fund to be invested in riskier, longer-term assets in pursuit of greater yield. Plaintiffs’ thesis—if endorsed by a court—would prove deeply problematic to the financial services industry and to the ERISA plans that it serves. With the benefit of hindsight, it will always be possible to observe that, during any given period, more risk in particular segments was either rewarded or punished. At the point of decision, however, asset managers lack the benefit of hindsight. Instead, asset managers and ERISA fiduciaries must rely on sound processes to offer plan participants the opportunity to elect a specified tradeoff between risk and possible reward. Courts have rightly refused to entertain claims, like this one, that rely, inextricably, on hindsight. In the end, given the lack of any meaningful allegation that there was a deficiency in the process for managing the Stable Value Fund, Plaintiffs’ complaint amounts to nothing more than the claim that the Stable Value Fund should have looked more like some "average" stable value fund. But ERISA permits—indeed, 4 Case: 17-1515 Document: 00117209314 Page: 9 Date Filed: 10/10/2017 Entry ID: 6124650 encourages—fiduciaries to make their own decisions about whether, in any given market segment, they want an average level of risk, or a below-or above-average level of risk, based on their own judgments and on the specific circumstances of their own participants. ERISA permits fiduciaries to choose a stable value fund—or any other type of fund—with a below-average level of risk. Those same fiduciaries cannot later be subjected to liability because that below-average level of risk yielded a lower return than a fund that took on more risk. Nor can the investment manager be subjected to liability for offering such a fund. I. ASSET MANAGEMENT MUST BE JUDGED BY PROCESS, NOT HINDSIGHT. A. Hindsight can play no role in the assessment of asset management. The financial markets are, by their nature, unpredictable. "While it is easy to pick an investment option in retrospect (buy Apple Inc. at $7 a share in December 2000 and short Enron Corp. at $90 a share), selecting an investment beforehand is difficult." Tussey v. ABB, Inc., 746 F.3d 327, 338 (8th Cir. 2014). The same holds true for investment risks generally. In hindsight, it is easy to discount low probabilities of catastrophic events that did not occur 5 Case: 17-1515 Document: 00117209314 Page: 10 Date Filed: 10/10/2017 Entry ID: 6124650 (or to take for granted low probability events that did occur). But accurately projecting uncertain events beforehand is hard. Indeed, their lack of predictability is what makes the markets function. Investors demand a premium for taking on risk, so the market prices bonds and stocks based on expectations for their future value combined with the likelihood that the expectations will be realized. In that environment of uncertainty, asset managers employ techniques to manage risks. They assemble portfolios to achieve targets for risk and projected return and monitor the portfolios to ensure continued compliance with those objectives. This approach permits asset managers to offer investors the opportunity to participate in a particular risk-return tradeoff. But, in any given market environment, some strategies will outpace targets, while others will fall short. In aggregate, it is an unavoidable fact of mathematics that half of all funds will underperform the median, with one-in-four in the bottom quartile. ERISA plaintiffs are frequently tempted by that truism to engage in condemnation-by-comparison. As the argument runs, the fact that other investments fared better over 6 Case: 17-1515 Document: 00117209314 Page: 11 Date Filed: 10/10/2017 Entry ID: 6124650 some (arbitrary) time period shows that the challenged investments were flawed.2 If this reasoning were enough to state an ERISA claim, it would be a foolproof way to generate an unending supply of cases from the Nation’s 500,000 401(k) plans.3 With the benefit of hindsight, a plaintiff can easily identify the quarter of funds with returns in the bottom quartile, and then identify the investment decisions that most contributed to their lower returns. There is nothing to distinguish the present case from any other case that could be brought via the same hindsight selection algorithm. Accordingly, with good reason, courts have emphasized that ERISA’s "fiduciary duty of care... requires prudence, not prescience." DeBruyne v. Equitable Life Assurance Soc’y of the U.S., 920 F.2d 457, 465 (7th Cir. 1990) (internal quotation marks omitted); accord Rinehart v. Lehman Bros. Holdings Inc., 817 F.3d 2 See, e.g., Complaint ¶ 100, Sweda v. Univ. of Pa., 2017 WL 4179752 (E.D. Pa. Sept. 21, 2017) (No. 2:16-cv-04329), ECF No. 1 (alleging that plan fiduciaries breached their duty of prudence by offering a fund that trailed "two other... funds in the same investment style"). Inv. Co. Inst., Frequently Asked Questions About 401(k) Plan 3 Research, https://www.ici.org/policy/retirement/plan/401k/faqs_401k. 7 Case: 17-1515 Document: 00117209314 Page: 12 Date Filed: 10/10/2017 Entry ID: 6124650 56, 64 (2d Cir. 2016). So "whether a fiduciary’s actions are prudent cannot be measured in hindsight." DiFelice v. U.S. Airways, Inc., 497 F.3d 410, 424 (4th Cir. 2007). B. Process is the touchstone for evaluating asset management. The measure of an asset manager’s performance is not whether its investment selections resulted in above-average returns, compared to the competition (measured ex post), but whether it implemented appropriate processes ex ante to make reasoned decisions. Because of the prohibition on judgment by hindsight, courts evaluating ERISA prudence claims do not consider performance— which is inherently a hindsight assessment—but rather focus on whether the manager engaged in a prudent process. As this Court held in Bunch v. W.R. Grace & Co., fiduciary decision making must be "viewed from the perspective of the time of the challenged decision rather than from the vantage point of hindsight." 555 F.3d 1, 7 (1st Cir. 2009) (quoting Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915, 917-18 (8th Cir. 1994)). So when an investment decision results from "thorough investigative and decisional process," "it is 8 Case: 17-1515 Document: 00117209314 Page: 13 Date Filed: 10/10/2017 Entry ID: 6124650 difficult, indeed impossible, given the standard of review... to legally challenge the[] actions." Id. Other courts employ similar standards, recognizing that consideration of a fund’s performance sheds no light on whether an investment vehicle was appropriately conceptualized and implemented, and thus must be excluded from the assessment of prudence. See, e.g., PBGC ex rel. St. Vincent Catholic Med. Centers Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 730 (2d Cir. 2013); In re Unisys Sav. Plan Litig., 74 F.3d 420, 434 (3d Cir. 1996) (requiring investment decisions to be reviewed "according to an objective standard, focusing on a fiduciary’s conduct in arriving at an investment decision, not on its results, and asking whether a fiduciary employed the appropriate methods to investigate and determine the merits of a particular investment") (emphasis added). The U.S. Department of Labor has placed the same emphasis on process, interpreting the duty of prudence to be satisfied if the fiduciary’s process is diligent: With regard to an investment or investment course of action taken by a fiduciary of an employee benefit plan pursuant to his investment duties, [ERISA’s prudence] requirements... are satisfied if the fiduciary: 9 Case: 17-1515 Document: 00117209314 Page: 14 Date Filed: 10/10/2017 Entry ID: 6124650 (i) Has given appropriate consideration to those facts and circumstances that, given the scope of such fiduciary’s investment duties, the fiduciary knows or should know are relevant to the particular investment or investment course of action involved, including the role the investment or investment course of action plays in that portion of the plan’s investment portfolio with respect to which the fiduciary has investment duties; and (ii) Has acted accordingly. 29 C.F.R. § 2550.404a-1(b)(1). II. TO ENGAGE IN A PRUDENT PROCESS, AN ASSET MANAGER NEED NOT FOLLOW THE HERD. Without considering hindsight, there is little left to Plaintiffs’ complaint. Here, as the district court found, Plaintiffs do not dispute that the Stable Value Fund satisfied the objectives disclosed to Plan participants. They do not "criticize any aspect of Galliard’s investment process or of CVS’s monitoring of Galliard’s investment process." A.10. Rather, Plaintiffs’ theory is that Galliard’s "failure" to pursue the strategy employed by certain other stable value funds demonstrates the plausibility of their claim for fiduciary breach because the Galliard fund’s level of risk diverged from the average of other funds, and because other stable value funds purportedly 10 Case: 17-1515 Document: 00117209314 Page: 15 Date Filed: 10/10/2017 Entry ID: 6124650 availed themselves of risk-free additional returns generated by investing the stable value fund in longer-duration bond funds. Plaintiffs are wrong as to their general point (about the desirability of following the herd); and wrong as to the application in the stable value fund context. A. Asset managers reasonably differentiate their investment offerings from competitors’ funds. On appeal, Plaintiffs contend that their challenge to the Stable Value Fund is justified because it "deviated from known and well-established industry standards." Pls.’ Br. 21. Such was the claim in DeBruyne, where the Seventh Circuit rejected the claim that losses sustained on Black Monday by Equitable’s "Balanced Fund" resulted from imprudence because Equitable’s fund did not reflect the same balance as other "balanced funds." The Seventh Circuit held that "assertions of what a'typical’ balanced fund portfolio manager might have done in 1987 say little about the wisdom of Equitable’s investments, only that Equitable may not have followed the crowd." 920 F.2d at 465. The DeBruyne approach is the right one. The contrary presumption—that deviations from typicality support an inference 11 Case: 17-1515 Document: 00117209314 Page: 16 Date Filed: 10/10/2017 Entry ID: 6124650 of imprudence—would undermine the interests of plan fiduciaries in having choices along the risk/return spectrum.. Even if there were such a thing as a typical stable value fund,4 it does not benefit investors to be restricted to investment options that cluster tightly around an "average"; to the contrary, it benefits investors to have investment lineups that reflect conscious decisions about the objectives of the population. To return, again, to the fundamentals, 401(k) investors come in all shapes and sizes. Some are old, some are young. Some have considerable wealth, some are dependent on their plan balances to make ends meet. Different plans can be expected to have different populations of plan participants; one would not, for example, expect that CVS’s employee population would resemble that of a Silicon Valley startup or a hedge fund. Different investor populations will sometimes indicate different strategies. Even within a single asset class, the circumstances of the targeted population may counsel in 4But see, e.g., Andrew Apostol, How to Evaluate Stable Value Funds and Their Managers, Dwight Asset Management Company (July 2007) ("Due to the varying expectations of individual plan sponsors and the range of management techniques used by their stable value managers, there is not a single style or strategy that is common across all stable value funds."). 12 Case: 17-1515 Document: 00117209314 Page: 17 Date Filed: 10/10/2017 Entry ID: 6124650 favor of a more aggressive—or a more conservative—posture. Fiduciaries to a plan such as CVS’s may wish to have a more conservative stable value fund than those chosen by plans with different populations. It is particularly relevant here that this case involves how the CVS Plan’s most conservative investment option was invested in the immediate aftermath of the 2008 financial crisis—which highlighted the risks of assets previously thought to be safe. Different investment populations reasonably greeted this "New World Order" with different strategies; and fund managers reasonably crafted funds with different risk profiles to meet the concerns of the marketplace. As a broader matter, it is a basic tenet of modern investment management that diversification—and a diversity of investment options—expands the horizon of desirable portfolios. Were this Court to accept the theory that Plaintiffs could survive a motion to dismiss—and subject plan fiduciaries and fund managers to the significant costs of discovery—merely by identifying deviations from industry averages, then the whole financial marketplace would suffer from the reduced choice that would predictably result. If an 13 Case: 17-1515 Document: 00117209314 Page: 18 Date Filed: 10/10/2017 Entry ID: 6124650 investment manager that diverges from the average in the level of risk that it assumes or in its general investment strategy has a litigation target on its back, those funds will not long be offered, at least not to retirement plans that are subject to ERISA. B. Investing in longer-duration bonds does not provide an opportunity for stable value funds to achieve additional returns without additional risk. As applied to the stable value context, Plaintiffs’ assertion is that other stable value funds follow the "typical" model because it permits them access to greater returns without additional risk. The district court deemed it implausible that investors could get something for nothing. The district court was correct. Stable value funds have desirable features. By combining bonds and an investment wrap, participants can achieve bond-like returns without the interest-rate volatility present in bond funds. But those features do not eliminate the risk of losses, they just delay them. The stability-enhancing features of a stable value fund mean that, if a stable value fund invests in a bond that defaults, the value of the fund will not take an immediate tumble, but the loss will be amortized over a period of time. Over the long run, the performance of a stable value fund approaches the performance of 14 Case: 17-1515 Document: 00117209314 Page: 19 Date Filed: 10/10/2017 Entry ID: 6124650 the underlying bond portfolio, minus the expenses of maintaining the wrap coverage and administering the fund. This is, then, a long way of restating the obvious: There is no such thing as a free lunch. Bonds with a longer duration are likelier to be defaulted, which is why, except in anomalous interest-rate environments, longer bonds have higher yields. So a stable value fund with a longer duration is riskier than a fund with a shorter duration. Were this not so, stable value funds would be investing primarily in 10-, 15-, and 20-year bonds, rather than in 1-, 2-, and 3-year instruments. III. ERISA DOES NOT PERMIT A CAUSE OF ACTION FOR CHAGRIN. A final point bears mention. After eliminating the possibility of procedural improprieties by CVS or Galliard in the management of the Stable Value Fund and discounting the suggestion that Plaintiffs should somehow have gotten greater returns without taking on additional risk, Plaintiffs’ complaint can still be read to suggest that Plaintiffs deserved a most-conservative investment option that was at a different point on the efficient frontier of risks and returns. 15 Case: 17-1515 Document: 00117209314 Page: 20 Date Filed: 10/10/2017 Entry ID: 6124650 Even when there is an array of appropriate investment options that can be combined to generate reasonable investment portfolios, somebody must make the ultimate decision about the point on the risk-return horizon on which to reside. There are circumstances in which a fiduciary gets to decide, on another’s behalf, how assets ought to be invested. (A defined-benefit pension plan is the classic example. See generally Hughes Aircraft Co. v. Jacobson, 525 U.S. 432 (1999).) But "participant choice is the centerpiece of what ERISA envisions for [401(k)] plans." Tibble v. Edison Int’l, 729 F.3d 1110, 1134-35 (9th Cir. 2013), vacated and remanded on other grounds, 135 S. Ct. 1823 (2015). In a 401(k) plan, plan participants get to control "the degree of risk to which [their individual accounts] are subject." 29 C.F.R. § 2550.404c-1(b)(3)(i)(A). The upshot is that CVS Plan participants who wanted exposure to greater risk had options for exposing themselves to greater risk. Unless they can show that the Stable Value Fund was managed through an imprudent process, Plaintiffs cannot escape the risk-return combination that they elected. ERISA is not an insurance policy that allows individuals who opted to forgo risk to 16 Case: 17-1515 Document: 00117209314 Page: 21 Date Filed: 10/10/2017 Entry ID: 6124650 claim the benefits of higher returns after the market has proven strong. See Sweda, 2017 WL 4179752, at *10 ("Chagrin does not inexorably become a cause of action."). CONCLUSION The judgment of the district court should be affirmed. Dated: October 10, 2017 s/Brian D. Netter Kevin Carroll Brian D. Netter SECURITIES INDUSTRY AND 1st Cir. Bar #1172960 FINANCIAL MARKETS bnetter@mayerbrown.com ASSOCIATION MAYER BROWN LLP 1101 New York Avenue, NW 1999 K Street, NW Washington, DC 20005 Washington, DC 20006 (202) 263-3000 Nancy G. Ross nross@mayerbrown.com MAYER BROWN LLP 71 South Wacker Drive Chicago, Illinois 60606 (312) 782-0600 17 Case: 17-1515 Document: 00117209314 Page: 22 Date Filed: 10/10/2017 Entry ID: 6124650 CERTIFICATE OF COMPLIANCE 1. This brief complies with the type-volume limitations of Fed. R. App. P. 29(a)(5) and Fed. R. App. P. 32(a)(7)(B)(i) because it contains 3,077 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii). 2. This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because this brief has been prepared in a proportionally spaced typeface using Microsoft Office Word 2007 in Bookman Old Style 14-point font. s/Brian D. Netter 18 Case: 17-1515 Document: 00117209314 Page: 23 Date Filed: 10/10/2017 Entry ID: 6124650 CERTIFICATE OF SERVICE I hereby certify that on October 10, 2017, I electronically filed the foregoing with the Clerk of the Court for the United States Court of Appeals for the First Circuit by using the CM/ECF system, which will electronically serve all registered counsel of record. s/Brian D. Netter 19

NOTICE of appearance on behalf of Movant(s) The Securities Industry and Financial Markets Association filed by Attorney Brian D. Netter. Certificate of service dated 10/10/2017. [17-1515] (BDN) [Entered: 10/10/2017 03:05 PM]

Case: 17-1515 Document: 00117209317 Page: 1 Date Filed: 10/10/2017 Entry ID: 6124651 United States Court of Appeals For the First Circuit NOTICE OF APPEARANCE No. 17-1515 Short Title: Barchock v. CVS Health Corp. The Clerk will enter my appearance as counsel on behalf of (please list names of all parties represented, using additional sheet(s) if necessary): Securities Industry and Financial Markets Association as the [] appellant(s) [] appellee(s) [X] amicus curiae [] petitioner(s) [] respondent(s) [] intervenor(s) [] The party I represented below is not a party to the appeal and I wish to be removed from the service list. Please list the names of all parties represented:/s/Brian D. Netter October 10, 2017 Signature Date Brian D. Netter Name Mayer Brown LLP (202) 263-3339 Firm Name (if applicable) Telephone Number 1999 K St NW (202) 263-5236 Address Fax Number Washington, DC 20006 bnetter@mayerbrown.com City, State, Zip Code Email (required) Court of Appeals Bar Number: 1172960 Has this case or any related case previously been on appeal? [X] No [] Yes Court of Appeals No. Attorneys for both appellant and appellee must file a notice of appearance within 14 days of case opening. New or additional counsel may enter an appearance outside the 14 day period; however, a notice of appearance may not be filed after the appellee/respondent brief has been filed without leave of court. 1st Cir. R. 12.0(a). Counsel must complete and file this notice of appearance in order to file pleadings in this court. Counsel not yet admitted to practice before this court must submit an application for admission with this form. 1st Cir. R. 46.0(a)(2). Effective January 1, 2010, use of the Case Management/Electronic Case Files (CM/ECF) system is mandatory for all attorneys filing in this court. Counsel may register at http://pacer.psc.uscourts.gov/. Case: 17-1515 Document: 00117209317 Page: 2 Date Filed: 10/10/2017 Entry ID: 6124651 CERTIFICATE OF SERVICE I hereby certify that on October 10, 2017, the foregoing was electronically filed with the Clerk of Court using the CM/ECF system, which will send notification to all counsel of record in this matter who are registered with the Court’s CM/ECF system./s/Brian D. Netter Brian D. Netter MAYER BROWN LLP 1999 K St NW Washington, DC 20006 (202) 263-3339 (tel.)

REPLY BRIEF filed by Appellants Mary Barchock, Thomas Wasecko and Stacy Weller. Certificate of service dated 10/16/2017. Nine paper copies identical to that of the electronically filed brief must be submitted so that they are received by the court on or before 10/25/2017. [17-1515] (AP) [Entered: 10/18/2017 04:54 PM]

Case: 17-1515 Document: 00117212693 Page: 1 Date Filed: 10/18/2017 Entry ID: 6126554 No. 17-1515 UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT MARY BARCHOCK; THOMAS WASECKO; STACY WELLER Plaintiffs – Appellants v. CVS HEALTH CORPORATION; THE BENEFITS PLAN COMMITTEE OF CVS HEALTH CORPORATION; GALLIARD CAPITAL MANAGEMENT, INC. Defendants-Appellees Appeal from the United States District Court For the District of Rhode Island, Case No. CA 16-61ML, The Honorable Mary M. Lisi, Senior Judge APPELLANTS' REPLY BRIEF SONJA L. DEYOE TODD M. SCHNEIDER LAW OFFICES OF SONJA L. DEYOE JASON H. KIM 395 SMITH STREET SCHNEIDER WALLACE PROVIDENCE, RI 02908 COTTRELL KONECKY (401) 864-5877 WOTKYNS LLP 2000 POWELL STREET, SUITE 1400 EMERYVILLE, CA 94608 (415) 421-7100 Counsel for Plaintiffs-Appellants Case: 17-1515 Document: 00117212693 Page: 2 Date Filed: 10/18/2017 Entry ID: 6126554 TABLE OF CONTENTS INTRODUCTION................................................................................................. 1 ARGUMENT......................................................................................................... 2 I. DEFENDANTS AND AMICI APPLY AN UNDULY NARROW DEFINITION OF ERISA IMPRUDENCE................................................. 2 II. PLAINTIFFS’ ALLEGATIONS OF IMPRUDENCE ARE BASED ON MORE THAN HINDSIGHT AND COMPARISON TO OTHER STABLE VALUE FUNDS......................................................................... 4 III. DEFENDANTS’ ARGUMENTS IMPERMISSIBLY REQUIRE DRAWING INFERENCES IN THEIR FAVOR........................................ 7 CONCLUSION.................................................................................................... 10 i Case: 17-1515 Document: 00117212693 Page: 3 Date Filed: 10/18/2017 Entry ID: 6126554 TABLE OF AUTHORITIES Cases Abbott v. Lockheed Martin Corp. No. 06-cv-0701, 2009 WL 839099 (S.D. Ill. March 31, 2009).......................... 9 Bd. of Trustees of Operating Engineers Pension Trust v. JPMorgan Chase Bank. NA No. 09-CIV-9333, 2013 WL 1234818 (S.D.N.Y. Mar. 27, 2013).................... 6 Braden v. Wal-Mart Stores, Inc. 588 F.3d 585 (8th Cir. 2009).......................................................................... 4, 7 Bunch v. W.R. Grace & Co. 532 F. Supp. 2d 283 (D. Mass. 2008)................................................................. 3 Bunch v. W.R. Grace & Co. 555 F.3d 1 (1st Cir. 2009)....................................................................... 2, 3, 4, 6 Concha v. London 62 F.3d 1493 (9th Cir. 1995).............................................................................. 4 DiFelice v. U.S. Airways, Inc. 497 F.3d 410 (4th Cir. 2007).............................................................................. 5 Fish v. GreatBanc Trust Co. 749 F.3d 671 (7th Cir. 2014).............................................................................. 3 Howard v. Shay 100 F.3d 1484 (9th Cir. 1996)............................................................................ 3 Krueger v. Ameriprise Financial, Inc. No. 11-cv-02781, 2012 WL 5873825 (D. Minn. Nov. 20, 2012)...................... 6 Pension Ben. Guar. Corp. ex rel. St. Vincent Catholic Medical Centers Retirement Plan v. Morgan Stanley Inv. Management Inc. 712 F.3d 705 (2d Cir. 2013)............................................................................... 3 ii Case: 17-1515 Document: 00117212693 Page: 4 Date Filed: 10/18/2017 Entry ID: 6126554 Rules Federal Rule of Civil Procedure 8......................................................................... 2 iii Case: 17-1515 Document: 00117212693 Page: 5 Date Filed: 10/18/2017 Entry ID: 6126554 INTRODUCTION Contrary to the assertions of Defendants-Appellees ("Defendants") and amici, Plaintiffs-Appellants’ ("Plaintiffs") Amended Complaint is based on far more than a retroactive critique of the performance of the Galliard stable value fund ("Stable Value Fund") at issue here or comparison of the composition of that fund to industry averages. Rather, Plaintiffs’ Amended Complaint alleges in robust detail—including by citation to authoritative sources—that the design of the Stable Value Fund was fundamentally flawed with respect to definitional features of stable value funds such as liquidity and duration. More specifically, the Stable Value Fund: (1) maintained excessive short-term cash holdings, requiring investors to pay a wasteful liquidity premium; and (2) was managed to an unreasonably short duration, thus cheating investors of the primary advantage of stable value fund investing as compared to money market investing. When the Amended Complaint is read fairly as a whole, with all inferences drawn in favor of Plaintiffs, it must be concluded that Plaintiffs have alleged more-than-viable claims against Defendants for breach of ERISA’s duty of prudence. Contrary to the purported concerns of amici, reversing the District Court and allowing this action to proceed to discovery will not impose any unreasonable liability on plan sponsors or discourage sponsors from offering 1 Case: 17-1515 Document: 00117212693 Page: 6 Date Filed: 10/18/2017 Entry ID: 6126554 retirement plans. Reversing the District Court would merely reaffirm long-standing precedent as to the proper standard for stating a claim pursuant to Fed. R. Civ. Proc. 8 in the context of claims of ERISA imprudence. ARGUMENT I. DEFENDANTS AND AMICI APPLY AN UNDULY NARROW DEFINITION OF ERISA IMPRUDENCE While Defendants and amici focus almost exclusively on the process by which an ERISA fiduciary makes decisions, this Court has applied a more holistic and fact-specific view. In Bunch v. W.R. Grace & Co., 555 F.3d 1, 6 (1st Cir. 2009), this Court held that evaluating the reasonableness of an ERISA fiduciary’s actions requires consideration of the "totality of the circumstances." And while this Court in Bunch relied on the "thorough investigative and decisional process" that led to the decision to divest the company stock at issue there, Bunch, 555 F.3d at 7, that case arose from a "case stated" with a well-developed factual record rather than on a motion to dismiss. Here, there is no such record and it cannot be presumed that such a "thorough" process exists at the motion to dismiss stage. Furthermore, as the district court’s opinion in Bunch makes clear, ERISA requires application of a standard of "substantive reasonableness" that goes beyond process and looks to the "merits" of a decision. That court stated that "the court focuses not only on the merits of a transaction, but also on the 2 Case: 17-1515 Document: 00117212693 Page: 7 Date Filed: 10/18/2017 Entry ID: 6126554 thoroughness of the investigation into the merits of that transaction." Bunch v. W.R. Grace & Co., 532 F. Supp. 2d 283, 288 (D. Mass. 2008), quoting Howard v. Shay, 100 F.3d 1484, 1488 (9th Cir. 1996) (alterations omitted and emphasis added). See also Fish v. GreatBanc Trust Co., 749 F.3d 671, 680 (7th Cir. 2014) ("Whether an ERISA fiduciary has acted prudently requires consideration of both the substantive reasonableness of the fiduciary’s actions and the procedures by which the fiduciary made its decision.") To be sure, the duty of prudence focuses on conduct and not results. Bunch, 555 F.3d at 7. But conduct is not synonymous with process. Plaintiffs here challenge Defendants’ conduct in designing and maintaining a stable value fund that—by deviating from the basic financial logic of stable value funds—ex ante would be expected to yield inferior returns. Plaintiffs do not merely rely on the fact that Defendants’ strategy happened ex post to yield such returns. Thus, the fact that Plaintiffs are not in a position to make direct allegations about the process by which Defendants chose to implement their transparently-flawed stable value strategy does not bar their claims here. See Pension Ben. Guar. Corp. ex rel. St. Vincent Catholic Medical Centers Retirement Plan v. Morgan Stanley Inv. Management Inc., 712 F.3d 705, 718 (2d Cir. 2013) (lack of direct allegations about defendant’s "knowledge, methods, or investigations" was not "fatal to a claim alleging a breach of fiduciary duty"). This is especially 3 Case: 17-1515 Document: 00117212693 Page: 8 Date Filed: 10/18/2017 Entry ID: 6126554 true because, as plan participants, Plaintiffs have no practical means to learn (prior to discovery) the details of Defendants’ decision-making process. See Concha v. London, 62 F.3d 1493, 1503 (9th Cir. 1995). It is therefore appropriate at the motion to dismiss stage to infer a flawed process from objective indicia. Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009). Plaintiffs have pleaded such objective indicia in detail, as set forth below. II. PLAINTIFFS’ ALLEGATIONS OF IMPRUDENCE ARE BASED ON MORE THAN HINDSIGHT AND COMPARISON TO OTHER STABLE VALUE FUNDS In their Amended Complaint, Plaintiffs describe in detail the underlying financial logic of stable value funds. In summary, stable value funds are able to achieve higher returns than money market funds with equivalent risk. This is because they are offered almost exclusively in employer-sponsored retirement plans, the participants in which are investors with predictable time horizons and liquidity needs. Thus, stable value funds can take advantage of the "yield curve." Stable value funds also avoid the liquidity premium inherent in money market funds, for which instant liquidity is a key feature. Add. 5-7, Am. Compl. ¶¶ 13-22. Appreciating this context, as detailed in the Amended Complaint, is critical because evaluating prudence requires consideration of how the management of the fund at issue compares to the "structure and aims" of stable 4 Case: 17-1515 Document: 00117212693 Page: 9 Date Filed: 10/18/2017 Entry ID: 6126554 value funds as an investment category. Bunch, 555 F.3d at 6, quoting DiFelice v. U.S. Airways, Inc., 497 F.3d 410, 418 (4th Cir. 2007). As the Fourth Circuit held in DiFelice, "[u]nder ERISA, the prudence of investments or classes of investments offered by a plan must be judged individually" and a "fiduciary must initially determine, and continue to monitor, the prudence of each investment option available to plan participants." Id. at 423 (emphasis in original). Thus, contrary to Defendants’ suggestion, the fact that the plan at issue here offered other investments with greater returns than the Stable Value Fund is not relevant to evaluating Defendants’ prudence with respect to the Stable Value Fund standing alone. Focusing on the "structure and aims" of stable value funds, Defendants designed and managed the Stable Value Fund in such a way as to deviate from the incontrovertible principles of stable value investing described above. During the relevant time period, the Stable Value Fund was invested in as much as 55 percent in liquid short-term cash equivalents, with a corresponding dilutive effect on fund duration. Add. 11-13, Am. Compl. ¶¶ 38-48. These allegations constitute a viable attack on the substantive reasonableness of Defendants’ conduct as well as providing objective indicia from which a flawed process can be inferred. 5 Case: 17-1515 Document: 00117212693 Page: 10 Date Filed: 10/18/2017 Entry ID: 6126554 Thus, the Amended Complaint is based on far more than criticizing from hindsight the performance of the Stable Value Fund or comparing the composition of the Stable Value Fund with the average stable value fund. Rather, it is primarily based on the underlying logic of stable value investing that is well-established in the industry and academic literature that Defendants were (or should have been) well aware of and Defendants’ failure to apply that underlying logic here to the detriment of Plaintiffs and other participants. To be sure, the Amended Complaint provides relevant industry context by comparing the composition and performance of the Stable Value Fund with other stable value funds. This is entirely appropriate and consistent with this Court’s statement in Bunch that a claim for breach of prudence under ERISA requires consideration of the "totality of the circumstances," which as courts have held includes "what is appropriate in the industry at a given point in time." Bd. of Trustees of Operating Engineers Pension Trust v. JPMorgan Chase Bank. NA, No. 09-CIV-9333, 2013 WL 1234818, *8 (S.D.N.Y. Mar. 27, 2013). See also Krueger v. Ameriprise Financial, Inc., No. 11-cv-02781, 2012 WL 5873825, at *10-11 (D. Minn. Nov. 20, 2012) ("A claim may be based on poor performance compared to other funds … when supported by additional facts.") Contrary to the purported concerns of Defendants and amici, relying in part on industry averages in no way requires ERISA fiduciaries to mirror such 6 Case: 17-1515 Document: 00117212693 Page: 11 Date Filed: 10/18/2017 Entry ID: 6126554 averages. Here, the Amended Complaint uses industry averages as just one means to illustrate that Defendants’ conduct was contrary to both the theory and practice of stable value investing. Plaintiffs have never argued that Defendants’ deviation from industry averages by itself is sufficient to support their ERISA prudence claims. III. DEFENDANTS’ ARGUMENTS IMPERMISSIBLY REQUIRE DRAWING INFERENCES IN THEIR FAVOR Defendants justify their deviation from well-established stable value norms and principles with a purported desire to reduce risk in the wake of the financial crises. While discovery may or may not ultimately support these assertions, they cannot be assumed in Defendants’ favor for purposes of a motion to dismiss. As the Eighth Circuit held in Braden, it is inconsistent with Rule 8’s liberal standard to require plaintiffs in their complaint to anticipate and rebut any possible justification or defense that may be asserted. In that case, the district court had dismissed an ERISA complaint, in part because the defendants "could have chosen funds with higher fees for any number of reasons, including potential for higher return, lower financial risk, more services offered, or greater management flexibility." Braden, 488 F.3d at 596 (emphasis added). In reversing the district court, the appeals court reasoned that "[t]hat may be so, but 7 Case: 17-1515 Document: 00117212693 Page: 12 Date Filed: 10/18/2017 Entry ID: 6126554 Rule 8 does not require a plaintiff to plead facts tending to rebut all possible lawful explanations for a defendant’s conduct." Id. Here, too, Plaintiffs were not required to anticipate and rebut the possible explanations for Defendants’ conduct. Even so, the Amended Complaint directly addresses the purported desire to minimize risk and the effect of the financial crises on stable value investing. Stable value funds have been shown to generate higher returns than money market funds with no increased volatility. Add. 6 & 14-15, Am. Compl. ¶ 20 & ¶¶ 55-56. Furthermore, stable value funds performed well during and immediately after the 2008 financial crisis and the events of that crisis did not cause any fundamental change in stable value principles. Add. 7-8, Am. Compl. ¶ 25. Thus, there was no basis to "de-risk" the Stable Value Fund by managing it more like a money market fund, even in the wake of the financial crisis. Even if there were, such a basis is certainly not so patently obvious that the District Court could for that reason conclude that Plaintiffs’ claims are implausible. Defendants and amici argue that Plaintiffs’ theory is inherently implausible because there is no proverbial "free lunch" with respect to the trade-off between risk and reward. Plaintiffs’ theory is not, despite the arguments of Defendants and amici, based on participants’ entitlement to a "free lunch." The superior risk-adjusted performance of stable value funds as compared to money 8 Case: 17-1515 Document: 00117212693 Page: 13 Date Filed: 10/18/2017 Entry ID: 6126554 market funds is no accident. It arises logically from structural features of stable value investing, namely the increased duration and lower liquidity requirements allowed by the context (i.e. employer-sponsored retirement plans) in which stable value funds are typically offered. Add. 6-7, Am. Compl. ¶ 21. Furthermore, what Defendants and amici fail to appreciate is that the structure of stable value funds has corresponding disadvantages to investors as well, namely lack of flexibility due to "equity wash" provisions and the inability to invest in such funds outside the structure of an ERISA plan (i.e. the inability of an investor to freely shop around and select from the entire range of stable value funds that would otherwise be available if they were offered on a retail basis). The allegations in the Amended Complaint therefore do not rely on a "free lunch." Rather, Defendants’ conduct has caused investors in the Stable Value Fund to be burdened with the structural limitations of stable value funds while depriving them of the full advantage of the benefits to return that these same limitations provide. Defendants’ attempt to distinguish Abbott v. Lockheed Martin Corp., No. 06-cv-0701, 2009 WL 839099 (S.D. Ill. March 31, 2009) also improperly relies on drawing inferences in Defendants’ favor. The stable value fund in Abbott was invested between 99 percent and 50 percent in money market funds. Abbott, 2009 WL 839099, *9. Here, the Stable Value Fund was invested between 55 9 Case: 17-1515 Document: 00117212693 Page: 14 Date Filed: 10/18/2017 Entry ID: 6126554 percent and 27 percent in the equivalent of money market funds. Add. 10-12, Am. Compl. ¶¶ 32-43. Whether the difference in the range between these two cases is so significant as to lead to dismissal in this case versus a $39 million settlement in Abbott is an inherently factual issue that cannot be decided on a motion to dismiss. CONCLUSION For the foregoing reasons, in addition to the reasons presented in Plaintiffs’ Opening Brief, the Judgment of the District Court in favor of Defendants should be reversed and this case remanded to the District Court for discovery and trial. October 16, 2017 Respectfully Submitted,/s/Jason H. Kim SONJA L. DEYOE TODD M. SCHNEIDER LAW OFFICES OF SONJA L. DEYOE JASON H. KIM 395 SMITH STREET SCHNEIDER WALLACE PROVIDENCE, RI 02908 COTTRELL KONECKY (401) 864-5877 WOTKYNS LLP 2000 POWELL STREET, SUITE 1400 EMERYVILLE, CA 94608 (415) 421-7100 Counsel for Plaintiffs-Appellants 10 Case: 17-1515 Document: 00117212693 Page: 15 Date Filed: 10/18/2017 Entry ID: 6126554 CERTIFICATE OF COMPLIANCE Pursuant to Fed. R. App. P. 32(a)(7)(C), I certify that this brief complies with the type-volume limitation of Fed. R. App. P. 32(a)(7)(B). 1. Exclusive of the exempted portions of the brief, as provided in Fed. R. App. P. 32(a)(7)(B), the brief contains 2,143 words. 2. The brief has been prepared in proportionally spaced typeface using Microsoft Word 2016 in 14 point Times New Roman font. As permitted by Fed. R. App. P. 32(a)(7)(C)(i), the undersigned has relied upon the word count feature of this word processing system in preparing this certificate./s/Jason H. Kim CERTIFICATE OF SERVICE I certify that I filed the foregoing Reply Brief for Plaintiffs-Appellants with the Clerk of the United States Court of Appeals for the First Circuit via the CM/ECF system this 16th day of October, 2017 to be served on all counsel of record for Defendants in this appeal./s/Jason H. Kim 11

CORPORATE disclosure statement filed by Movants American Benefits Council and Chamber of Commerce of the United States of America. [17-1515] (AL) [Entered: 10/26/2017 04:49 PM]

Case:Case: 17-1515 17-1515 Document: Document: 00117215316 33 Page: Page: 10 Date 1 Date Filed:Filed: 10/09/2017 10/26/2017 EntryEntry ID: 6124438 ID: 6128140 CORPORATE DISCLOSURE STATEMENT Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure, amici cu-riae certifies that they have no parent corporations, and no publicly held corpora-tion owns 10% or more of their stock. Dated: October 9, 2017/s/Evan A. Young Evan A. Young ii

ORDER entered: No objections having been filed, the motion for leave to file an amicus curiae brief by the American Benefits Council and Chamber of Commerce of the United States of America in support the appellees and affirmance is granted. The brief is accepted for filing this day. [17-1515] (AL) [Entered: 10/30/2017 04:14 PM]

Case: 17-1515 Document: 00117216085 Page: 1 Date Filed: 10/30/2017 Entry ID: 6128681 United States Court of Appeals For the First Circuit ____________________________ No. 17-1515 MARY BARCHOCK; THOMAS WASECKO; STACY WELLER Plaintiffs-Appellants v. CVS HEALTH CORPORATION; THE BENEFITS PLAN COMMITTEE OF CVS HEALTH CORPORATION; GALLIARD CAPITAL MANAGEMENT, INC. Defendants-Appellees ____________________________ ORDER OF COURT Entered: October 30, 2017 Pursuant to 1st Cir. R. 27.0(d) No objections having been filed, the motion for leave to file an amicus curiae brief by the American Benefits Council and Chamber of Commerce of the United States of America in support the appellees and affirmance is granted. The brief is accepted for filing this day. By the Court:/s/Margaret Carter, Clerk cc: Garrett W. Wotkyns, Todd M. Schneider, Sonja Linnea Deyoe, Jason H. Kim, John Joseph Nestico Robert Clark Corrente, Brian D. Boyle, Bradley N. Garcia, Meaghan McLaine VerGow, Robert N. Hochman, Robert M. Duffy, Stacey P. Nakasian, Daniel Thies, Joel S. Feldman, Mark Bruce Blocker, Steven Paul Lehotsky, Evan Young, Shane Pennington, Janet M. Jacobson, Nancy G. Ross, Kevin M. Carroll, Brian David Netter

ORDER entered: No objections having been filed, the motion for leave to file an amicus curiae brief by the Securities Industry and Financial Markets Association in support the appellees and affirmance is granted. The brief is accepted for filing this day. [17-1515] (AL) [Entered: 10/30/2017 04:19 PM]

Case: 17-1515 Document: 00117216094 Page: 1 Date Filed: 10/30/2017 Entry ID: 6128685 United States Court of Appeals For the First Circuit ____________________________ No. 17-1515 MARY BARCHOCK; THOMAS WASECKO; STACY WELLER Plaintiffs-Appellants v. CVS HEALTH CORPORATION; THE BENEFITS PLAN COMMITTEE OF CVS HEALTH CORPORATION; GALLIARD CAPITAL MANAGEMENT, INC. Defendants-Appellees ____________________________ ORDER OF COURT Entered: October 30, 2017 Pursuant to 1st Cir. R. 27.0(d) No objections having been filed, the motion for leave to file an amicus curiae brief by the Securities Industry and Financial Markets Association in support the appellees and affirmance is granted. The brief is accepted for filing this day. By the Court:/s/Margaret Carter, Clerk cc: Garrett W. Wotkyns, Todd M. Schneider, Sonja Linnea Deyoe, Jason H. Kim, John Joseph Nestico Robert Clark Corrente, Brian D. Boyle, Bradley N. Garcia, Meaghan McLaine VerGow, Robert N. Hochman, Robert M. Duffy, Stacey P. Nakasian, Daniel Thies, Joel S. Feldman, Mark Bruce Blocker, Steven Paul Lehotsky, Evan Young, Shane Pennington, Janet M. Jacobson, Nancy G. Ross, Kevin M. Carroll, Brian David Netter

AMICUS CURIAE BRIEF filed by Amici Curiae American Benefits Council and Chamber of Commerce of the United States of America in support of Appellee. Certificate of service dated 10/09/2017. Nine paper copies identical to that of the electronically filed brief must be submitted so that they are received by the court on or before 11/06/2017. [17-1515]. (AL) [Entered: 10/30/2017 04:36 PM]

Case: 17-1515 Document: 00117216126 Page: 1 Date Filed: 10/30/2017 Entry ID: 6128697 No. 17-1515 _______________________ UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT _______________________ MARY BARCHOCK; THOMAS WASECKO; STACY WELLER Plaintiffs-Appellants, v. CVS HEALTH CORPORATION; THE BENEFITS PLAN COMMITTEE OF CVS HEALTH CORPORATION; GALLIARD CAPITAL MANAGEMENT, INC. Defendants-Appellees. __________________________ Appeal from the United States District Court for the District of Rhode Island, Case No. CA 16-61ML, The Honorable Mary M. Lisi, Senior Judge __________________________ Brief of Amici Curiae Chamber of Commerce of the United States of America and American Benefits Council Supporting Defendants-Appellees and Affirmance _________________________ STEVEN P. LEHOTSKY EVAN A. YOUNG JANET GALERIA BAKER BOTTS L.L.P. U.S. CHAMBER LITIGATION CENTER 98 SAN JACINTO BLVD. 1615 H STREET, NW SUITE 1500 WASHINGTON, DC 20062-2000 AUSTIN, TX 78701 (202) 463-5747 (512) 322-2506 JANET M. JACOBSON SHANE PENNINGTON AMERICAN BENEFITS COUNCIL BAKER BOTTS L.L.P. 1501 M STREET, N.W., SUITE 600 910 LOUISIANA ST. WASHINGTON, DC 20005 HOUSTON, TX 77002 (202) 289-6700 (713) 229-1340 Attorneys for Amici Curiae Case: 17-1515 Document: 00117216126 Page: 2 Date Filed: 10/30/2017 Entry ID: 6128697 CORPORATE DISCLOSURE STATEMENT Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure, amici cu-riae certifies that they have no parent corporations, and no publicly held corpora-tion owns 10% or more of their stock. Dated: October 9, 2017/s/Evan A. Young Evan A. Young ii Case: 17-1515 Document: 00117216126 Page: 3 Date Filed: 10/30/2017 Entry ID: 6128697 TABLE OF CONTENTS CORPORATE DISCLOSURE STATEMENT........................................................ ii TABLE OF CONTENTS......................................................................................... iii TABLE OF AUTHORITIES.....................................................................................v INTEREST OF AMICI CURIAE AND SUMMARY OF ARGUMENT..................1 ARGUMENT.............................................................................................................4 I. The law—backed by sound policy—focuses on the fiduciary’s process, not ultimate results..................................................................4 A. Plaintiffs’ results-oriented theory of fiduciary liability is inconsistent with ERISA’s fiduciary standard and cases interpreting it.............................................................................4 B. A results-oriented approach to ERISA’s fiduciary standard would upset the underlying purposes of ERISA.......................................................................................6 1. Plaintiffs’ hindsight-based liability theory would undermine the uniformity and predictability ERISA was designed to foster..........................................6 2. Plaintiffs’ hindsight-based liability theory would discourage the creation and maintenance of defined-contribution plans..............................................10 II. Courts should not presume imprudence when plan fiduciaries’ approaches to asset allocation—or the results of those approaches—deviate from peer averages............................................12 A. ERISA’s text and structure prohibit a presumption of imprudence based on a fund’s deviation from industry averages..................................................................................13 B. A presumption of imprudence based on deviation from industry averages would pose serious practical problems for plan fiduciaries while driving up plan costs........................................................................................14 iii Case: 17-1515 Document: 00117216126 Page: 4 Date Filed: 10/30/2017 Entry ID: 6128697 C. Plan fiduciaries must have a variety of tools at their disposal to accomplish plan objectives in ever-changing circumstances..........................................................................16 CONCLUSION........................................................................................................18 CERTIFICATE OF COMPLIANCE.......................................................................20 CERTIFICATE OF SERVICE................................................................................21 iv Case: 17-1515 Document: 00117216126 Page: 5 Date Filed: 10/30/2017 Entry ID: 6128697 TABLE OF AUTHORITIES Page(s) CASES Armstrong v. LaSalle Bank Nat’l Ass’n, 446 F.3d 728 (7th Cir. 2006)............................................................................5, 9 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)..............................................................................................9 Bunch v. W.R. Grace & Co., 555 F.3d 1 (1st Cir. 2009).....................................................................................4 Burke v. Kodak Ret. Income Plan, 336 F.3d 103 (2d. Cir. 2003)..............................................................................13 Caterino v. Barry, 8 F.3d 878 (1st Cir. 1993).....................................................................................5 Conkright v. Frommert, 559 U.S. 506 (2010)......................................................................................10, 15 Cooper v. IBM Pers. Pension Plan, 457 F.3d 636 (7th Cir. 2006)........................................................................10, 12 DeBruyne v. Equitable Life Assurance Soc’y of the U.S., 920 F.2d 457 (7th Cir. 1990)............................................................................5, 6 DiFelice v. U.S. Airways, Inc., 497 F.3d 410 (4th Cir. 2007)................................................................................ 4 Donovan v. Cunningham, 716 F.2d 1455 (5th Cir. 1983).............................................................................. 4 Egelhoff v. Egelhoff, 532 U.S. 141 (2001)....................................................................................7, 9, 13 Ellis v. Fid. Mgmt. Tr. Co., No. 1:15-cv-14128-WGY, 2017 WL 2636042 (D. Mass. June 19, 2017).....................................................................................................................8 v Case: 17-1515 Document: 00117216126 Page: 6 Date Filed: 10/30/2017 Entry ID: 6128697 Evans v. Akers, 534 F.3d 65 (1st Cir. 2008)...................................................................................9 Fifth Third Bancorp v. Dudenhoeffer, 134 S. Ct. 2459 (2014)........................................................................................15 Heimeshoff v. Hartford Life & Accident Ins. Co., 134 S. Ct. 604 (2013)..........................................................................................15 Ingersoll-Rand Co. v. McClendon, 498 U.S. 133 (1990)..........................................................................................6, 7 Jenkins v. Yager, 444 F.3d 916 (7th Cir. 2006)..........................................................................8, 18 Jones v. Harris Assocs., 559 U.S. 335 (2010)..............................................................................................5 Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134 (1985)............................................................................................10 Pension Benefit Guar. Corp. ex rel. St. Vincent Catholic Med. Ctrs. Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705 (2d Cir. 2013)................................................................................. 8 Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987)..............................................................................................10 Renfro v. Unisys Corp., 671 F.3d 314 (3d Cir. 2011)...............................................................................16 Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915 (8th Cir. 1994)............................................................................5, 11 Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355 (2002)..........................................................................................6, 7 Varity Corp. v. Howe, 516 U.S. 489 (1996)..................................................................................9, 10, 15 Whitley v. J.P. Morgan Chase Bank, 1:12-cv-02548 (S.D.N.Y. Dec. 16, 2014)............................................................. 8 vi Case: 17-1515 Document: 00117216126 Page: 7 Date Filed: 10/30/2017 Entry ID: 6128697 STATUTES AND RULES Fed. R. App. P. 29......................................................................................................1 29 U.S.C. § 1001........................................................................................................1 29 U.S.C. § 1022......................................................................................................13 29 U.S.C. § 1102(a).................................................................................................13 29 U.S.C. § 1102(b)(4).............................................................................................13 29 U.S.C. § 1104(a)(1)(B)...................................................................................5, 13 29 U.S.C. § 1132......................................................................................................13 OTHER AUTHORITIES John Carl, ERISA Fidelity Bond vs. Fiduciary Liability Insurance, Napa Net Daily (Aug. 3, 2016)...........................................................................11 H.R. Rep. No. 93-1280 (1974).................................................................................11 Nancy Trejos, Retirement Savings Lose $2 Trillion in 15 Months, Washington Post (Oct. 8, 2008)..........................................................................18 vii Case: 17-1515 Document: 00117216126 Page: 8 Date Filed: 10/30/2017 Entry ID: 6128697 INTEREST OF AMICI CURIAE AND SUMMARY OF ARGUMENT Amici curiae are the Chamber of Commerce of the United States of America (the "Chamber") and the American Benefits Council (the "Council"). 1 The Cham-ber is the world’s largest business federation. It represents 300,000 direct mem-bers and indirectly represents an underlying membership of three million business-es and professional organizations of every size, in every economic sector, and from every region of the country. Many of the Chamber’s members maintain, adminis-ter, or provide services to employee-benefits programs governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. ("ERISA"). The Council is a national non-profit organization dedicated to protecting and fos-tering privately sponsored employee-benefit plans. Its approximately 430 mem-bers are primarily large, multistate employers that provide employee benefits to ac-tive and retired workers and their families. The Council’s membership also in-cludes organizations that provide employee-benefit services to employers of all sizes. Collectively, the Council’s members either directly sponsor or provide ser-1 Pursuant to Federal Rule of Appellate Procedure 29(a)(4)(E), amici affirm that no party or counsel for a party authored this brief in whole or in part and that no per-son other than amici, their members, or their counsel has made any monetary con-tribution intended to fund the preparation or submission of this brief. Plaintiffs-appellants do not consent to the filing of this brief. As set forth in the accompany-ing motion, pursuant to Federal Rule of Appellate Procedure 29(a)(2)-(3), amici have requested leave to file this brief. 1 Case: 17-1515 Document: 00117216126 Page: 9 Date Filed: 10/30/2017 Entry ID: 6128697 vices to retirement and health plans covering virtually all Americans who partici-pate in employer-sponsored benefit programs. The Chamber and the Council frequently participate as amici curiae, includ-ing in cases with the potential to significantly affect the design and administration of employee-benefit plans. This is such a case, and it presents two questions of enormous practical importance to amici and their members: (1) whether courts should focus on an ERISA fiduciary’s process rather than the results of that pro-cess when resolving challenges to the fiduciary’s adherence to the duty of pru-dence when making investment decisions with respect to a stable-value fund, and (2) whether courts should refuse to presume imprudence when plan fiduciaries’ in-vestment decisions deviate from industry averages. The answers to these questions directly implicate the interests of amici and their members (and the many employ-ees who benefit from ERISA plans administered by amici’s members). The district court’s decision rejecting plaintiffs’ hindsight-based theory of ERISA fiduciary liability and that theory’s proposed presumption of imprudence properly construes the statute and avoids serious distortions that would harm the public. If this Court were to embrace plaintiffs’ theory of fiduciary liability, amici and their members would face increased costs associated with plan administration and litigation, none of which are compatible with ERISA’s text or its purposes. Those increased costs would not inure to the benefit of employees, but would 2 Case: 17-1515 Document: 00117216126 Page: 10 Date Filed: 10/30/2017 Entry ID: 6128697 largely amount to deadweight losses in transaction costs that would diminish value. Even more likely, plan administrators would simply decline to offer investment op-tions that are especially valuable to millions of Americans trying to save for re-tirement. Nor does ERISA permit (much less require) plaintiffs’ odd theory that courts should punish plan fiduciaries who make investment decisions that do not line up with peer averages. Under the statute, fiduciaries are to account for the individual circumstances of a plan and the particular needs of plan participants when making investment decisions. Plaintiffs’ proposed rule, by contrast, would force plan fidu-ciaries to focus instead on the decisions that their peers make. But those decisions were made under different circumstances, with distinct plan objectives, and to ben-efit plan participants with different needs. Plaintiffs’ proposed presumption would undermine ERISA’s core purpose of encouraging plan fiduciaries to offer plan par-ticipants a variety of investment options of varying risk levels tailored to the needs and circumstances of the particular plan and its participants. It would also defeat Congress’s goal of minimizing the administrative and financial burdens on plan administrators—burdens ultimately borne by plan beneficiaries. For the reasons stated in this brief, amici respectfully urge the Court to af-firm. 3 Case: 17-1515 Document: 00117216126 Page: 11 Date Filed: 10/30/2017 Entry ID: 6128697 ARGUMENT I. The law—backed by sound policy—focuses on the fiduciary’s process, not ultimate results. When reviewing claims of imprudent investment management, courts focus on a fiduciary’s conduct in arriving at an investment decision—not on the invest-ment’s results. This principle is familiar in the law. Whether a defendant is liable for a car crash turns on the reasonableness of her conduct, not the fact that a crash happened—otherwise, strict liability would be the norm rather than the very unu-sual exception. The theory of fiduciary liability underlying plaintiffs’ complaint directly contravenes that principle. Specifically, plaintiffs urge the Court to infer imprudence from a comparison of the performance of the stable-value fund at issue here to the performance of other stable-value options. ERISA’s plain text (like common sense) forecloses that claim, and allowing it to proceed would undermine the core purposes of the statute. The district court was right to reject it. A. Plaintiffs’ results-oriented theory of fiduciary liability is incon-sistent with ERISA’s fiduciary standard and cases interpreting it. This Court has recognized that the "‘test of prudence—the Prudent Man Rule—is one of conduct, and not a test of the result of performance of the invest-ment.’" Bunch v. W.R. Grace & Co., 555 F.3d 1, 7 (1st Cir. 2009) (quoting Do-novan v. Cunningham, 716 F.2d 1455, 1467 (5th Cir. 1983) (quotations omitted)). As such, "‘[w]hether a fiduciary’s actions are prudent cannot be measured in hind-sight....’" Id. (quoting DiFelice v. U.S. Airways, Inc., 497 F.3d 410, 424 (4th 4 Case: 17-1515 Document: 00117216126 Page: 12 Date Filed: 10/30/2017 Entry ID: 6128697 Cir. 2007)). Instead, the "test [is] how the fiduciary acted viewed from the per-spective of the time of the challenged decision rather than from the vantage point of hindsight." Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915, 917-18 (8th Cir. 1994) (quotations omitted)). While this process-focused fiduciary-liability standard makes common sense and harmonizes with basic principles of liability in other contexts, it is also the ap-proach demanded by ERISA’s plain text. Section 404(a)(1)(B) requires that fidu-ciary conduct be judged according to circumstances "then prevailing"—not results later-occurring. 29 U.S.C. § 1104(a)(1)(B). This longstanding rule is based in part on the view that courts are "institutionally unsuited to gather the facts upon which economic predictions can be made, and professionally untrained to make them," Jones v. Harris Assocs., 559 U.S. 335, 353 (2010) (quotations omitted). Under ERISA, fiduciaries must make those judgments using a prudent process, and courts should not place them "on a razor’s edge" in doing so. Armstrong v. LaSalle Bank Nat’l Ass’n, 446 F.3d 728, 733 (7th Cir. 2006). For that reason, courts do not "substitute [their] judgment" for that of fiduciaries. Caterino v. Barry, 8 F.3d 878, 883 (1st Cir. 1993). The Seventh Circuit has applied this process-not-results principle to reject a similar attempt to base an ERISA fiduciary-liability claim on a plan’s performance relative to that of supposed peer plans. See DeBruyne v. Equitable Life Assurance 5 Case: 17-1515 Document: 00117216126 Page: 13 Date Filed: 10/30/2017 Entry ID: 6128697 Soc’y of the U.S., 920 F.2d 457, 465 (7th Cir. 1990) ("[T]he ultimate outcome of an investment is not proof of imprudence."). As that Court rightly recognized, as-sertions about the performance of other plans "say little about the wisdom" of a particular plan’s investments—"only that it may not have followed the crowd." Id. Ignoring this settled rule, plaintiffs would have this Court recognize fiduci-ary-imprudence claims anytime the results of an ERISA fiduciary’s investment de-cisions compare unfavorably to the results of other similarly-situated stable-value fund fiduciaries’ decisions. Beyond being directly contrary to ERISA’s plain text, plaintiffs’ claim of hindsight-based liability would undermine ERISA’s core pur-poses and ultimately harm the very plan beneficiaries that ERISA intends to pro-tect. B. A results-oriented approach to ERISA’s fiduciary standard would upset the underlying purposes of ERISA. 1. Plaintiffs’ hindsight-based liability theory would undermine the uniformity and predictability ERISA was designed to foster. One of Congress’s core purposes in passing ERISA was to create "a uniform body of benefits law," Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 142 (1990), with "a predictable set of liabilities, under uniform standards of primary conduct and a uniform regime of ultimate remedial orders." Rush Prudential HMO, Inc. v. Moran, 536 U.S. 355, 379 (2002) (citations omitted). Besides being a goal in and of itself, predictability "induc[es] employers to offer benefits" and to 6 Case: 17-1515 Document: 00117216126 Page: 14 Date Filed: 10/30/2017 Entry ID: 6128697 maintain high levels of benefits. Id.; see also Egelhoff v. Egelhoff, 532 U.S. 141, 149-50 (2001) (Congress intended ERISA to "‘minimiz[e] the administrative and financial burdens’ on plan administrators—burdens ultimately borne by the benefi-ciaries" (quoting Ingersoll-Rand Co., 498 U.S. at 142)). Plaintiffs’ results-oriented approach to assessing ERISA fiduciary liability would make predicting liability impossible. No matter how prudent a plan fiduci-ary’s investment decision may have been "under the circumstances then prevail-ing," he could never escape the looming threat that later-emerging results might render otherwise-prudent investment decisions retroactively imprudent when viewed in hindsight. If ERISA’s "under the circumstances then prevailing" standard were re-placed with plaintiffs’ hindsight-based rule, plaintiffs could subject plan fiduciaries to costly litigation anytime plan participants were disappointed with investment re-sults. Even without that rule, plaintiffs consistently challenge the decisions of plan fiduciaries regardless of the thoroughness of the process the defendant-fiduciary followed. As a review of recent claims brought in this area demonstrates, that ap-proach makes it virtually impossible for ERISA fiduciaries to avoid costly litiga-tion no matter their approach to asset-allocation decisions. Some plaintiffs, like those that brought this case, claim that plan fiduciaries have managed stable-value 7 Case: 17-1515 Document: 00117216126 Page: 15 Date Filed: 10/30/2017 Entry ID: 6128697 funds too conservatively. 2 Others allege that defendants took too much risk when managing a stable-value fund.3 In some instances, ERISA fiduciaries have simul-taneously defended both types of claims, giving new meaning to the concept of be-ing stuck between a rock and a hard place. In Evans v. Akers, which involved claims that fiduciaries breached ERISA duties by maintaining a "heavy investment in Grace securities when the stock was no longer a prudent investment," this Court observed that "[a]nother suit challenging the actions of Plan fiduciaries" had "as-serted a diametrically opposed theory of liability"—"that the Plan fiduciaries had imprudently divested the Plan of its holdings in Grace common stock despite the 2 See Ellis v. Fid. Mgmt. Tr. Co., No. 1:15-cv-14128-WGY, 2017 WL 2636042, at *8 (D. Mass. June 19, 2017) (currently pending on appeal in this Court as No. 17-01693) (plaintiffs allege that Fidelity, the trustee of a collective investment trust in which plaintiffs’ plans invested, managed the trust too conservatively, as compared to other stable-value funds); Jenkins v. Yager, 444 F.3d 916, 925-26 (7th Cir. 2006) (rejecting plaintiffs’ claim that notwithstanding "years of lower perfor-mance," an "investment strategy" that was based on "find[ing] long-term, con-servative reliable investments that would do well during market fluctuations" was "unreasonable [and] imprudent"). 3 Third Am. Compl. at 3, Whitley v. J.P. Morgan Chase Bank, 1:12-cv-02548 (S.D.N.Y. Dec. 16, 2014), ECF No. 182 (alleging fiduciaries managed stable-value fund in "inherently risky" manner); Pension Benefit Guar. Corp. ex rel. St. Vincent Catholic Med. Ctrs. Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 719 (2d Cir. 2013) (involving claim that fiduciaries were imprudent in making risky investment decisions). 8 Case: 17-1515 Document: 00117216126 Page: 16 Date Filed: 10/30/2017 Entry ID: 6128697 company’s solid potential to emerge from bankruptcy...." 534 F.3d 65, 68 (1st Cir. 2008).4 Recognizing the dilemma ERISA fiduciaries often face, courts have refused to place ERISA fiduciaries on such a "razor’s edge." See, e.g., Armstrong, 446 F.3d at 733. Courts also recognize, however, that placing such pressure on ERISA fiduciaries undermines the purposes of the statute and ultimately harms plan bene-ficiaries. Egelhoff, 532 U.S. at 149-50 (citations omitted). Litigation, even of non-meritorious claims, always comes at a cost. "[T]he threat of discovery expense will push cost-conscious defendants to settle even anemic cases before reaching [summary judgment]." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 559 (2007). Unfortunately, increased litigation costs and liability risks inevitably disserve plan participants. Increased costs mean reduced employer contributions and greater plan expenses. And if the costs of maintaining plans be-come overly burdensome, employers may be forced to reduce their sponsorship of retirement plans entirely or to cut back on the variety of investment options they offer. See, e.g., Varity Corp. v. Howe, 516 U.S. 489, 497 (1996) (with ERISA, Congress tried to avoid creating "a system that is so complex that administrative costs, or litigation expenses, unduly discourage employers from offering welfare 4 Importantly, plaintiffs’ hindsight-based view of fiduciary liability, if accepted, could apply to any type of investment—not just stable-value funds. 9 Case: 17-1515 Document: 00117216126 Page: 17 Date Filed: 10/30/2017 Entry ID: 6128697 benefit plans in the first place"); Cooper v. IBM Pers. Pension Plan, 457 F.3d 636, 642 (7th Cir. 2006) (result of litigation was that "IBM eliminated the cash-balance option for new workers and confined them to pure defined-contribution plans"). 2. Plaintiffs’ hindsight-based liability theory would discourage the creation and maintenance of defined-contribution plans. "ERISA represents a careful balancing between ensuring fair and prompt en-forcement of rights under a plan and the encouragement of the creation of such plans." Conkright v. Frommert, 559 U.S. 506, 517 (2010) (quotations omitted). It was designed to prevent "administrative costs [and] litigation expenses [from] un-duly discourag[ing] employers from offering welfare benefit plans in the first place." Varity Corp., 516 U.S. at 497; see also Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 42 (1987) (emphasizing Congress’s focus on balancing "the need for prompt and fair claims settlement procedures against the public interest in encour-aging the formation of employee benefit plans"); Mass. Mut. Life Ins. Co. v. Rus-sell, 473 U.S. 134, 148 n.17 (1985) ("Congress was concerned lest the cost of fed-eral standards discourage the growth of private pension plans.") (citations omitted). ERISA’s legislative history confirms this point: It is axiomatic to anyone who has worked for any time in this area that pension plans cannot be expected to develop if costs are made overly burdensome, particularly for employers who generally foot most of the bill. This would be self-defeating and would be unfavorable rather than helpful to the employees for whose benefit this legislation is de-signed. 10 Case: 17-1515 Document: 00117216126 Page: 18 Date Filed: 10/30/2017 Entry ID: 6128697 H.R. Rep. No. 93-1280 (1974), reprinted in 1974 U.S.C.C.A.N. 5038, 5167, and in 3 Legis. Hist. of ERISA, at 4763 (1976) (statement of Rep. Ullman, Member, House Comm. on Ways and Means). Plaintiffs’ results-oriented liability theory would upset that balance by ren-dering ERISA plan fiduciaries guarantors of plan performance regardless of the prudence of the process the fiduciary followed "under the circumstances then pre-vailing." See Roth, 16 F.3d at 920 (recognizing that ERISA does not make fiduci-aries "guarantors" and emphasizing that "[t]he basis for personal liability in each case is the breach of duty, which is not a guarantee but a standard of conduct that Congress has imposed and that the fiduciary can satisfy by acting reasonably"). Faced with such a perilous fiduciary standard, fewer and fewer individuals would be willing to assume the risks associated with serving as a plan fiduciary. And the few fiduciaries willing to take such a risk would insist (at a minimum) on either in-surance or indemnification—expenses that plan participants would ultimately bear. See John Carl, ERISA Fidelity Bond vs. Fiduciary Liability Insurance, Napa Net Daily (Aug. 3, 2016), http://www.napa-net.org/news/technical-competence/case-of-the-week/case-of-the-week-erisa-fidelity-bond-vs-fiduciary-liability-insurance/("Evolving demands have led to important expansions in fiduciary liability insur-ance coverage."). 11 Case: 17-1515 Document: 00117216126 Page: 19 Date Filed: 10/30/2017 Entry ID: 6128697 As Congress acknowledged when passing ERISA, and as courts interpreting its fiduciary-responsibility provisions have emphasized, ERISA plans are them-selves benefits that employers voluntarily offer their employees. Litigation that punishes employers based on 20/20 hindsight creates precisely the perverse incen-tives that Congress sought to avoid through ERISA. As the Seventh Circuit aptly put it, "[l]itigation cannot compel an employer to make plans more attractive.... It is possible, though, for litigation about pension plans to make everyone worse off." Cooper, 457 F.3d at 642. Plaintiffs’ hindsight-based standard would contra-vene ERISA’s plain text and the statute’s core purposes. The Court should reject it. II. Courts should not presume imprudence when plan fiduciaries’ ap-proaches to asset allocation—or the results of those approaches— deviate from peer averages. Plaintiffs argue that courts may presume that an ERISA fiduciary followed an imprudent process when the fiduciary’s investment decision "devi-ate[s]... substantially" from industry averages and yields lower returns than funds taking on more risk. Br. 19. ERISA prohibits such a presumption, and like plain-tiffs’ results-based theory of liability, their proposed presumption of imprudence would undermine ERISA’s core purposes, ultimately harming the plan participants that ERISA was designed to protect. 12 Case: 17-1515 Document: 00117216126 Page: 20 Date Filed: 10/30/2017 Entry ID: 6128697 A. ERISA’s text and structure prohibit a presumption of impru-dence based on a fund’s deviation from industry averages. ERISA requires fiduciaries to take into account the individual "circumstanc-es" of the plan and its participants. See 29 U.S.C. § 1104(a)(1)(B). Plan adminis-trators’ conduct must be judged in context, considering the particular plan’s "char-acter" and "aims." Id. Plaintiffs’ preferred presumption of imprudence would shift the focus instead to the decisions of other ERISA fiduciaries facing different circumstances, under plans with different objectives, and serving plan participants with different needs. Such a shift would be at odds with the entire statutory scheme. ERISA mandates clear disclosure to participants. All plans must be in writing and must specify the basis on which payments are made. 29 U.S.C. §§ 1022, 1102(a), 1102(b)(4). The required disclosures "advance[] the Congressional purpose of pro-tecting beneficiaries of ERISA plans by insuring that employees are fully and ac-curately appraised of their rights under the plan." Burke v. Kodak Ret. Income Plan, 336 F.3d 103, 112 (2d. Cir. 2003) (quotations omitted). The disclosures pro-vide clear parameters for the plan administrators’ conduct, allowing "employers to establish a uniform administrative scheme." Egelhoff, 532 U.S. at 148 (quotations omitted). Plan participants have a statutory remedy when plan administrators run afoul of those required disclosures. See 29 U.S.C. § 1132. 13 Case: 17-1515 Document: 00117216126 Page: 21 Date Filed: 10/30/2017 Entry ID: 6128697 Under the presumption of imprudence that plaintiffs propose, however, plan administrators could be subjected to costly litigation based on a standard defined entirely by reference to the decisions of fiduciaries of other, unrelated plans, rather than the terms and disclosures of the plan involved. Beyond being incompatible with ERISA’s text and structure, such a presumption would have serious negative consequences for plan fiduciaries and participants alike. B. A presumption of imprudence based on deviation from industry averages would pose serious practical problems for plan fiduciar-ies while driving up plan costs. A presumption of imprudence based on a fund’s deviation from industry av-erages would leave some plan fiduciaries with an untenable Hobson’s choice: (1) follow the herd and risk liability for breach of their fiduciary duty to make individ-ualized judgments regarding the best interest of plan participants, or (2) make those individualized judgments and risk liability anytime plaintiffs could show that, in doing so, a plan administrator deviated from a made-up industry "norm." Even worse, plan fiduciaries seeking to abide by such a standard would face one inscrutable question after another: • Which funds are sufficiently similar to each other to count as "peers" for purposes of the presumption? • What constitutes a typical or average approach to any given plan-administration decision? • How much "deviation" from such an approach is acceptable? 14 Case: 17-1515 Document: 00117216126 Page: 22 Date Filed: 10/30/2017 Entry ID: 6128697 With no principled way to answer these questions or (more importantly) to guess how a court might answer them, plan fiduciaries would feel compelled to continuously monitor the decisions and approaches of the fiduciaries of all plans even remotely similar to their own without any real sense of what they were look-ing for. And in the event that they spotted anything a court or a plaintiff might view as a trend in decisions or approaches, plan fiduciaries would feel they have no choice but to follow the trend mindlessly, even if the more popular approach was not, in their judgment, best for their plan or its participants. Given these perverse incentives, a presumption of imprudence based on a plan fiduciary’s failure to make "average" decisions undoubtedly would create sig-nificant administrative expenses, "unduly discourag[ing] employers from offering [ERISA] plans in the first place." Conkright, 559 U.S. at 517 (quotations omitted); accord Fifth Third Bancorp v. Dudenhoeffer, 134 S. Ct. 2459, 2470 (2014) (same); Heimeshoff v. Hartford Life & Accident Ins. Co., 134 S. Ct. 604, 612 (2013) (same); Varity Corp., 516 U.S. at 497 (same). Because the presumption of impru-dence that plaintiffs endorse would create precisely the perverse incentives that Congress sought to avoid in creating ERISA in the first place, this Court should re-ject it. 15 Case: 17-1515 Document: 00117216126 Page: 23 Date Filed: 10/30/2017 Entry ID: 6128697 C. Plan fiduciaries must have a variety of tools at their disposal to accomplish plan objectives in ever-changing circumstances. ERISA’s "flexible" prudence standard reflects the obligation applicable to every ERISA fiduciary to consider the specific "character and aims of the particu-lar type of plan he serves." Renfro v. Unisys Corp., 671 F.3d 314, 322 (3d Cir. 2011) (quotations omitted). Consistent with that mandate, plan administrators seek to offer plan participants a variety of investment options based on the needs of their workforce. Id. at 327. Without the discretion inherent in ERISA’s flexible prudence standard, plan administrators would not be able to make individual judgments about the needs of plans and participants. For example, a young work-force (e.g., Google) may have different needs than an older workforce (e.g., a typi-cal industrial plant). Similarly, a particularly investment-savvy workforce might have different needs than the typical workforce. Yet plaintiffs’ attempt to impose fiduciary liability based on a presumption of imprudence triggered by a stable-value fund’s deviation from industry averages would thwart ERISA’s mandate that fiduciaries make investment choices based on their individual plan’s needs. Indeed, it would encourage ERISA fiduciaries to ig-nore the specific "character and aims of the particular type of plan [they] serve," id. at 322, and instead to mindlessly follow the crowd even when doing so would, in the fiduciary’s individual judgment, be contrary to the best interests of plan par-ticipants. If plan administrators risked liability anytime they made non-average 16 Case: 17-1515 Document: 00117216126 Page: 24 Date Filed: 10/30/2017 Entry ID: 6128697 decisions with respect to the appropriate amount of risk to taken when making in-vestment decisions, they would naturally seek to make "average" decisions. As a result, familiarity with the operative industry averages would replace familiarity with unique plan objectives and participant needs as the driving force behind plan fiduciaries’ risk-allocation assessments. Courts should not apply a legal standard that pressures plan administrators to make "average" choices that, in their judg-ment, may not be best for their particular plans. Instead, this Court should reject plaintiffs’ proposed presumption and reaf-firm the flexible prudence standard that has long facilitated plan administrators’ ability to offer plan participants a variety of investment options reflecting varying goals and risk levels. Charting a conservative course through a period of turbulent market volatility, for example, is a legitimate option for plan fiduciaries. Plan ad-ministrators frequently employ stable-value funds as the "safe" option in their in-vestment lineups and value the flexibility to pick among options within a given as-set class. Depending on their individual plan needs and investment lineups, some may prefer a conservative stable-value strategy, while others may prefer a less-conservative approach. A plan administrator whose investment lineup already contains a safe-value option, for example, might decide that a less-conservative stable-value option is appropriate under the circumstances. After the financial crisis, by contrast, the 17 Case: 17-1515 Document: 00117216126 Page: 25 Date Filed: 10/30/2017 Entry ID: 6128697 availability of a very conservative safe-investment option was particularly im-portant to many plan administrators and participants. See, e.g., Nancy Trejos, Re-tirement Savings Lose $2 Trillion in 15 Months, Washington Post (Oct. 8, 2008). Even investments "widely considered more stable" were "hit hard." Id. This dra-matic and unexpected turn of events resulted in a heightened desire among some plan administrators to be able to offer even safer investment options to plan partic-ipants. Id. There was nothing imprudent about that approach. ERISA fiduciaries are not required to take on increased risk simply because other plan fiduciaries have concluded that, considering the "character" and "aims" of their own plans, doing so is in the best interests of their plan participants. See, e.g., Jenkins, 444 F.3d at 925-26 (explaining that notwithstanding "years of lower performance," an "investment strategy" that was based on "find[ing] long-term, conservative reliable investments that would do well during market fluctuations" was neither "unreason-able [n]or imprudent"). CONCLUSION The judgment below should be affirmed. 18 Case: 17-1515 Document: 00117216126 Page: 26 Date Filed: 10/30/2017 Entry ID: 6128697 Dated: October 9, 2017 Respectfully submitted,/s/Evan A. Young EVAN A. YOUNG BAKER BOTTS L.L.P. 98 SAN JACINTO BLVD. SUITE 1500 AUSTIN, TX 78701 (512) 322-2506 SHANE PENNINGTON BAKER BOTTS L.L.P. 910 LOUISIANA ST. HOUSTON, TX 77002 (713) 229-1340 STEVEN P. LEHOTSKY JANET GALERIA U.S. CHAMBER LITIGATION CENTER 1615 H STREET, NW WASHINGTON, DC 20062-2000 (202) 463-5747 JANET M. JACOBSON AMERICAN BENEFITS COUNCIL 1501 M STREET, N.W., SUITE 600 WASHINGTON, DC 20005 (202) 289-6700 Attorneys for Amici Curiae Chamber of Commerce of the United States of America and American Benefits Council 19 Case: 17-1515 Document: 00117216126 Page: 27 Date Filed: 10/30/2017 Entry ID: 6128697 CERTIFICATE OF COMPLIANCE 1. This brief complies with the type-volume limitations of Fed. R. App. P. 29(a)(5) and Fed. R. App. P. 32(a)(7)(B)(i) because it contains 3,985 words, ex-cluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii). 2. This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because this brief has been prepared in a proportionally spaced typeface using Microsoft Word 2010 in Times New Roman 14-point font. Dated: October 9, 2017/s/Evan A. Young Evan A. Young 20 Case: 17-1515 Document: 00117216126 Page: 28 Date Filed: 10/30/2017 Entry ID: 6128697 CERTIFICATE OF SERVICE I hereby certify that on October 9, 2017, I electronically filed the foregoing with the Clerk of the Court for the U.S. Court of Appeals for the First Circuit by using the appellate CM/ECF system. All interested parties are registered CM/ECF users./s/Evan A. Young Evan A. Young 21

AMICUS CURIAE BRIEF filed by Amicus Curiae Securities Industry and Financial Markets Association in support of Appellee. Certificate of service dated 10/10/2017. Nine paper copies identical to that of the electronically filed brief must be submitted so that they are received by the court on or before 11/06/2017. [17-1515] (AL) [Entered: 10/30/2017 04:51 PM]

Case: 17-1515 Document: 00117216129 Page: 1 Date Filed: 10/30/2017 Entry ID: 6128704 No. 17–1515 __________________________________________________________________ UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT __________________________________________________________________ MARY BARCHOCK; THOMAS WASECKO; and STACY WELLER, Plaintiffs-Appellants, v. CVS HEALTH CORP.; THE BENEFITS PLAN COMMITTEE OF CVS HEALTH CORP.; and GALLIARD CAPITAL MANAGEMENT, INC., Defendants-Appellees. __________________________________________________________________ On Appeal from The U.S. District Court for the District of Rhode Island No. 1:16-cv-00061-ML-PAS __________________________________________________________________ BRIEF FOR THE SECURITIES INDUSTRY AND FINANCIAL MARKETS ASSOCIATION AS AMICUS CURIAE IN SUPPORT OF APPELLEES AND AFFIRMANCE __________________________________________________________________ Kevin Carroll Brian D. Netter SECURITIES INDUSTRY AND bnetter@mayerbrown.com FINANCIAL MARKETS MAYER BROWN LLP ASSOCIATION 1999 K Street, NW 1101 New York Avenue, NW Washington, DC 20006 Washington, DC 20005 (202) 263-3000 Nancy G. Ross MAYER BROWN LLP 71 South Wacker Drive Chicago, Illinois 60606 Counsel for The Securities Industry and Financial Markets Association Case: 17-1515 Document: 00117216129 Page: 2 Date Filed: 10/30/2017 Entry ID: 6128704 TABLE OF CONTENTS Page TABLE OF AUTHORITIES.............................................................. ii STATEMENT OF THE IDENTITY AND INTEREST OF THE AMICUS CURIAE................................................................... 1 ARGUMENT.................................................................................. 3 I. ASSET MANAGEMENT MUST BE JUDGED BY PROCESS, NOT HINDSIGHT................................................. 5 A. Hindsight can play no role in the assessment of asset management........................................................ 5 B. Process is the touchstone for evaluating asset management................................................................. 8 II. TO ENGAGE IN A PRUDENT PROCESS, AN ASSET MANAGER NEED NOT FOLLOW THE HERD....................... 10 A. Asset managers reasonably differentiate their investment offerings from competitors’ funds.............. 11 B. Investing in longer-duration bonds does not provide an opportunity for stable value funds to achieve additional returns without additional risk................... 14 III. ERISA DOES NOT PERMIT A CAUSE OF ACTION FOR CHAGRIN............................................................................ 15 CONCLUSION............................................................................. 17 CERTIFICATE OF COMPLIANCE................................................. 18 CERTIFICATE OF SERVICE......................................................... 19-i-Case: 17-1515 Document: 00117216129 Page: 3 Date Filed: 10/30/2017 Entry ID: 6128704 TABLE OF AUTHORITIES Page(s) Cases Bunch v. W.R. Grace & Co., 555 F.3d 1 (1st Cir. 2009)...................................................... 8, 9 DeBruyne v. Equitable Life Assurance Soc’y of the U.S., 920 F.2d 457 (7th Cir. 1990)................................................ 7, 11 DiFelice v. U.S. Airways, Inc., 497 F.3d 410 (4th Cir. 2007)...................................................... 8 Hughes Aircraft Co. v. Jacobson, 525 U.S. 432 (1999)................................................................. 16 Rinehart v. Lehman Bros. Holdings Inc., 817 F.3d 56 (2d Cir. 2016)......................................................... 7 Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915 (8th Cir. 1994)........................................................ 8 PBGC ex rel. St. Vincent Catholic Med. Centers Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705 (2d Cir. 2013)....................................................... 9 Sweda v. Univ. of Pa., 2017 WL 4179752 (E.D. Pa. Sept. 21, 2017)......................... 7, 17 Tibble v. Edison Int’l, 729 F.3d 1110 (9th Cir. 2013), vacated and remanded on other grounds, 135 S. Ct. 1823 (2015).................................. 16 Tussey v. ABB, Inc., 746 F.3d 327 (8th Cir. 2014)...................................................... 5 In re Unisys Sav. Plan Litig., 74 F.3d 420 (3d Cir. 1996)......................................................... 9-ii-Case: 17-1515 Document: 00117216129 Page: 4 Date Filed: 10/30/2017 Entry ID: 6128704 TABLE OF AUTHORITIES (continued) Page(s) Other Authorities 29 C.F.R.: § 2550.404a-1(b)(1).................................................................. 10 § 2550.404c-1(b)(3)(i)(A)........................................................... 16 Andrew Apostol, How to Evaluate Stable Value Funds and Their Managers......................................................................... 12 Fed. R. App. P.: Rule 29(a)(4)(D).......................................................................... 1 Rule 29(a)(4)(E)........................................................................... 1 Inv. Co. Inst., Frequently Asked Questions About 401(k) Plan Research, https://www.ici.org/policy/retirement/plan/401k/faqs_401k................................................................ 7-iii-Case: 17-1515 Document: 00117216129 Page: 5 Date Filed: 10/30/2017 Entry ID: 6128704 STATEMENT OF THE IDENTITY AND INTEREST OF THE AMICUS CURIAE1 The Securities Industry and Financial Markets Association (SIFMA) is the voice of the U.S. securities industry. SIFMA represents the broker-dealers, banks, and asset managers whose nearly 1 million employees provide access to the capital markets, raising over $2.5 trillion for businesses and municipalities in the United States, serving clients with over $20 trillion in assets, and managing more than $67 trillion in assets for individual and institutional clients, including mutual funds and retirement plans. SIFMA has offices in New York and Washington, D.C., and is the regional member of the Global Financial Markets Association for the United States. Additional information about SIFMA is available at http://www.sifma.org. 1Pursuant to Fed. R. App. P. 29(a)(4)(E), no party’s counsel authored this brief in whole or in part; no party or party’s counsel contributed money that was intended to fund preparing or submitting this brief; and no person—other than the amicus curiae, its members, or its counsel—contributed money that was intended to fund preparing or submitting the brief. Pursuant to Rule 29(a)(4)(D), this brief is accompanied by a motion for leave to file. Case: 17-1515 Document: 00117216129 Page: 6 Date Filed: 10/30/2017 Entry ID: 6128704 Virtually all companies that offer participant-directed retirement plans permit their participants to elect an income-producing, low risk, liquid fund, such as a money market fund or a stable value fund. SIFMA members manage such funds, and also offer them in the defined-contribution plans that they sponsor and administer for their employees. The rise in the use of defined contribution plans has spawned a rise in lawsuits like this one, in which participants allege that plan fiduciaries or plan service providers breached their respective duties to plan participants by including investment options that proved, with the benefit of hindsight, to be too risky—or not risky enough. Decision makers for defined contribution plans must make their decisions, however, before it is known how the investment markets will fare. SIFMA has a strong interest, on behalf of its members, in clarifying the fiduciary obligations of investment managers and plan fiduciaries in selecting and managing investment options in retirement plans governed by ERISA. 2 Case: 17-1515 Document: 00117216129 Page: 7 Date Filed: 10/30/2017 Entry ID: 6128704 ARGUMENT When asset managers decide how to manage their portfolios, they do not know how the markets will perform. They do not know whether, in the coming years, the markets will reward or punish risk-taking in any particular market segment. Even the most sophisticated asset managers cannot reliably predict which sectors will thrive and which will falter—or when the market has reached its apex or its trough. At the point of decision, uncertainty reigns. As a result, sound investment management requires risk management. Investment professionals develop and implement processes for scrutinizing assets before selecting them for their portfolios. The objective is to formulate a portfolio with a chosen risk profile that provides opportunities for returns concomitant with that level of risk. In this case, three participants in the 401(k) Plan and Employee Stock Ownership Plan of CVS Health Corporation and Affiliated Companies (the "Plan") are challenging the Plan’s Stable Value Fund. As the name suggests, a stable value fund is a conservative investment option that is designed to provide stability, as opposed to growth. Plaintiffs do not claim that the Stable Value 3 Case: 17-1515 Document: 00117216129 Page: 8 Date Filed: 10/30/2017 Entry ID: 6128704 Fund lacked stability, nor that it failed to maintain its value. Rather, their theory is that ERISA required the Stable Value Fund to be invested in riskier, longer-term assets in pursuit of greater yield. Plaintiffs’ thesis—if endorsed by a court—would prove deeply problematic to the financial services industry and to the ERISA plans that it serves. With the benefit of hindsight, it will always be possible to observe that, during any given period, more risk in particular segments was either rewarded or punished. At the point of decision, however, asset managers lack the benefit of hindsight. Instead, asset managers and ERISA fiduciaries must rely on sound processes to offer plan participants the opportunity to elect a specified tradeoff between risk and possible reward. Courts have rightly refused to entertain claims, like this one, that rely, inextricably, on hindsight. In the end, given the lack of any meaningful allegation that there was a deficiency in the process for managing the Stable Value Fund, Plaintiffs’ complaint amounts to nothing more than the claim that the Stable Value Fund should have looked more like some "average" stable value fund. But ERISA permits—indeed, 4 Case: 17-1515 Document: 00117216129 Page: 9 Date Filed: 10/30/2017 Entry ID: 6128704 encourages—fiduciaries to make their own decisions about whether, in any given market segment, they want an average level of risk, or a below-or above-average level of risk, based on their own judgments and on the specific circumstances of their own participants. ERISA permits fiduciaries to choose a stable value fund—or any other type of fund—with a below-average level of risk. Those same fiduciaries cannot later be subjected to liability because that below-average level of risk yielded a lower return than a fund that took on more risk. Nor can the investment manager be subjected to liability for offering such a fund. I. ASSET MANAGEMENT MUST BE JUDGED BY PROCESS, NOT HINDSIGHT. A. Hindsight can play no role in the assessment of asset management. The financial markets are, by their nature, unpredictable. "While it is easy to pick an investment option in retrospect (buy Apple Inc. at $7 a share in December 2000 and short Enron Corp. at $90 a share), selecting an investment beforehand is difficult." Tussey v. ABB, Inc., 746 F.3d 327, 338 (8th Cir. 2014). The same holds true for investment risks generally. In hindsight, it is easy to discount low probabilities of catastrophic events that did not occur 5 Case: 17-1515 Document: 00117216129 Page: 10 Date Filed: 10/30/2017 Entry ID: 6128704 (or to take for granted low probability events that did occur). But accurately projecting uncertain events beforehand is hard. Indeed, their lack of predictability is what makes the markets function. Investors demand a premium for taking on risk, so the market prices bonds and stocks based on expectations for their future value combined with the likelihood that the expectations will be realized. In that environment of uncertainty, asset managers employ techniques to manage risks. They assemble portfolios to achieve targets for risk and projected return and monitor the portfolios to ensure continued compliance with those objectives. This approach permits asset managers to offer investors the opportunity to participate in a particular risk-return tradeoff. But, in any given market environment, some strategies will outpace targets, while others will fall short. In aggregate, it is an unavoidable fact of mathematics that half of all funds will underperform the median, with one-in-four in the bottom quartile. ERISA plaintiffs are frequently tempted by that truism to engage in condemnation-by-comparison. As the argument runs, the fact that other investments fared better over 6 Case: 17-1515 Document: 00117216129 Page: 11 Date Filed: 10/30/2017 Entry ID: 6128704 some (arbitrary) time period shows that the challenged investments were flawed.2 If this reasoning were enough to state an ERISA claim, it would be a foolproof way to generate an unending supply of cases from the Nation’s 500,000 401(k) plans.3 With the benefit of hindsight, a plaintiff can easily identify the quarter of funds with returns in the bottom quartile, and then identify the investment decisions that most contributed to their lower returns. There is nothing to distinguish the present case from any other case that could be brought via the same hindsight selection algorithm. Accordingly, with good reason, courts have emphasized that ERISA’s "fiduciary duty of care... requires prudence, not prescience." DeBruyne v. Equitable Life Assurance Soc’y of the U.S., 920 F.2d 457, 465 (7th Cir. 1990) (internal quotation marks omitted); accord Rinehart v. Lehman Bros. Holdings Inc., 817 F.3d 2 See, e.g., Complaint ¶ 100, Sweda v. Univ. of Pa., 2017 WL 4179752 (E.D. Pa. Sept. 21, 2017) (No. 2:16-cv-04329), ECF No. 1 (alleging that plan fiduciaries breached their duty of prudence by offering a fund that trailed "two other... funds in the same investment style"). Inv. Co. Inst., Frequently Asked Questions About 401(k) Plan 3 Research, https://www.ici.org/policy/retirement/plan/401k/faqs_401k. 7 Case: 17-1515 Document: 00117216129 Page: 12 Date Filed: 10/30/2017 Entry ID: 6128704 56, 64 (2d Cir. 2016). So "whether a fiduciary’s actions are prudent cannot be measured in hindsight." DiFelice v. U.S. Airways, Inc., 497 F.3d 410, 424 (4th Cir. 2007). B. Process is the touchstone for evaluating asset management. The measure of an asset manager’s performance is not whether its investment selections resulted in above-average returns, compared to the competition (measured ex post), but whether it implemented appropriate processes ex ante to make reasoned decisions. Because of the prohibition on judgment by hindsight, courts evaluating ERISA prudence claims do not consider performance— which is inherently a hindsight assessment—but rather focus on whether the manager engaged in a prudent process. As this Court held in Bunch v. W.R. Grace & Co., fiduciary decision making must be "viewed from the perspective of the time of the challenged decision rather than from the vantage point of hindsight." 555 F.3d 1, 7 (1st Cir. 2009) (quoting Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915, 917-18 (8th Cir. 1994)). So when an investment decision results from "thorough investigative and decisional process," "it is 8 Case: 17-1515 Document: 00117216129 Page: 13 Date Filed: 10/30/2017 Entry ID: 6128704 difficult, indeed impossible, given the standard of review... to legally challenge the[] actions." Id. Other courts employ similar standards, recognizing that consideration of a fund’s performance sheds no light on whether an investment vehicle was appropriately conceptualized and implemented, and thus must be excluded from the assessment of prudence. See, e.g., PBGC ex rel. St. Vincent Catholic Med. Centers Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 730 (2d Cir. 2013); In re Unisys Sav. Plan Litig., 74 F.3d 420, 434 (3d Cir. 1996) (requiring investment decisions to be reviewed "according to an objective standard, focusing on a fiduciary’s conduct in arriving at an investment decision, not on its results, and asking whether a fiduciary employed the appropriate methods to investigate and determine the merits of a particular investment") (emphasis added). The U.S. Department of Labor has placed the same emphasis on process, interpreting the duty of prudence to be satisfied if the fiduciary’s process is diligent: With regard to an investment or investment course of action taken by a fiduciary of an employee benefit plan pursuant to his investment duties, [ERISA’s prudence] requirements... are satisfied if the fiduciary: 9 Case: 17-1515 Document: 00117216129 Page: 14 Date Filed: 10/30/2017 Entry ID: 6128704 (i) Has given appropriate consideration to those facts and circumstances that, given the scope of such fiduciary’s investment duties, the fiduciary knows or should know are relevant to the particular investment or investment course of action involved, including the role the investment or investment course of action plays in that portion of the plan’s investment portfolio with respect to which the fiduciary has investment duties; and (ii) Has acted accordingly. 29 C.F.R. § 2550.404a-1(b)(1). II. TO ENGAGE IN A PRUDENT PROCESS, AN ASSET MANAGER NEED NOT FOLLOW THE HERD. Without considering hindsight, there is little left to Plaintiffs’ complaint. Here, as the district court found, Plaintiffs do not dispute that the Stable Value Fund satisfied the objectives disclosed to Plan participants. They do not "criticize any aspect of Galliard’s investment process or of CVS’s monitoring of Galliard’s investment process." A.10. Rather, Plaintiffs’ theory is that Galliard’s "failure" to pursue the strategy employed by certain other stable value funds demonstrates the plausibility of their claim for fiduciary breach because the Galliard fund’s level of risk diverged from the average of other funds, and because other stable value funds purportedly 10 Case: 17-1515 Document: 00117216129 Page: 15 Date Filed: 10/30/2017 Entry ID: 6128704 availed themselves of risk-free additional returns generated by investing the stable value fund in longer-duration bond funds. Plaintiffs are wrong as to their general point (about the desirability of following the herd); and wrong as to the application in the stable value fund context. A. Asset managers reasonably differentiate their investment offerings from competitors’ funds. On appeal, Plaintiffs contend that their challenge to the Stable Value Fund is justified because it "deviated from known and well-established industry standards." Pls.’ Br. 21. Such was the claim in DeBruyne, where the Seventh Circuit rejected the claim that losses sustained on Black Monday by Equitable’s "Balanced Fund" resulted from imprudence because Equitable’s fund did not reflect the same balance as other "balanced funds." The Seventh Circuit held that "assertions of what a'typical’ balanced fund portfolio manager might have done in 1987 say little about the wisdom of Equitable’s investments, only that Equitable may not have followed the crowd." 920 F.2d at 465. The DeBruyne approach is the right one. The contrary presumption—that deviations from typicality support an inference 11 Case: 17-1515 Document: 00117216129 Page: 16 Date Filed: 10/30/2017 Entry ID: 6128704 of imprudence—would undermine the interests of plan fiduciaries in having choices along the risk/return spectrum.. Even if there were such a thing as a typical stable value fund,4 it does not benefit investors to be restricted to investment options that cluster tightly around an "average"; to the contrary, it benefits investors to have investment lineups that reflect conscious decisions about the objectives of the population. To return, again, to the fundamentals, 401(k) investors come in all shapes and sizes. Some are old, some are young. Some have considerable wealth, some are dependent on their plan balances to make ends meet. Different plans can be expected to have different populations of plan participants; one would not, for example, expect that CVS’s employee population would resemble that of a Silicon Valley startup or a hedge fund. Different investor populations will sometimes indicate different strategies. Even within a single asset class, the circumstances of the targeted population may counsel in 4But see, e.g., Andrew Apostol, How to Evaluate Stable Value Funds and Their Managers, Dwight Asset Management Company (July 2007) ("Due to the varying expectations of individual plan sponsors and the range of management techniques used by their stable value managers, there is not a single style or strategy that is common across all stable value funds."). 12 Case: 17-1515 Document: 00117216129 Page: 17 Date Filed: 10/30/2017 Entry ID: 6128704 favor of a more aggressive—or a more conservative—posture. Fiduciaries to a plan such as CVS’s may wish to have a more conservative stable value fund than those chosen by plans with different populations. It is particularly relevant here that this case involves how the CVS Plan’s most conservative investment option was invested in the immediate aftermath of the 2008 financial crisis—which highlighted the risks of assets previously thought to be safe. Different investment populations reasonably greeted this "New World Order" with different strategies; and fund managers reasonably crafted funds with different risk profiles to meet the concerns of the marketplace. As a broader matter, it is a basic tenet of modern investment management that diversification—and a diversity of investment options—expands the horizon of desirable portfolios. Were this Court to accept the theory that Plaintiffs could survive a motion to dismiss—and subject plan fiduciaries and fund managers to the significant costs of discovery—merely by identifying deviations from industry averages, then the whole financial marketplace would suffer from the reduced choice that would predictably result. If an 13 Case: 17-1515 Document: 00117216129 Page: 18 Date Filed: 10/30/2017 Entry ID: 6128704 investment manager that diverges from the average in the level of risk that it assumes or in its general investment strategy has a litigation target on its back, those funds will not long be offered, at least not to retirement plans that are subject to ERISA. B. Investing in longer-duration bonds does not provide an opportunity for stable value funds to achieve additional returns without additional risk. As applied to the stable value context, Plaintiffs’ assertion is that other stable value funds follow the "typical" model because it permits them access to greater returns without additional risk. The district court deemed it implausible that investors could get something for nothing. The district court was correct. Stable value funds have desirable features. By combining bonds and an investment wrap, participants can achieve bond-like returns without the interest-rate volatility present in bond funds. But those features do not eliminate the risk of losses, they just delay them. The stability-enhancing features of a stable value fund mean that, if a stable value fund invests in a bond that defaults, the value of the fund will not take an immediate tumble, but the loss will be amortized over a period of time. Over the long run, the performance of a stable value fund approaches the performance of 14 Case: 17-1515 Document: 00117216129 Page: 19 Date Filed: 10/30/2017 Entry ID: 6128704 the underlying bond portfolio, minus the expenses of maintaining the wrap coverage and administering the fund. This is, then, a long way of restating the obvious: There is no such thing as a free lunch. Bonds with a longer duration are likelier to be defaulted, which is why, except in anomalous interest-rate environments, longer bonds have higher yields. So a stable value fund with a longer duration is riskier than a fund with a shorter duration. Were this not so, stable value funds would be investing primarily in 10-, 15-, and 20-year bonds, rather than in 1-, 2-, and 3-year instruments. III. ERISA DOES NOT PERMIT A CAUSE OF ACTION FOR CHAGRIN. A final point bears mention. After eliminating the possibility of procedural improprieties by CVS or Galliard in the management of the Stable Value Fund and discounting the suggestion that Plaintiffs should somehow have gotten greater returns without taking on additional risk, Plaintiffs’ complaint can still be read to suggest that Plaintiffs deserved a most-conservative investment option that was at a different point on the efficient frontier of risks and returns. 15 Case: 17-1515 Document: 00117216129 Page: 20 Date Filed: 10/30/2017 Entry ID: 6128704 Even when there is an array of appropriate investment options that can be combined to generate reasonable investment portfolios, somebody must make the ultimate decision about the point on the risk-return horizon on which to reside. There are circumstances in which a fiduciary gets to decide, on another’s behalf, how assets ought to be invested. (A defined-benefit pension plan is the classic example. See generally Hughes Aircraft Co. v. Jacobson, 525 U.S. 432 (1999).) But "participant choice is the centerpiece of what ERISA envisions for [401(k)] plans." Tibble v. Edison Int’l, 729 F.3d 1110, 1134-35 (9th Cir. 2013), vacated and remanded on other grounds, 135 S. Ct. 1823 (2015). In a 401(k) plan, plan participants get to control "the degree of risk to which [their individual accounts] are subject." 29 C.F.R. § 2550.404c-1(b)(3)(i)(A). The upshot is that CVS Plan participants who wanted exposure to greater risk had options for exposing themselves to greater risk. Unless they can show that the Stable Value Fund was managed through an imprudent process, Plaintiffs cannot escape the risk-return combination that they elected. ERISA is not an insurance policy that allows individuals who opted to forgo risk to 16 Case: 17-1515 Document: 00117216129 Page: 21 Date Filed: 10/30/2017 Entry ID: 6128704 claim the benefits of higher returns after the market has proven strong. See Sweda, 2017 WL 4179752, at *10 ("Chagrin does not inexorably become a cause of action."). CONCLUSION The judgment of the district court should be affirmed. Dated: October 10, 2017 s/Brian D. Netter Kevin Carroll Brian D. Netter SECURITIES INDUSTRY AND 1st Cir. Bar #1172960 FINANCIAL MARKETS bnetter@mayerbrown.com ASSOCIATION MAYER BROWN LLP 1101 New York Avenue, NW 1999 K Street, NW Washington, DC 20005 Washington, DC 20006 (202) 263-3000 Nancy G. Ross nross@mayerbrown.com MAYER BROWN LLP 71 South Wacker Drive Chicago, Illinois 60606 (312) 782-0600 17 Case: 17-1515 Document: 00117216129 Page: 22 Date Filed: 10/30/2017 Entry ID: 6128704 CERTIFICATE OF COMPLIANCE 1. This brief complies with the type-volume limitations of Fed. R. App. P. 29(a)(5) and Fed. R. App. P. 32(a)(7)(B)(i) because it contains 3,077 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii). 2. This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because this brief has been prepared in a proportionally spaced typeface using Microsoft Office Word 2007 in Bookman Old Style 14-point font. s/Brian D. Netter 18 Case: 17-1515 Document: 00117216129 Page: 23 Date Filed: 10/30/2017 Entry ID: 6128704 CERTIFICATE OF SERVICE I hereby certify that on October 10, 2017, I electronically filed the foregoing with the Clerk of the Court for the United States Court of Appeals for the First Circuit by using the CM/ECF system, which will electronically serve all registered counsel of record. s/Brian D. Netter 19

DESIGNATION of attorney presenting oral argument filed by Attorney Jason H. Kim for Appellants Mary Barchock, Thomas Wasecko and Stacy Weller. Certificate of service dated 11/03/2017. [17-1515] (JHK) [Entered: 11/03/2017 06:25 PM]

Case: 17-1515 Document: 00117218221 Page: 1 Date Filed: 11/03/2017 Entry ID: 6129929 Case: 17-1515 Document: 00117218221 Page: 2 Date Filed: 11/03/2017 Entry ID: 6129929 CERTIFICATE OF SERVICE I certify that I filed the foregoing with the Clerk of the United States Court of Appeals for the First Circuit via the CM/ECF system this 3rd day of November, 2017 to be served on counsel of record for Defendants and amici in this appeal./s/Jason H. Kim

DESIGNATION of attorney presenting oral argument filed by Attorney Meaghan McLaine VerGow for Appellees CVS Health Corporation and The Benefits Plan Committee of CVS Health Corporation. Certificate of service dated 11/16/2017. [17-1515] (MMV) [Entered: 11/16/2017 01:24 PM]

Case: 17-1515 Document: 00117222179 Page: 1 Date Filed: 11/16/2017 Entry ID: 6132155 United States Court of Appeals For the First Circuit ____________________ Designation of Attorney Presenting Oral Argument Counsel who intend to present oral argument to the court must file this form no later than two weeks prior to oral argument. Counsel presenting oral argument must be admitted to practice before this court and must have entered an appearance in the case. Counsel who have not entered an appearance must file an appearance and a motion for leave pursuant to Loc. R. 12.0(a) with this designation. Appeal No.: 17-1515 Case Name: Barchock, et al v. CVS Health Corporation, et al Date of Argument: December 4, 2017 Location of Argument: ✔ Boston Puerto Rico Other: Name and appellate designation of the party(ies) you will be arguing on behalf of: Defendants-Appellees CVS Health Corp., The Benefits Plan Committee Of CVS Health Corp., And Galliard Capital Management, Inc. Attorney Name: Meaghan VerGow First Circuit Bar No.: 1180158 Phone Number: 202-383-5504 Fax Number: 202-383-5414 Email: mvergow@omm.com Check the box that applies: ✔ I have already filed an appearance in this matter. I am filing my appearance form and a motion in accordance with Loc. R. 12.0(a) contemporaneously with this form./s/Meaghan VerGow November 16, 2017 (Signature) (Date) PLEASE NOTE: Only arguing counsel will be notified by phone when the opinion is released. Case: 17-1515 Document: 00117222179 Page: 2 Date Filed: 11/16/2017 Entry ID: 6132155 CERTIFICATE OF SERVICE I hereby certify that on November 16, 2017, I electronically filed the foregoing with the Clerk of the Court for the U.S. Court of Appeals for the First Circuit by using the appellate CM/ECF system. All interested parties are registered CM/ECF users. Dated: November 16, 2017/s/Meaghan VerGow

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05/23/2017
CIVIL CASE docketed. Notice of appeal (doc. #43) filed by Appellants Mary Barchock, Thomas Wasecko and Stacy Weller. Docketing Statement, Transcript Report/Order form and Appearance form due 06/06/2017. [17-1515] (AL) [Entered: 05/23/2017 09:56 AM]
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05/30/2017
NOTICE of appearance on behalf of Appellee Galliard Capital Management, Inc. filed by Attorney Joel S. Feldman. Certificate of service dated 05/30/2017. [17-1515] (MBB) [Entered: 05/30/2017 06:29 PM]
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05/30/2017
NOTICE of appearance on behalf of Appellee Galliard Capital Management, Inc. filed by Attorney Mark S. Blocker. Certificate of service dated 05/30/2017. [17-1515] (MBB) [Entered: 05/30/2017 06:32 PM]
doc
05/30/2017
NOTICE of appearance on behalf of Appellee Galliard Capital Management, Inc. filed by Attorney Daniel R. Thies. Certificate of service dated 05/30/2017. [17-1515] (DT) [Entered: 05/30/2017 06:36 PM]
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05/30/2017
CERTIFICATE of service for notice of appearance [6095608-2] filed by Appellee Galliard Capital Management, Inc. Certificate of service dated 05/30/2017. [17-1515] (JSF) [Entered: 05/30/2017 07:09 PM]
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05/31/2017
NOTICE of appearance on behalf of Appellee Galliard Capital Management, Inc. filed by Attorney Joel S. Feldman. Certificate of service dated 05/30/2017. [17-1515] (JSF) [Entered: 05/31/2017 10:46 AM]
doc
05/31/2017
NOTICE of appearance on behalf of Appellees CVS Health Corporation and The Benefits Plan Committee of CVS Health Corporation filed by Attorney Brian D. Boyle. Certificate of service dated 05/31/2017. [17-1515] (BDB) [Entered: 05/31/2017 02:19 PM]
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05/31/2017
NOTICE of appearance on behalf of Appellees CVS Health Corporation and The Benefits Plan Committee of CVS Health Corporation filed by Attorney Meaghan VerGow. Certificate of service dated 05/31/2017. [17-1515] (MMV) [Entered: 05/31/2017 02:26 PM]
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06/06/2017
NOTICE of appearance on behalf of Appellants Mary Barchock, Thomas Wasecko and Stacy Weller filed by Attorney Sonja L Deyoe. Certificate of service dated 06/06/2017. [17-1515] (SLD) [Entered: 06/06/2017 09:03 PM]
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06/06/2017
TRANSCRIPT report/order form filed by Appellants Mary Barchock, Thomas Wasecko and Stacy Weller indicating all necessary transcripts have already been filed in district court. Certificate of service dated 06/06/2017. [17-1515] (SLD) [Entered: 06/06/2017 09:04 PM]
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06/06/2017
DOCKETING statement filed by Appellants Mary Barchock, Thomas Wasecko and Stacy Weller. Certificate of service dated 06/06/2017. [17-1515] (SLD) [Entered: 06/06/2017 09:06 PM]
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06/07/2017
NOTICE issued. After 06/21/2017, the following attorneys will no longer receive notice of court issued documents in this case unless they register for an appellate ECF account: Kyle G. Bates for Mary Barchock, Thomas Wasecko and Stacy Weller, Jason H. Kim for Mary Barchock, Thomas Wasecko and Stacy Weller, John J. Nestico for Mary Barchock, Thomas Wasecko and Stacy Weller, Jonathan P. Cardosi for Galliard Capital Management, Inc. and Meaghan McLaine VerGow for CVS Health Corporation and The Benefits Plan Committee of CVS Health Corporation. [17-1515] (AL) [Entered: 06/07/2017 04:39 PM]
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06/13/2017
NOTICE of appearance on behalf of Appellees CVS Health Corporation and The Benefits Plan Committee of CVS Health Corporation filed by Attorney Robert Clark Corrente. Certificate of service dated 06/13/2017. [17-1515] (RCC) [Entered: 06/13/2017 04:00 PM]
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06/15/2017
RESPONSE filed by Appellees CVS Health Corporation, Galliard Capital Management, Inc. and The Benefits Plan Committee of CVS Health Corporation to docketing statement [6097421-2]. Certificate of service dated 06/15/2017. [17-1515] (BDB) [Entered: 06/15/2017 04:04 PM]
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06/16/2017
NOTICE of appearance on behalf of Appellants Mary Barchock, Thomas Wasecko and Stacy Weller filed by Attorney Jason H. Kim. Certificate of service dated 06/16/2017. [17-1515] (JHK) [Entered: 06/16/2017 08:38 PM]
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06/22/2017
NOTICE issued. The following attorneys have failed to register for an appellate ECF account and will no longer receive notice of court issued documents in this case: Kyle G. Bates for Mary Barchock, Thomas Wasecko and Stacy Weller and Jonathan P. Cardosi for Galliard Capital Management, Inc. [17-1515] (AL) [Entered: 06/22/2017 01:40 PM]
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06/22/2017
BRIEFING schedule set. Brief and Appendix due 08/01/2017 for appellant Mary Barchock, Thomas Wasecko and Stacy Weller. Pursuant to F.R.A.P. 31(a), appellee's brief will be due 30 days following service of appellant's brief and appellant's reply brief will be due 14 days following service of appellee's brief. [17-1515] (AL) [Entered: 06/22/2017 01:48 PM]
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06/30/2017
JOINT MOTION to extend time to file brief and appendix filed by Appellants Mary Barchock, Thomas Wasecko, Stacy Weller and Appellees CVS Health Corporation, Galliard Capital Management, Inc. and The Benefits Plan Committee of CVS Health Corporation. Certificate of service dated 06/30/2017. [17-1515] (BDB) [Entered: 06/30/2017 04:25 PM]
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07/11/2017
ORDER denying motion to extend time to file brief and appendix filed by Appellees CVS Health Corporation, The Benefits Plan Committee of CVS Health Corporation, Galliard Capital Management, Inc. and Appellants Mary Barchock, Thomas Wasecko and Stacy Weller. The motion is denied without prejudice to renewal. [17-1515] (AL) [Entered: 07/11/2017 12:36 PM]
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08/01/2017
BRIEF tendered by Appellants Mary Barchock, Thomas Wasecko and Stacy Weller. Certificate of service dated 08/01/2017. [17-1515] (JHK) [Entered: 08/01/2017 06:10 PM]
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08/02/2017
ASSENTED TO MOTION to extend time to file brief filed by Appellees CVS Health Corporation, Galliard Capital Management, Inc. and The Benefits Plan Committee of CVS Health Corporation. Certificate of service dated 08/02/2017. [17-1515] (BDB) [Entered: 08/02/2017 03:11 PM]
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08/04/2017
APPELLANTS' BRIEF filed by Appellants Mary Barchock, Thomas Wasecko and Stacy Weller. Certificate of service dated 08/01/2017. Nine paper copies identical to that of the electronically filed brief must be submitted so that they are received by the court on or before 08/11/2017. Brief due 08/31/2017 for APPELLEE CVS Health Corporation, Galliard Capital Management, Inc. and The Benefits Plan Committee of CVS Health Corporation. [17-1515] (AP) [Entered: 08/04/2017 11:51 AM]
08/08/2017
NINE (9) paper copies of appellant/petitioner brief [6110787-2] submitted by Appellants Mary Barchock, Thomas Wasecko and Stacy Weller. [17-1515] (CC) [Entered: 08/08/2017 11:43 AM] (Text entry; no document attached.)
08/08/2017
APPENDIX filed by Appellants Mary Barchock, Thomas Wasecko and Stacy Weller. Number of volumes: 1. Number of copies: 10. Certificate of service dated 08/07/2017. [17-1515] (AP) [Entered: 08/08/2017 12:35 PM] (Text entry; no document attached.)
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08/08/2017
ORDER granting motion to extend time to file brief filed by Appellees CVS Health Corporation, The Benefits Plan Committee of CVS Health Corporation and Galliard Capital Management, Inc. Brief due 10/02/2017 for appellee CVS Health Corporation, Galliard Capital Management, Inc. and The Benefits Plan Committee of CVS Health Corporation. [17-1515] (TS) [Entered: 08/08/2017 04:50 PM]
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09/28/2017
NOTICE of appearance on behalf of Appellees CVS Health Corporation and The Benefits Plan Committee of CVS Health Corporation filed by Attorney Bradley N. Garcia. Certificate of service dated 09/28/2017. [17-1515] (BNG) [Entered: 09/28/2017 03:33 PM]
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10/02/2017
BRIEF tendered by Appellees CVS Health Corporation, Galliard Capital Management, Inc. and The Benefits Plan Committee of CVS Health Corporation. Certificate of service dated 10/02/2017. [17-1515] CLERK'S NOTE: Party selection was incomplete. Correction made by clerk's office. No further action required. (BDB) [Entered: 10/02/2017 03:41 PM]
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10/04/2017
APPELLEES' BRIEF filed by Appellees CVS Health Corporation, Galliard Capital Management, Inc. and The Benefits Plan Committee of CVS Health Corporation. Certificate of service dated 10/02/2017. Nine paper copies identical to that of the electronically filed brief must be submitted so that they are received by the court on or before 10/11/2017. Reply brief due 10/16/2017 for APPELLANT Mary Barchock, Thomas Wasecko and Stacy Weller. [17-1515] (AP) [Entered: 10/04/2017 01:41 PM]
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10/04/2017
CORPORATE disclosure statement filed by Appellees CVS Health Corporation, Galliard Capital Management, Inc. and The Benefits Plan Committee of CVS Health Corporation. [17-1515] (AP) [Entered: 10/04/2017 01:44 PM]
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10/09/2017
NOTICE of appearance on behalf of Movant(s) The Chamber of Commerce of the United States of America and the American Benefits Council filed by Attorney Evan A. Young. Certificate of service dated 10/09/2017. [17-1515] (EY) [Entered: 10/09/2017 02:45 PM]
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10/09/2017
MOTION for leave to file amicus curiae brief in support of Appellee filed by Movant(s) American Benefits Council and Chamber of Commerce of the United States of America. Certificate of service dated 10/09/2017. [17-1515] (EY) [Entered: 10/09/2017 07:34 PM]
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10/10/2017
MOTION for leave to file amicus curiae brief in support of Appellee filed by Movant(s) The Securities Industry and Financial Markets Association. Certificate of service dated 10/10/2017. [17-1515] (BDN) [Entered: 10/10/2017 03:03 PM]
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10/10/2017
NOTICE of appearance on behalf of Movant(s) The Securities Industry and Financial Markets Association filed by Attorney Brian D. Netter. Certificate of service dated 10/10/2017. [17-1515] (BDN) [Entered: 10/10/2017 03:05 PM]
10/10/2017
NINE (9) paper copies of appellee/respondent brief [6123795-2] submitted by Appellees CVS Health Corporation, Galliard Capital Management, Inc. and The Benefits Plan Committee of CVS Health Corporation. [17-1515] (AP) [Entered: 10/11/2017 04:36 PM] (Text entry; no document attached.)
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10/16/2017
BRIEF tendered by Appellants Mary Barchock, Thomas Wasecko and Stacy Weller. [17-1515] (JHK) [Entered: 10/16/2017 07:55 PM]
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10/18/2017
REPLY BRIEF filed by Appellants Mary Barchock, Thomas Wasecko and Stacy Weller. Certificate of service dated 10/16/2017. Nine paper copies identical to that of the electronically filed brief must be submitted so that they are received by the court on or before 10/25/2017. [17-1515] (AP) [Entered: 10/18/2017 04:54 PM]
10/20/2017
PLEADING tendered: NINE (9) paper copies of appellants' reply brief submitted by Appellants Mary Barchock, Thomas Wasecko and Stacy Weller. [17-1515] (AP) [Entered: 10/20/2017 12:13 PM] (Text entry; no document attached.)
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10/26/2017
CORPORATE disclosure statement filed by Securities Industry and Financial Markets Association. Certificate of service dated 10/26/2017. [17-1515] (BDN) [Entered: 10/26/2017 12:57 PM]
10/26/2017
NINE (9) paper copies of reply brief [6126554-2] submitted by Appellants Mary Barchock, Thomas Wasecko and Stacy Weller. [17-1515] (AP) [Entered: 10/26/2017 02:06 PM] (Text entry; no document attached.)
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10/26/2017
CORPORATE disclosure statement filed by Movants American Benefits Council and Chamber of Commerce of the United States of America. [17-1515] (AL) [Entered: 10/26/2017 04:49 PM]
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10/30/2017
ORDER entered: No objections having been filed, the motion for leave to file an amicus curiae brief by the American Benefits Council and Chamber of Commerce of the United States of America in support the appellees and affirmance is granted. The brief is accepted for filing this day. [17-1515] (AL) [Entered: 10/30/2017 04:14 PM]
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10/30/2017
ORDER entered: No objections having been filed, the motion for leave to file an amicus curiae brief by the Securities Industry and Financial Markets Association in support the appellees and affirmance is granted. The brief is accepted for filing this day. [17-1515] (AL) [Entered: 10/30/2017 04:19 PM]
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10/30/2017
AMICUS CURIAE BRIEF filed by Amici Curiae American Benefits Council and Chamber of Commerce of the United States of America in support of Appellee. Certificate of service dated 10/09/2017. Nine paper copies identical to that of the electronically filed brief must be submitted so that they are received by the court on or before 11/06/2017. [17-1515]. (AL) [Entered: 10/30/2017 04:36 PM]
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10/30/2017
AMICUS CURIAE BRIEF filed by Amicus Curiae Securities Industry and Financial Markets Association in support of Appellee. Certificate of service dated 10/10/2017. Nine paper copies identical to that of the electronically filed brief must be submitted so that they are received by the court on or before 11/06/2017. [17-1515] (AL) [Entered: 10/30/2017 04:51 PM]
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11/02/2017
CASE calendared: Monday, 12/04/2017 AM Boston, MA Panel Courtroom. Designation form due 11/16/2017. [17-1515] (DT) [Entered: 11/02/2017 10:04 AM]
11/02/2017
NINE (9) paper copies of amicus brief [6128704-2] submitted by Amicus Curiae Securities Industry and Financial Markets Association. [17-1515] (LM) [Entered: 11/06/2017 08:54 AM] (Text entry; no document attached.)
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11/03/2017
DESIGNATION of attorney presenting oral argument filed by Attorney Jason H. Kim for Appellants Mary Barchock, Thomas Wasecko and Stacy Weller. Certificate of service dated 11/03/2017. [17-1515] (JHK) [Entered: 11/03/2017 06:25 PM]
11/07/2017
NINE (9) paper copies of amicus brief [6128697-2] submitted by Amici Curiae American Benefits Council and Chamber of Commerce of the United States of America in support of Appellee. [17-1515] (LM) [Entered: 11/08/2017 08:44 AM] (Text entry; no document attached.)
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11/16/2017
DESIGNATION of attorney presenting oral argument filed by Attorney Meaghan McLaine VerGow for Appellees CVS Health Corporation and The Benefits Plan Committee of CVS Health Corporation. Certificate of service dated 11/16/2017. [17-1515] (MMV) [Entered: 11/16/2017 01:24 PM]
12/04/2017
CASE argued. Panel: Juan R. Torruella, Appellate Judge; William J. Kayatta, Jr., Appellate Judge and David J. Barron, Appellate Judge. Arguing attorneys: Jason H. Kim for Mary Barchock, Thomas Wasecko and Stacy Weller and Meaghan McLaine VerGow for CVS Health Corporation and The Benefits Plan Committee of CVS Health Corporation. [17-1515] (DT) [Entered: 12/04/2017 11:35 AM] (Text entry; no document attached.)
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03/23/2018
OPINION issued by Juan R. Torruella, Appellate Judge; William J. Kayatta, Jr., Appellate Judge and David J. Barron, Appellate Judge. Published. [17-1515] (AL) [Entered: 03/23/2018 03:58 PM]
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03/23/2018
JUDGMENT. 17-1515 Affirmed. [17-1515] (AL) [Entered: 03/23/2018 04:02 PM]
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04/16/2018
MANDATE issued. [17-1515] (DO) [Entered: 04/16/2018 04:09 PM]
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