When RJR was spun off from Nabisco, participants' shares of Nabisco, an investment in the company's defined contribution plan, were sold off in January 2000 at all-time lows.

A year later Nabisco soared back to hit all-time highs. That caused participants millions in losses, alleged the original claim.

A U.S. District Court in North Carolina ruled in favor of RJR, dismissing the plaintiffs' claim that the decision to sell off the shares at all-time lows constituted a breach of ERISA's prudent fiduciary standard, even though the court acknowledged RJR's fiduciaries' decision to sell the shares was rushed.

Though the District Court agreed with the plaintiffs claims that RJR was procedurally negligent in coming to the decision to liquidate the stock, it was nonetheless a decision a prudent fiduciary could have come to, according to court documents.

The 4^th Circuit overturned that decision, ruling in a 2 to 1 split decision that a fiduciary can be held liable for losses from an investment decision, even if that decision was "objectively prudent," according to the appellate court's decision.

It also found RJR's procedural imprudence "unprecedented."

The case also revealed a division among Circuit Courts as to whether the burden of proving prudence in ERISA cases falls to the plaintiffs or defendants.

The 4^th Circuit ruled it was RJR's responsibility to prove it acted prudently in liquidating the stock.

That ruling "deepened a well-documented circuit split over which party bears the burden of proof on loss causation," a split RJR's attorneys were hoping the Supreme Court would resolve when it petitioned it to hear the case.

But in its recommendation to the High Court to reject the case, the Solicitor General argued that the 4^th Circuit ruling was accurate, and that the duty to prove prudence falls on plan sponsor fiduciaries, not participants, in accordance with long-standing trust law.