International Business Machines Corp. workers who accused the company of failing to protect their retirement savings from a 7 percent drop in IBM stock price convinced a federal appeals court to revive their lawsuit.

The decision is a rare win for 401(k) investors in a series of Employee Retirement Income Security Act cases that have been almost universally dismissed.

The fiduciaries of IBM’s 401(k) plan might be liable under ERISA for failing to make an early disclosure of the company’s struggles, the U.S. Court of Appeals for the Second Circuit held Dec. 10. The workers validly alleged that no prudent ERISA plan fiduciary in IBM’s position could have concluded that an early corrective disclosure would have done more harm than good to the company’s stock price, the court said.

The ruling is one of the first significant victories for 401(k) investors challenging drops in company stock price in four years. Following the U.S. Supreme Court’s 2014 decision in Fifth Third Bancorp v. Dudenhoeffer, courts have rejected lawsuits involving RadioShack, WellsFargo, Target, Lehman Brothers, Citigroup, Whole Foods, JPMorgan, L-3 Communications, and BP Plc, among others.

The IBM decision involves Dudenhoeffer‘s “more harm than good” standard, which applies when employees claim hidden corporate fraud caused their stock to be artificially overvalued. Under this standard, investors must identify an alternative action plan fiduciaries could have taken that a prudent fiduciary would not—or could not—see as doing more harm than good to stock price.

In reviving the lawsuit against IBM, the Second Circuit declined to decide whether to use the investor-friendly “would-not” standard—which asks whether the average prudent fiduciary would’ve deemed the action overly harmful—or the company-friendly “could-not” standard, which asks whether any prudent fiduciary would have found it too harmful. The IBM workers satisfied either standard, the court said.

Many ERISA lawsuits have identified early disclosure of fraud as an alternative action under Dudenhoeffer. Unlike the Second Circuit, most courts have rejected these arguments by saying that prudent fiduciaries might conclude that disclosure would harm stock price more than help it.

Chief Judge Robert A. Katzmann wrote the decision. Judges Robert D. Sack and Reena Raggi joined.

Zamansky LLC represented the workers. Davis Polk & Wardwell represented IBM.

The case is Jander v. Retirement Plans Committee of IBM, 2d Cir., No. 17-3518, 12/10/18.