Big-Name Universities Targeted in Bout of ERISA Suits
Schlichter, Bogard & Denton filed separate class action lawsuits against three universities, seeking various damages and remedies for some 60,000 employees enrolled in the universities’ defined contribution (DC) retirement plans.
The complaints—David B. Tracey, et al. v. Massachusetts Institute of Technology [MIT], et al.; Dr. Alan Sacerdote, et al. v. New York University [NYU], et al.; and Joseph Vellali, et al. v. Yale University, et al.—were filed in the U.S. District Court of Massachusetts, the Southern District of New York and the District of Connecticut, respectively.
The suits contend these universities, as Employee Retirement Income Security Act (ERISA) fiduciaries, have breached their duties under the law to protect the retirement assets of their employees and retirees. Common to all three complaints are allegations that the school “breached [its] duties of loyalty and prudence under ERISA by causing plan participants to pay millions of dollars in unreasonable and excessive fees for recordkeeping, administrative and investment services of the plans.”
The suits resemble numerous previous complaints filed by Schlichter, Bogard & Denton and other firms, alleging ERISA fiduciaries were more concerned with their employer’s economic interests than with ensuring positive outcomes for plan participants. Defendants in these cases invariably claim the complaints are unfairly critical and seek to punish common and accepted business practices.
The new complaints against MIT, NYU and Yale allege that the universities breached their fiduciary duties by selecting and retaining high-cost and poorly performing investment options compared with available alternatives; doing so, the plaintiffs say, substantially reduced the retirement assets of the employees and retirees.
In the cases of NYU and Yale, both of which offer 403(b)-type plans, the complaints allege that employees paid excessive recordkeeping fees and the plans offered funds that historically underperformed for years.
2006 FLASHBACK
Fee for All … Law firm launches lawsuits over 401(k) fees