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Compliance September 25, 2020
Settlement for Cornell 403(b) Plan Suit Filed for Preliminary Approval
Parties agreed that a payment of $225,000 will settle the remaining claim in the case related to the share class of the TIAA-CREF Lifecycle Funds.
Reported by Rebecca Moore
Fiduciaries to the Cornell University 403(b) plan have agreed to pay $225,000 to settle an Employee Retirement Income Security Act (ERISA) lawsuit.
The case, filed in 2016, originally contained allegations similar to those in other lawsuits challenging university 403(b) plans—alleging excessive fees, imprudent investments, too many investments and the imprudent use of more than one recordkeeper.
In a September 2019 decision, U.S. District Judge P. Kevin Castel of the U.S. District Court for the Southern District of New York granted summary judgement for Cornell on many counts. Castel let one claim remain that alleged defendants breached their duty of prudence by failing to swap out the TIAA-CREF Lifecycle target-date funds (TDFs) with the firm’s identical institutional share class funds.
According to the settlement agreement, the settlement is limited to that remaining claim.
“The Cornell defendants agree that it is desirable to settle the sole remaining issue for trial and maintain that they are without fault or liability with respect to that issue or any of the allegations or claims asserted in this action. The Cornell defendants are settling the released claim solely to avoid litigation costs and the risks associated with an in-person trial set for September 2020 amidst the current public health crisis,” the settlement agreement states.