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Johns Hopkins University is the latest prominent college to lose an early round in a lawsuit challenging the fees and investment options in its retirement plan ( Kelly v. Johns Hopkins Univ. , D. Md., No. 1:16-cv-02835-GLR, order partially denying motion to dismiss 9/28/17 ).
A federal judge Sept. 28 refused to dismiss key portions of the lawsuit, including claims that the school violated the Employee Retirement Income Security Act by offering actively managed funds in its retirement plan and using multiple record-keepers. However, the judge dismissed claims that Johns Hopkins imprudently offered higher-cost share classes when cheaper classes of the same funds were available. The judge also dismissed the novel claim that the school violated ERISA by offering too many investment options in its retirement plan.
In the past year, 16 prominent colleges have been targeted by class actions challenging the fees and investment lineups of their retirement plans. Complaints against NYU, Columbia, Duke, Emory, Princeton, MIT, and the University of Chicago have seen varying degrees of early success. On Sept. 21, the University of Pennsylvania became the first school to win complete dismissal of a lawsuit challenging its retirement plan.
In the Johns Hopkins case, the judge relied heavily on these prior rulings in his three-page order, which he described as “informal in nature.” In considering the claims against Johns Hopkins, the judge said that he was “persuaded” by the reasoning of the other courts that have considered these cases.
The courts’ refusals to grant quick dismissals in these lawsuits could prompt retirement plan litigation against other private colleges. As of the 2017 school year, more than 1,900 private, four-year colleges were operating in the U.S., according to data from the National Center for Education Statistics. Public colleges may be less vulnerable to these lawsuits because their retirement plans typically aren’t subject to ERISA.
Judge George L. Russell III of the U.S. District Court for the District of Maryland wrote the decision in the Johns Hopkins case.
Schlichter Bogard & Denton LLP and Brown Goldstein & Levy LLP represent the Johns Hopkins plan participants. Morgan Lewis & Bockius LLP represents Johns Hopkins.
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