Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
A lawsuit challenging how the University of Chicago runs its two large retirement plans got a boost when a federal judge reinstated claims involving a $2.1 billion plan covering about 13,000 university employees and former employees.
The university worker who challenged the school’s $2.1 billion plan sufficiently alleged that he paid excessive record-keeping and administrative fees, a federal judge ruled Jan. 10. In September, the school convinced the judge to dismiss all claims related to this plan—leaving in place only challenges to the school’s smaller $980 million plan—by arguing that none of the workers involved in the lawsuit received benefits through the bigger plan. The workers resolved that issue by adding a new party to the lawsuit, the judge said, and he allowed challenges to both plans to move forward.
The University of Chicago is one of more than a dozen prominent colleges to be hit with proposed class actions challenging their retirement plans in recent years. So far, the University of Pennsylvania is the only school to defeat one of these cases outright, with judges allowing similar challenges to proceed against Cornell, Columbia, Duke, Emory, New York University, Johns Hopkins, Princeton, and Vanderbilt.
The lawsuits largely accuse the schools of offering overly large menus of expensive and poorly performing investment options and paying excessive administrative fees to the plans’ record keepers.
The University of Chicago argued that the worker added to the lawsuit didn’t have standing because he didn’t allege that he paid excessive record-keeping fees. The worker “may have paid” about $37 in record-keeping fees per year, the school said, which wasn’t far from the $35-per-year benchmark the workers previously said was reasonable.
The judge disagreed, pointing to language in the workers’ pleadings saying their administrative fees were closer to $166 per year. This factual dispute over the true amount of fees was something that couldn’t be resolved in the early stages of litigation, the judge said.
Chief Judge Rubén Castillo of the U.S. District Court for the Northern District of Illinois wrote the decision. Castillo also advised the parties to “exhaust all settlement possibilities” before their next hearing on Jan. 31.
So far, none of the cases in this litigation series have settled.
The workers are represented by Wexler Wallace LLP, Berger & Montague P.C., and Schneider Wallace Cottrell Konecky Wotkyns LLP. The university is represented by Sidley Austin LLP.
The case is Daugherty v. Univ. of Chi. , N.D. Ill., No. 1:17-cv-03736, denying motion to dismiss 1/10/18 .
To contact the reporter on this story: Jacklyn Wille in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jo-el J. Meyer at email@example.com
Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)