Duke University settled a lawsuit alleging that it mismanaged its retirement plan for employees for nearly $11 million.
It's the second higher-education institution, following the University of Chicago, to settle similar claims in the roughly two dozen lawsuits filed against universities since the summer of 2016.
These cases allege that universities imprudently managed their 403(b) plans, which are defined contribution plans for non-profits, causing plan participants to pay excessive fees that eroded their retirement savings.
Parties in the Duke case, which was among the initial 403(b) lawsuits filed, reached a $10.65 million settlement Wednseday. The settlement, filed in the U.S. District Court for the Middle District of North Carolina, still must be approved by a judge.
The settlement covers two consolidated cases: David Clark et al v. Duke University et al, filed in August 2016; and Kathi Lucas et al v. Duke University, filed in August 2018.
Michael Schoenfeld, Duke's vice president for public affairs and government relations, said the university denies all allegations of wrongdoing and claims of liability.
"This settlement was made solely to avoid the expense and inconvenience of prolonged litigation, and to ensure that Duke University's resources are spent on retirement contributions for faculty and staff rather than the costs of litigation," Mr. Schoenfeld said. "We believe that the Duke Employee Retirement Plan has been well and prudently managed, and is in total compliance with [the Employee Retirement Income Security Act of 1974] and other applicable regulations."
Plaintiffs are represented by Jerome Schlichter, founding and managing partner of Schlichter Bogard & Denton, who gained prominence by bringing the initial tranche of 401(k) excessive-fee cases in 2006. The plaintiffs' attorneys in the Duke requested a third of a settlement — $3.55 million — in addition to $825,000 for reimbursement of incurred costs. Mr. Schlichter has obtained more than $300 million in settlements for plaintiffs in 401(k) cases.
Plaintiffs have seen varying degrees of success in 403(b) lawsuits to date. The University of Chicago also settled its lawsuit for $6.5 million. But the University of Pennsylvania, Northwestern University, Washington University in St. Louis and, most recently, Georgetown University have all obtained dismissals pre-trial. New York University won after a trial hearing.