Northwestern University wins appeal in 403(b) case

A federal appeals court has ruled in favor of plan fiduciaries at Northwestern University in a case that charged university representatives with failing to negotiate a better deal for the school’s 403(b) plan participants. The original suit, filed in 2016, was dismissed with prejudice in 2018, which meant that the plan participant plaintiffs could not file another complaint in a lower court. The suit argued that the Evanston, Ill., school had eliminated “hundreds of mutual funds” from the plan and had not consolidated record keepers until 2012. In an opinion written by Judge Michael B. Brennan, the appellate court disagreed with the plaintiffs’ theory that Northwestern was required to seek a sole record keeper to satisfy its fiduciary duties, and found Northwestern’s decision to maintain two record keepers “prudent,” and “to the extent plaintiffs alleged Northwestern should have selected TIAA as its sole record keeper, that assertion also fails to state a claim for relief,” he wrote. “ERISA does not require a sole record keeper or mandate any specific record-keeping arrangement at all,” the court wrote. Of the roughly 20 universities that have been sued over fees and investment options in their retirement plans since 2016, there have been six announced settlements, according to a story on napa-net.org. Universities other than Northwestern that have prevailed in similar cases include Washington University in Saint Louis and New York University. [More: Jerry Schlichter's fee lawsuits have left an indelible mark on the 401(k) industry]