A federal judge on Tuesday ruled in favor of New York University in a lawsuit alleging the university charged excessive fees in its retirement plan.
According to NYU employees represented by the law firm Schlichter Bogard & Denton, NYU's retirement plan committee failed to fulfill its fiduciary obligations under ERISA, resulting in losses totaling $358 million.
(More: Attorney Jerry Schlichter opens up about 403(b), 401(k) suits)
However, Judge Katherine B. Forrest of the U.S. District Court of the Southern District wrote in her decision that there was no proof the university acted imprudently or cost the plans as a result.
NYU spokesman John Beckman said the judge's decision validated NYU's position from the outset of the litgation. "NYU maintained from the time the plaintiffs first publicized this case that it was baseless, and the judge's finding supports that," he said in a statement. "The simple fact is that NYU is, and always has been, a careful, conscientious steward of the retirement plans for its employees and retirees, and the plaintiffs failed to meet their burden of proof to suggest otherwise."
In a statement, Schlichter Bogard & Denton managing partner Jerry Schlichter raised the possibility of an appeal.
"We respectfully continue to believe that retirement plan participants at universities that operate as non-profits have the same rights and protections under the law to build their retirement savings as workers at for-profit companies," he wrote. "We also continue to believe, from the unanimous ruling by the U.S. Supreme Court in Tibble v. Edison, that placing high priced retail funds in the NYU multibillion dollar plans is a fiduciary breach and the fees charged were excessive. We will continue to pursue this case in order to make the NYU employees and retirees financially whole."
The plaintiffs argued NYU imprudently managed the selection and monitoring of recordkeepers, and failed to remove the TIAA Real Estate Account and CREF Stock Account as investment options.
Ms. Forrest did note some deficiencies in the NYU retireent plan committee's process, including "a concerning lack of knowledge relevant to the committee's mandate" from several members.
Ms. Forrest
dismissed other allegations, such as one claiming the university offered higher-cost retail share classes of investment funds instead of lower-cost institutional ones.
The lawsuit is one of
11 cases brought by Schlichter Bogard & Denton against prominent universities, alleging that their 403(b) plans charged excessive fees. NYU's was
the first to go to trial.
Most cases have
settled prior to trial. Others were
dismissed.
Mr. Schlichter
pioneered litigation against 401(k) plan sponsors for high fees in 2006. The cases brought against NYU and other universities were the first such cases to target 403(b) plans, the defined-contribution plans for public educational institutions, nonprofit employers and churches.
