Northwestern University continues its battle to clear itself of a fiduciary breach charge and accusations of excessive fees for its retirement plan, this time in front of the U.S. Supreme Court. And they’d better bring their A-game as the plaintiffs are represented by litigating powerhouse Schlichter Bogard & Denton, which has been behind scores of retirement plan lawsuits.
The case is only the second excessive fee case under the Employee Retirement Income Security Act of 1974 (“ERISA”) to be heard by the high court. The first was Tibble vs. Edison with the plaintiffs represented by, you guessed it, tort behemoth Jerome Schlichter, who won the case in a unanimous (and rare) 9-0 decision.
According to the law firm, the case against the university was originally filed in 2016 and revolves around plan participants’ challenge to Northwestern’s retirement plan investments and fees. On July 2, 2021, the Court accepted the plan participants’ writ of certiorari and will now review the Seventh Circuit’s decision affirming the trial court’s dismissal of the case.
Schlichter and Co. are seeking to have the Court resolve a series of “split” decisions made in similar cases decided in the Third, Seventh, and Eighth Circuit Courts. According to the writ, all three cases involved “essentially the same allegations against fiduciaries of large university retirement plans: paying excessive recordkeeping fees by retaining multiple recordkeepers and failing to solicit competitive bids or negotiate lower fees, and offering mutual funds with excessive investment management fees (including high-cost retail-class shares of mutual funds when lower-cost institutional-class shares of the same mutual funds were available)”.
However, the Seventh Circuit affirmed the dismissal of claims based on the same substantive allegations that the Third and Eighth Circuits determined to be sufficient to survive a motion to dismiss.
Schlichter was recently quoted in The Wall Street Journal making his case against the elite Chicago university, saying that “they have consistently contended that Northwestern breached its fiduciary duties to its employees and retirees, costing them substantial retirement assets.”
After the Tibble case, Schlichter seemed to turn his sights to public education, filing similar suits against Emory University, Duke University, and Massachusetts Institute of Technology. The Emory case was settled last year when Schlichter garnered nearly $17 million in settlement concessions for the plaintiffs.
Lynn Brackpool Giles is a contributing editor to 401(k) Specialist. Giles is a former Managing Director of Communications and Consumer Services for the Financial Planning Association (FPA), where she oversaw all corporate, legislative, and consumer communications. In her current journalistic practice, she is a frequent contributor to numerous financial services industry publications.
