The U.S. Supreme Court recently agreed to hear an appeal from a 7th Circuit decision that upheld a lower court dismissal of a lawsuit targeting Northwestern University’s 403(b) retirement plan. Oral arguments are set for December 6.
The case follows other high-stakes lawsuits seen around the country in recent years against colleges and universities, with some dismissed and others that reportedly settled. The various cases center on claims of a breach of fiduciary duty in administering a retirement plan under the Employee Retirement Income Security Act of 1974.
Coordinated by the American Council on Education (ACE), NACUBO joined ACE and 16 other organizations in an amicus brief that calls on the Court to take a position that will ultimately screen out meritless litigation.
The brief states:
Amici recognize that ERISA imposes fiduciary duties on plan sponsors and administrators, and that fiduciaries therefore must ensure that plans incur reasonable expenses and offer a reasonable lineup of investment options. Universities—and the individual personnel who administer the plans— expend considerable time and resources to fulfill those duties. They must have the flexibility to administer the plans based upon the particular needs and references of the plan participants, without constant second-guessing.
The brief highlights the unique characteristics of 403(b) university plans, and urges the Supreme Court to establish clear baseline pleading standards to ensure that only plausible claims can proceed to discovery.
Appellate courts are split over the basis for claims in these cases. How the Supreme Court rules in this case will likely determine whether, and the extent to which, these types of cases continue to emerge.