A large class-action lawsuit involving Brown University has recently been settled, as reported in the news media. The class action settled for a reported $3.5 million dollars. The lawsuit revolved around investment choices and fees related to two of the university’s retirement plans, the Brown University Deferred Vesting Retirement Plan and the Brown University Legacy Retirement Plan.
ERISA is a federal law that aims to strengthen pension plans and employer-sponsored benefit plans. Under the law, those who manage plans owe the plan participants certain fiduciary duties, such as the duty not to take advantage of participants. Any breach of these duties could warrant a lawsuit and the paying of compensation to victimized participants.
The original lawsuit was filed by four plan participants who alleged that the trustee chose investment options that did worse than benchmarks and for charging excessive management fees. They filed a lawsuit in July 2017 in the U.S. District Court in Providence.
The University did not admit guilt when agreeing to the settlement. Instead, a spokesperson reiterated that the university was confident that they were in compliance. However, they settled the case to avoid protracted and costly litigation.
Brown is only the latest university to settle an ERISA suit in the past few years. Duke University, Vanderbilt University, and the University of Chicago also settled ERISA class action lawsuits. The University of Chicago, for example, settled a similar suit for $6.5 million, and Duke settled for $10.65 million.
Retirement plan trustees have general fiduciary duties they must follow, otherwise, they could be sued. For example:
ERISA also includes a list of prohibitions on trustees of investment funds, including:
It is not always obvious whether a trustee has violated any of these duties, especially if you are a novice investor. However, there are some things to look out for, such as fees that seem unreasonably high and poor performance of the investment fund—both of which were at issue in the Brown University litigation.
If you suspect the trustee of your retirement plan has broken his or her fiduciary duties, you might be entitled to compensation. At the Law Offices of Michael Bartolic, our firm has handled many fiduciary duty claims, and we would be pleased to meet with you to discuss your case. Reach out to us today by calling our office or submitting an online form through our website.