On August 16, 2021, the United States Court of Appeals for the Second Circuit partially revived an ERISA class-action case against New York University. The class, made up of former and current NYU employees, alleges that NYU breached its fiduciary duties by mismanaging employees’ retirement funds. Eric Lechtzin, a Managing Partner of Edelson Lechtzin LLP, was a co-author of an amicus brief filed on behalf of a group of law school professors who supported plaintiffs’ appeal.
What Does the Lawsuit Allege?
Participants in NYU’s 403(b) retirement plans allege that the University breached its ERISA fiduciary duties by selecting imprudent investment options and failed to monitor and control recordkeeping fees for the plans by selecting two recordkeepers for the plans instead of one. Employees of both NYU and the NYU School of Medicine claim that the fiduciaries of their retirement plans are responsible for $358 million in damages.
The complaint asserts that the NYU Retirement Plan Committee, which manages the plans, selected and retained underperforming and unreasonably expensive investment options for the plans. The defendants allegedly chose more expensive retail-class shares of mutual funds as opposed to the lower-cost institutional-class options, which were otherwise identical investments in the same funds. These practices caused the plans’ participants to incur unduly high fees and costs.
Why Was the Original District Court Decision Overturned?
The 2018 verdict in favor of Defendants was reversed, in part, by a three-judge panel of the Second Circuit Court. On appeal, Plaintiffs successfully argued that the District Court wrongly rejected their claims that NYU breached their fiduciary duties by selecting more expensive retail share classes of funds instead of institutional share classes of the same funds.
The Court of Appeals also found that the trial court erred in denying Plaintiff’s motion to amend their Complaint to name additional defendants. In doing so, the Second Circuit rejected Defendants’ contention that the District Court’s denial of Plaintiffs’ motion seeking leave to amend was harmless. Rather, the District Court’s decision hampered two of the Plaintiffs’ post-trial motions. As a result, Plaintiffs will now be allowed to pursue class claims for share class violations on behalf of participants in the plans.
The case is Sacerdote et al. v. New York University, Case Number 18-2707, in the U.S. Court of Appeals for the Second Circuit.
What Should I Do If I Think My Retirement Plan Is Being Mishandled?
Edelson Lechtzin LLP is a national class action law firm with offices in Pennsylvania and California. In addition to cases involving employee retirement plans, our lawyers focus on class and collective litigation in cases alleging violations of the federal antitrust laws, securities and investment fraud, wage theft and unpaid overtime, consumer fraud and consumer protection, and dangerous and defective drugs and medical devices.