Schlichter Bogard Reaches Preliminary $13 Million Settlement on Behalf of Columbia University Employees

On Friday, May 21, Schlichter Bogard & Denton filed a preliminary settlement approval motion on behalf of Columbia University employees and retirees in their suit against the University involving their 403(b) retirement plans. The settlement’s terms include the creation of a $13 million settlement fund for the plaintiffs, as well as substantial non-monetary relief including changes in the 403(b) plans.

Had this settlement not been reached, the underlying lawsuit—filed in August 2016 and styled Cates et al. v. Trustees of Columbia University et al.—was scheduled to proceed as one of the first civil trials in the United States District Court for the Southern District of New York in the aftermath of the Covid-19  pandemic. The complaint alleged that Columbia University breached its fiduciary duties under the Employee Retirement Income Security Act (“ERISA”) by causing plan participants to pay excessive fees for administrative and investment services. The University has denied that it committed any fiduciary breach in its operation of the plan.

As part of the proposed settlement, the University has agreed to request competitive bids for administrative services in the next four years, to maintain the lowest share class of plan investments in annuities and mutual funds, to continue to use an independent consultant to make recommendations, to prohibit the recordkeeper from using confidential information obtained from plan participants to sell other investment and wealth management services, and to ensure that all participants are informed of their ability to move assets out of frozen investment options. Schlichter Bogard & Denton will monitor compliance with these terms for a three-year period.

“We are pleased that this settlement, which came on the eve of trial, affords plan participants both monetary and non-monetary relief, including financial compensation and significant non-monetary improvements to the plan going forward. These key changes will enable Columbia employees and retirees to build their retirement assets for many years to come,” said Jerry Schlichter, founding and managing partner of Schlichter Bogard & Denton.

Recognized as pioneers in ERISA litigation, Schlichter Bogard & Denton filed the first cases alleging excessive fees in 401(k) and 403(b) plans. In 2012, the firm won the first full trial of a 401(k) excessive fee case. The firm also handled Tibble v. Edison, the first and only 401(k) excessive fee case argued before the United States Supreme Court in 2015. In Tibble, the firm won a landmark unanimous 9-0 decision.

We are proud to be pioneers in 401(k) and 403(b) litigation. Visit our website to learn more about other high-impact cases handled by Schlichter Bogard & Denton. For additional information about Schlichter Bogard & Denton’s retirement practice, please contact us at 800-873-5297 or via email at contact@uselaws.com.