HomeNewsBrown University Settles ERISA Fiduciary Duty Class Action

Brown University Settles ERISA Fiduciary Duty Class Action

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.

Fiduciary Duties at Issue

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.

Do You Have a Fiduciary Duty Claim?

Retirement plan trustees have general fiduciary duties they must follow, otherwise, they could be sued. For example:

  • Trustees must administer the plan by following the documents and instruments that govern the plan.
  • Trustees must administer the plan for the exclusive benefit of participants and their beneficiaries. This means the trustee cannot manage the plan for their own benefit or for someone else’s, such as a different client.
  • The trustee must act prudently, i.e., as a careful fiduciary would.
  • The trustee must diversify plan investments to reduce the chances of a large loss unless it is prudent not to diversity.

ERISA also includes a list of prohibitions on trustees of investment funds, including:

  • The trustee or fiduciary cannot engage in self-dealing, i.e., selling assets to itself.
  • Trustees cannot have conflicts of interest, e.g., acting on behalf of someone whose interests are adverse to the plan’s.
  • The trustee cannot receive any kickbacks.

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.

Brown University has settled a large ERISA class action for a trustee’s breach of fiduciary duties. To check if you can bring a case, contact a Chicago ERISA lawyer.

If you suspect the trustee of your retirement plan has broken his or her fiduciary duties, you might be entitled to compensation. At Bartolic Law, 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.

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