Approximately 20 of these suits have been filed since 2016—this would be the seventh settlement.
This time the defendants is Princeton University, and the original suit was filed nearly three years ago by plaintiff Elysee Nicolas individually and as representative of a class of participants and beneficiaries of the Princeton University Retirement Plan and the Princeton University Retirement Savings Plan, charges that the plan fiduciaries “…selected and retained as the Plans’ investment options investment funds and insurance company annuities that caused the Plans to incur far higher administrative fees and expenses relative to the size and complexity of the Plans.”
The suit also alleges that the defendant “failed to engage in a prudent process for the evaluation and monitoring of amounts being charged for administrative expense, allowing the Plans to be charged an asset-based fee for recordkeeping calculated in a manner that was completely inconsistent with a reasonable fee for the service and was grossly excessive for the service being provided.”
Consistent with similar suits, it also took issue with the selection of the Teachers Insurance and Annuity Association of America and College Retirement Equities Fund (TIAA-CREF), TIAA Traditional Annuity as the plan’s principal capital preservation fund, as well as the CREF Stock Account (which comprised more than 20% of the plans’ assets), and the TIAA Real Estate Account, asserts that as a “jumbo” plan, the plan should have been able to negotiate a better deal, including the negotiation for recordkeeping services on a per participant basis rather than on asset-based fees, and their decision to use multiple recordkeepers (here TIAA-CREF and Vanguard), claiming that “the inefficient and costly structure maintained by Defendant has caused Plan participants to pay and continue to pay duplicative, excessive, and unreasonable fees for Plan recordkeeping and administrative services.”
Now, however—following a successful motion for a stay in the proceedings in December 2017—the parties have apparently come to terms.
The parties have reached an “agreement in principle” on settlement terms, which will include “therapeutic relief,” they said in a status report filed with Magistrate Judge Douglas E. Arpert. A draft settlement agreement will be circulated next week, with no proposed timeline for seeking court approval or making the deal’s terms public, according to the status report.
“The parties have now reached an agreement in principle on all substantive terms with respect to the settlement, including therapeutic relief,” according to a letter directed to Judge Douglas E. Alpert, in the federal district court in New Jersey. The letter, dated April 14, indicates that they plan to provide the defendants in the case a draft of the settlement papers by next week, and that they will “continue to update the Court as to the status of the settlement.”
And us.
‘Call’ Signs
Of the roughly 20 universities that have been sued over the fees and investment options in their retirement plans since 2016, there have been six announced settlements (now seven, of course); the largest to date with MIT, for $18.1 million, and prior to that Vanderbilt University, which in April 2019 announced a $14,500,000 cash settlement, as well as a long list of process/procedural changes that were, as with the MIT settlement, also to be monitored over a three-year period, and the most recent was a little more than a month ago with Johns Hopkins, which settled for $14,000,000, also alongside a number of plan design/procedural changes. In March, Brown University settled for $3.5 million, as well as “other, structural relief.” In May 2018, the University of Chicago entered into a class action settlement for a $6.5 million cash payment and changes to the university’s $3 billion plan, while earlier that year Duke University announced a $10.65 million settlement.
On the other hand, St. Louis-based Washington University, New York University and Northwestern University have thus far prevailed in making their cases in court. The University of Pennsylvania, which in 2017 won at the district court level, in 2019 had that decision partially overturned by an appellate court, though the plan fiduciaries’ motion for an en banc review of that decision was rebuffed.
