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Duke Settles for $10,650,000 and Change

“After protracted litigation, extensive discovery and almost six months of arm’s length negotiations with the assistance of a national mediator,” the details of a university 403(b) excessive fee suit settlement have come to light.

The settlement in the case of Clark v. Duke University was announced early last month just two weeks after Duke filed a motion for summary judgment in the case, which was set to go to trial in July. The parties explain that since the filing of the suit “the parties engaged in over two years of hard-fought litigation that included the production of over 762,000 pages of documents, the designation and deposition of 8 experts, and 20 fact depositions.”

Settlement Terms

As for the terms of the settlement:

Defendants have agreed to deposit $10,650,000 in an interest-bearing settlement account, from which the claims will be paid. In addition, the defendants agreed that:


  1. within 30 calendar days after the end of the first and second year of the Settlement Period, Duke will provide to Class Counsel a list of the Plan’s investment options and fees, and a copy of the Plan’s Investment Policy Statement (if any);

  2. no later than Jan. 1, 2020, Duke shall communicate, in writing, with current Plan participants and inform them of the investment options available in the new lineup, including the annuity option, and provide a link to a webpage containing the fees and performance information for the new investment options and the contact information for the individual or entity that can facilitate a fund transfer for participants who seek to transfer their investments in frozen annuity accounts to another fund in the Plan;

  3. during the third year of the Settlement Period, the Plan’s fiduciaries shall retain an independent consultant to provide a recommendation regarding whether the Plan fiduciaries should issue Requests for Proposals for recordkeeping and administrative services provided to the Plan;

  4. during the Settlement Period, in considering Plan investment options, the Plan’s fiduciaries shall consider, among other factors: (a) the cost of different share classes available for any particular mutual fund considered for inclusion in the Plan as well as other criteria applicable to different share classes; and (b) the availability of revenue sharing rebates on any share class available for any investment option considered for inclusion in the Plan; (c) other factors that the Plan fiduciaries deem appropriate under the circumstances; and

  5. during the Settlement Period, Duke shall not cause Plan assets or assets held in the Plan’s ERISA revenue credit or reimbursement account to be used to pay salaries and fringe benefits and other expenses incurred by Duke for services performed by Duke employees.


Most members of the class will automatically receive their distributions directly into their tax-deferred retirement account, while those who have left the plan will be given the option to receive payment in check or rollover to a tax-deferred account.

Other Fees

As for some of the fees that will be paid from the settlement fund:


  • Newport Trust Company was selected as the Independent Fiduciary at a cost of $30,000.

  • Analytics LLC was selected as the Settlement Administrator at an estimated cost of $142,120 to provide notices electronically for those Class Members for whom a current e-mail address is available.

  • Named plaintiffs will seek $25,000 each for the two in the Clark case, and $30,000 each for the three who were also plaintiffs in the Lucas case.


As for the plaintiffs’ attorneys, they’re asking for the standard one-third of the settlement, or in this case $3,550,000, “as well as reimbursement for costs incurred of no more than $825,000.”

Leaving what’s left to be spread among approximately 40,000 participants (looks to be about $150 each).

Case Courses

The suit was one of the first in the August 2016 flurry of filings by the law firm of Schlichter, Bogard & Denton. The plan fiduciaries here, as in most of these cases, had been charged with a series of fiduciary breaches, including providing “…a dizzying array of duplicative funds in the same investment style,” relying on the services of four recordkeepers, carrying actively managed funds on its plan menu when passives were available, having recordkeeping charges that were asset-based, rather than per participant, and not using its status as a “jumbo” plan to negotiate a better deal for plan participants, among other things.

While at least 20 universities have been sued over the fees and investment options in their retirement plans since 2016, only one other settlement has been announced: in May the plaintiffs and 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.

On the other hand, St. Louis-based Washington UniversityNew York University, the University of Pennsylvania and Northwestern University have prevailed in making their cases in court.

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