Duke Strikes a Deal in Excessive Fee Suit

The parties in a university 403(b) excessive fee suit have struck a deal.

The news – though specifics of the deal were not disclosed – was revealed in a docket entry in North Carolina federal court. That entry indicated that the parties had settled and that a stipulation of dismissal was due by Jan. 2, 2019.

Just two weeks ago, Duke filed a motion for summary judgment in the case, which was set to go to trial in July.

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.

The case is Clark v. Duke Univ., M.D.N.C., No. 1:16-cv-010044-CCE-LPA, minute entry 11/29/18, and Lucas v. Duke Univ., M.D.N.C., No. 1:18-cv-00722-CCE-LPA, minute entry 11/29/18.

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