A U.S. District Court judge in New York has dismissed a complaint by participants in two defined contribution plans who alleged breach of fiduciary duty by TIAA-CREF.
Judge P. Kevin Castel said TIAA was not a fiduciary based on the allegations made by a participant in the University of Chicago Retirement Income Plan for Employees and a participant in the Nova Southeastern University 403(b) Plan.
The University of Chicago plan had assets of $981.1 million as of the same date, according to its latest Form 5500. The Nova Southeastern plan had $451.2 million in assets at year-end 2015, according to its latest Form 5500.
“Plaintiffs have not pled facts sufficient to establish that (the) defendant was a fiduciary of the plans with respect to its role as a service provider, a condition precedent of all of plaintiffs' claims for legal relief,” said the judge's opinion Tuesday in the case of Malone and McKeough vs. Teachers Insurance and Annuity Association of America.
The plaintiffs argued TIAA's use of revenue-sharing fees was “contrary to the common practice” and that TIAA's “discretionary control” over revenue-sharing fees represented a fiduciary act under ERISA.
Mr. Castel rejected this complaint. “This argument is not meritorious,” he wrote. “The original agreement between TIAA and each plan regarding TIAA's compensation … was not a discretionary act giving rise to fiduciary obligations on behalf of TIAA.”