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Judge rules NYU excessive-fee case can go to trial

A U.S. District Court judge in New York has denied a petition by New York University for summary judgment against complaints that two university 403(b) plans violated provisions of the Employee Retirement Income Security Act.

The Thursday ruling by Judge Katherine B. Forrest means the case of Sacerdote et al. vs. New York University can go to trial. The trial is scheduled for April 16. However, on Friday, the judge dismissed a similar suit against NYU, calling it "a blatant attempt to re-plead an existing action." This lawsuit was filed in November 2017, adding multiple defendants to the complaints about the 403(b) plans. Both NYU cases were filed by the law firm of Schlichter Bogard & Denton. Since 2016, the firm has sued many large private university defined contribution plans — including those of Duke University, Johns Hopkins University and Yale University — but the initial NYU case is the first scheduled for trial. "We're pleased that this case on behalf of NYU employees and retirees will now go to trial," said Jerome Schlichter, the plaintiff's lead counsel, in an email about the first NYU case. "We look forward to presenting the facts regarding how the plan was handled and the impact it had on the participants." Mr. Schlichter is managing partner of Schlichter Bogard & Denton.

"Much of this case has been dismissed previously," NYU spokesman John Beckman wrote in an email. "We would have preferred it be dismissed in its entirety because it is a baseless suit. We expect to prevail in court." In the initial NYU case, participants in the two 403(b) plans sued in August 2016, but Ms. Forrest dismissed five of the seven allegations made by the plaintiffs in August 2017.

One remaining allegation was that plan managers breached their ERISA duties of prudence regarding allegedly high record-keeping fees, the failure to issue competitive bids for record keepers and the failure to monitor the amount of revenue sharing paid to record keepers.

The other allegation asserts the plans "failed to prudently select and evaluate plan investment options," according to court documents. Plaintiffs argued the plans offered retail-class options with high fees and poor performance "instead of other readily available options" and continued to offer two investment options with "high fees and poor performance."