A federal appeals court in Washington allowed an ERISA complaint by participants in two Georgetown University 403(b) plans to continue, saying a lower court should have considered plaintiffs' request to file an amended complaint.
In a 2-1 decision, the judges said Tuesday that "there is no need now for this court to address" the participants' challenges to the original dismissal or the university's argument "that the proposed amendments would be futile."
Instead, the ruling focused narrowly on whether the participants' should have been allowed to amend their original complaint.
The judges sent the case back to U.S District Court in Washington "to consider whether to grant leave" for the participants to file an amended complaint in the case of Wilcox and McGuire et al. vs. Georgetown University et al.
Participants in the two 403(b) plans sued in February 2018 seeking class-action status for their complaint that the plans had too many record keepers, offered too many investment options and retained too many poor-performing options.
U.S. District Judge Rosemary M. Collyer dismissed the complaint in January 2019. ERISA "does not provide a cause of action for 'underperforming funds,'" she wrote. "A fiduciary is not required to select the best performing fund."
As for the argument about too many record keepers, "plaintiffs' allegations challenge the fundamental structures of the Georgetown plans, not the fiduciary attentions or prudence of the trustees," she wrote.
The appeals court judges noted that Ms. Collyer had dismissed the case "without prejudice," but she also "denied as untimely their motion for leave to file an amended complaint."
Dismissing a complaint without prejudice "is generally not a final appealable order, but exceptions apply where the record clearly indicates that the district court has separated itself from the case," the judges wrote.
"We hold the district court erred when it denied appellants leave to file their amended complaint on the ground that it had previously entered a final judgment in their case," the judges wrote. "Because the district court had not entered final judgment when it dismissed (the participants') complaint, we remand the case to the district court for renewed consideration.
The Georgetown University Defined Contribution Retirement Plan had $1.91 billion in assets, and the Georgetown University Voluntary Contribution Retirement Plan had $650.6 million, both as of Dec. 31, 2019, according to the latest Form 5500 filings for the Washington-based plans.
