A federal appeals court in New York upheld a lower court's dismissal of allegations by current and former Cornell University retirement plan participants that the university and its fiduciaries committed a series of ERISA violations.
The Nov. 14 unanimous ruling by a three-judge panel is the latest event in a 7-year-old complaint in the case of Cunningham et al. vs. Cornell University et al.
The 2nd U.S. Circuit Court of Appeals agreed with a U.S. District Court judge's rejection of allegations that included conducting prohibited transactions, failing to monitor and control record-keeping costs and failing to remove underperforming investments. The federal court judge also rejected allegations of the plans' ERISA violations for offering higher cost retail shares of mutual funds instead of lower-cost institutional shares.
"Because we agree with the ultimate disposition of each of these claims, we affirm the district court's judgment," the appellate court judges wrote.
The plaintiffs in two Cornell 403(b) plans sued in August 2016 — amending the lawsuit in February 2017 — seeking class-action status.
U.S. District Judge Kevin P. Kastel in New York dismissed many of the allegations in September 2017. Two years later, the judge granted summary judgment to the defendants on several other allegations.
A motion for summary judgment is usually filed after the parties have completed discovery, giving a judge the opportunity to review details of a case. A motion to dismiss, usually requested soon after a complaint is filed, argues that the plaintiff has failed to state a claim.
After all of these rulings, the only remaining allegation was that the university and its fiduciaries failed to adopt a lower-cost shares of a target-date series. The defendants agreed to pay $225,000, and the judge approved the settlement in December 2020.
The plaintiffs appealed all of the rejected allegations in April 2021.
The Cornell University Retirement Plans for the Endowed Colleges at Ithaca had assets of $2.45 billion, and the Cornell University Tax Deferred Annuity Plan had assets of $1.95 billion both as of Dec. 31, 2022, according to the latest Form 5500s. Both plans are based in Ithaca, N.Y.