A federal court judge in New York has dismissed an ERISA complaint against TIAA-CREF by three participants in separate retirement plans, saying that it was not a fiduciary in the plans' management and rejecting plaintiffs' argument that participant data is a plan asset.
"Multiple courts have found that participant information and the like does not fall under the definition of 'plan assets,'" under ERISA, U.S. District Judge Katherine Polk Failla wrote in her opinion Tuesday.
The plaintiffs argued that TIAA, in its role as a record keeper, used participant data as an "exercise of fiduciary control and authority over the plans' operations," the judge wrote. "Plaintiffs cite no cases in support of this theory, nor do they fully explain how this distinction would make a difference."
The judge rejected the plaintiffs' contention that the "use of participant information can be leveraged to induce plan participants to engage in transactions and to exercise control over participants," in the case of Carfora et al. vs. Teachers Insurance Annuity Association of America et al.
The three plaintiffs sued TIAA in October 2021, accusing it of "fraudulent sales tactics to induce individuals to transfer assets from their low-fee employer-sponsored retirement plans to TIAA's high-fee Portfolio Advisor program and other lucrative non-plan products," according to the original complaint.
The three plaintiffs are seeking class-action status. One plaintiff is a participant in both a 401(a) plan run by Dartmouth College, Hanover, N.H., and a 403(b) plan at Loyola Marymount University, Los Angeles. Another is a participant in a 401(a) and a 403(b) plan run by the Pacific Institute for Research and Evaluation, Beltsville, Md. The third plaintiff is a participant in two retirement plans run by Georgetown University, Washington. None of the sponsors are cited as defendants.
TIAA used its role as a record keeper "to harvest highly confidential and personal financial data," the complaint said. "Armed with this sensitive information, TIAA used it to identify individuals with large account balances nearing retirement as targets for TIAA's sales representatives."