A federal judge in New York has rejected a request by a participant in a Washington University in St. Louis 403(b) plan to have her lawsuit against the Teachers Insurance and Annuity Association broadened to a class-action suit to cover some 8,000 other plans.
Washington University in St. Louis isn't a defendant in Melissa Haley vs. Teachers Insurance and Annuity Association. She criticized the TIAA practice of offering collateralized and non-collateralized loans to retirement plan participants, alleging this was an ERISA violation.
The ruling Tuesday by U.S. District Judge J. Paul Oetken reversed his November 2020 decision that allowed the broad class-action complaint, which would have covered nearly 1 million loan transactions, according to court records.
TIAA appealed to the 2nd U.S. Circuit Court of Appeals in New York, which in December 2022 overturned the judge's original class-certification ruling and sent the case back to his court.
"Plaintiff again sought a class definition identical to that which the Second Circuit vacated, and plaintiff relies on a virtually indistinguishable set of arguments as before, even though the Second Circuit has rejected them," Mr. Oetken wrote Tuesday.
The judge rejected the plaintiff's request to file class-action applications affecting certain subgroups among the 8,000 plans, noting that she had five years to do so.
The class-action ruling doesn't affect the substance of Ms. Haley's lawsuit, which she filed in 2017. She argued that TIAA was a fiduciary, alleging that it engaged in a prohibited transaction under ERISA by allowing plan participants to take collateralized or non-collateralized loans. She also sued TIAA for liability as a non-fiduciary for alleged ERISA violations by the university.
Mr. Oetken in March 2018 ruled against Ms. Haley's ERISA claim but allowed her to proceed with her non-fiduciary claim. The case remains pending.