The U.S. Supreme Court on Monday declined to review a petition by the University of Pennsylvania seeking to reverse a pro-plaintiff ruling by a federal appeals court in an ERISA complaint against university fiduciaries of a 403(b) plan.
As a result, the ruling by the Philadelphia appeals court remains in force. An appeals court panel ruled 2-1 in May that a U.S. District Court judge erred in applying a standard of review for two counts of a seven-count complaint filed against the university by current and former plan participants. The panel sent the case back to the District Court.
The plaintiffs sued the university and its investment committee in 2016, alleging a series of fiduciary breaches.
U.S. District Court Judge Gene Pratter, in Philadelphia, dismissed all seven allegations in September 2017, saying the participants failed to state a proper claim for the breaches. The judge said their complaint didn't show the plan had engaged in prohibited transactions under ERISA.
The appeals court panel supported the district court judge's dismissal of five of the allegations in the case of Sweda et al. vs. University of Pennsylvania et al.
However, for the other two allegations, the appeals court panel said plaintiffs had "plausibly stated a claim" when they accused plan managers of paying excessive administrative fees, failing to "comprehensively review" plan management, failing to use the plan's size to negotiate lower fees and keeping high-cost investment options when less expense, better-performing investments were available in market place.
The university asked for a rehearing by the full court of appeals, but the request was denied in July. The university asked the Supreme Court in December to review the case, arguing that the appeals court ruling clashed with several rulings by other appeals courts.
The university said the Supreme Court should review the case to settle a "circuit split" among appeals courts to make sure ERISA's "uniform standards of primary" conduct are maintained among the appeals courts. The appeals court decision "sows enormous confusion for plan fiduciaries," the university petition said.
The University of Pennsylvania Matching Plan had assets of $4.42 billion as of Dec. 31, 2018, according to the latest Form 5500 filing.