The U.S. Supreme Court asked the acting U.S. solicitor general for an opinion in an ERISA fee fight case before the justices decide if they will hear the complaint involving two 403(b) plans run by Northwestern University, Evanston, Ill.
Participants in the two plans petitioned the Supreme Court on June 19 after having lost at both the federal District Court and federal appeals court levels in their allegations that the university and its fiduciaries violated ERISA guidelines in managing the plans.
They argue that the ruling by the appeals court — upholding the District Court's dismissal of the initial complaint — conflicts with decisions by other federal appeals courts regarding similar ERISA complaints.
The plaintiffs want the Supreme Court to rule on the so-called circuit split to establish uniform guidelines for lower courts' reviews of ERISA cases.
The Supreme Court issued its request on Monday to Acting Solicitor General Jeffrey B. Wall. The court, which didn't set a timeline for a response, periodically asks the solicitor general's office for its opinion.
The participants filed their complaint in August 2016 — and amended it in December 2016 — alleging that the university's plans charged excessively high fees, employed too many record keepers and offered too many investment options.
The case is Hughes et al. vs. Northwestern University et al.
A federal district court judge dismissed the complaint in May 2018. A federal appeals court in Chicago in March upheld the dismissal. In a 3-0 vote, the appeals court panel wrote that it found "no error" in the district court judge's opinion.
They contended two federal appeals courts "have held that a plan participant can adequately plead a breach of fiduciary duty by claiming that the retirement plan charged excessive fees when lower-cost alternatives existed," according to their petition.
However, they said the appeals court in the Northwestern case "held that virtually identical pleadings are insufficient to state a claim."
Attorneys for the university responded in an Aug. 24 petition to the Supreme Court.
"There is no disagreement among the lower courts regarding the proper legal standard for evaluating a motion to dismiss or the scope or content of ERISA's duty of prudence," the university's attorneys wrote.
The participants "mischaracterize" the ruling by the Chicago appeals court "in an attempt to conjure a 'circuit split,' but none exists," they wrote.
The Northwestern University Retirement Plan had assets of $2.83 billion, as of Dec. 31, 2018, and the Northwestern University Voluntary Savings Plan had assets of $703.53 million, as of Dec. 31, 2018, both according to the latest Form 5500 filings.