Supreme Court of the United States of America rule unanimously agreed on Monday to reinstate a lawsuit brought against Northwestern University by university employees over the university’s alleged violations of its fiduciary duties in administering retirement plans. of employee. All eight judges participated (Justice Amy Coney Barrett unrelated to the incident) sided with the affected employees, who argued that the plan administrators violated their “duty of caution”.
The case is Hughes sues Northwestern University.
Northwestern retirement plans must comply with the Employee Retirement Income Security Act of 1974, known as “ERISA.” According to ERISA, subsidiaries that manage the scheme must fulfill their duties “with care, skill, prudence and diligence in situations, then a prudent man acts with energy Similar force and familiarity with the issues that would be used in the operation of a business by a likeable character and for the purpose of liking. A group of current and former employees sued the school, alleging that its plan-managing subsidiaries were not prudent enough in offering “inexpensive investment options” and paying “record storage fees are too high”.
Specifically, the plaintiffs argued that the fees for investing in mutual funds and index funds were too high, and the bookkeeping rates calculated were exorbitant and inconsistent with acceptable practices. The investments deemed problematic are just some of the options available to investors, who are free to choose from over 200 investment options.
The district court dismissed the case, and on appeal, the United States Court of Appeals for the Seventh Circuit affirmed. The appeals court’s decision focused on the trustee’s choice to present a range of options to investors. The court held that a lot of options were presented to investors, “removing[ed] any claim that plan participants are forced to eat an unappetizing menu. “
The judges, however, disagreed. Justice Sonia Sotomayor wrote the six-page decision to the Eight-Member Court, arguing that Seventh Street focused on the wrongful aspect of the fiduciary duty in question. She explains that subsidiaries have to do more than offer a multitude of options. Instead, “plan subsidiaries are required to conduct their own independent assessments to determine which investments could be included in the plan’s list of options with caution. ” Furthermore, “if the subsidiaries do not remove the reckless investment from the plan within a reasonable time, they have breached their obligations”.
Because the lower court did not fully assess any breach of the duty of caution, the judges dropped the case so that the lower court “could re-evaluate the charges in their entirety.”
[Erin Schaff/POOL/AFP via Getty Images]
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https://lawandcrime.com/supreme-court/scotus-rules-unanimously-to-resurrect-lawsuit-against-northwestern-university-for-alleged-mismanagement-of-employee-retirement-accounts/ Unanimous Supreme Court Rules in the Northwestern University Case