U.S. District Judge Katherine B. Forrest certified a 20,000-plus member class including investors from two New York University retirement plans, finding that workers can sue together due to the fact that their Employee Retirement Income Security Act suit does present common questions. The questions presented by the NYU ERISA plan suit can be broken down to just two:
1. Did the school pay too much to maintain their investments?
2. Did the school offer poor investment options?
When seeking qualification for certification, U.S. District Judge Katherine B. Forrest depended on the U.S. Supreme Court certification bar established in the 2011 decision in Walmart v. Dukes because the questions being asked and claims being filed were similar. Plaintiffs in the case claim that the university breached their fiduciary duty through plan mismanagement. If this is, in fact, the case, the breach would be to all plaintiffs.
This ERISA suit is just one of any federal suits filed by workers at universities/colleges. Allegations of mismanagement of employee retirement plans are more and more common. Other universities facing similar allegations include: Massachusetts Institute of Technology, Yale University, etc.
Allegations of violations include:
Failing to remove underperforming funds.
Paying unreasonably high prices to third parties to service the plan.
Allowing third parties to require the plan to offer their in-house funds.
In order to gain class certification, a group is required to show that it has many individuals united by a common theory that are victims of a crime (allegedly) and are represented by named plaintiffs who qualify. Judge Forrest stated that the workers in this case fulfill all requirements for certification. The class will number at least 19,000 at all times during the period represented and maxes out at 24,000 in 2014. This easily meets the qualification for “many.” All seek to resolve claims hinging on how the court answers a series of common questions and all have a shared experience as investors in the same plans (commonality).
NYU attempted to argue that the plaintiffs were poor representatives for the class, but Judge Forrest rejected the argument.
If you have questions about ERISA or if you feel your retirement funds are being mismanaged, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.