August 11, 2016 (Updated August 15, 2016)
On August 10 and 11, 2016, the law firm of Schlichter, Bogard & Denton, LLP, is reported to have filed class action lawsuits on behalf of plan participants against the plan fiduciaries of eight large university 403(b) or 401(k) plans. The universities identified so far are in the Northeast and Mid-Atlantic regions of the country.
The Schlichter firm is primarily responsible for the wave of class action lawsuits against the fiduciaries of large corporate 401(k) plans that has been intensifying in recent years. These suits generally raise various breach-of-fiduciary-duty claims that focus primarily on the fees charged against participant accounts. The new 403(b) cases appear to raise similar claims, and some include a new claim that the plan imprudently provides participants with too many investment choices, thereby leading to “decision paralysis.”
It is important to remember that the complaints filed to initiate these lawsuits contain only unproven allegations and represent only the first step in what is generally a very lengthy process. At the same time, however, it is also worth noting that the Schlichter firm has a lot of experience with this type of lawsuit when it comes to 401(k) plans, and in some cases has achieved significant settlements for its clients. Whether it can translate that experience to the 403(b) plan universe is still to be determined. Sibson will keep you informed as the litigation develops.