Parties in Emory University 403(b) Plan Lawsuit Agree to Settle

Only one of the spate of lawsuits challenging university 403(b) plans has gone to trial.

The court for the case of Henderson v. Emory University, et. al. has received a status report from the parties saying they “have reached an agreement in principle to resolve this matter.”

U.S. District Judge Charles A. Pannell Jr. of the U.S. District Court for the Northern District of Georgia has granted the parties’ request for additional time to prepare the settlement agreement and file a motion for preliminary approval, setting the due date as May 29.

In the lawsuit, the plaintiffs’ primary allegations are that the plans’ fiduciaries did not use their bargaining power to negotiate for lower expenses and exercise proper judgment in deciding what investment options to include in the plans. In addition, they allege Emory fiduciaries allowed the recordkeepers to tie the plans to certain investment options and collected “unlimited asset-based compensation from their own proprietary products.”

Pannell previously dismissed a claim that the plan includes too many funds in the investment lineup and that is imprudent. He allowed other claims to move forward.

A spate of similar lawsuits has been filed against universities, starting in 2016. According to an update on Cammack Retirement’s website, as of August, six lawsuits had been settled, but other settlements have been announced since then. Only one case—against New York University—has gone to trial. Despite a judge finding “deficiencies in the committee’s processes,” the university won the suit.