A wave of class action lawsuits is sweeping America, and the targets are elite universities.
The attorney behind these lawsuits, Jerome Schlichter of the St. Louis firm Schlichter Bogard & Denton, has filed 11 new lawsuits, each raising similar allegations that the targeted universities:
- Should not have used multiple recordkeepers, which the suits allege resulted in increased fees;
- Offered investment options with high investment management fees despite the availability of other investments that were identical but charged lower fees; and
- Failed to remove specific investment options that were poor performers.
This is not Schlichter’s first foray into ERISA class action litigation. Starting in 2006, he launched a similar campaign against companies with large 401(k) plans.
In selecting defendants, Schlichter appears to be mostly indiscriminate. It may, therefore, not be possible to avoid being targeted, but certain best practices by plans and their fiduciaries may reduce the risks posed by litigation.
- Be attentive. Learn from what your peers are doing, ideally before any lawsuits are filed.
- Be meticulous. Review the allegations made in other cases, assess whether your plan is functioning efficiently and document your reasoning.
- Be prepared. Most cases begin with a request for information by a plan participant. If Schlichter is sniffing around your plan, don’t be caught off guard.
If you would like to discuss how to minimize the risk that your plans and fiduciaries will be targeted with an ERISA class action, we are happy to discuss those proactive steps with you.