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AAU, Associations File Amicus Brief in Supreme Court Case on Fiduciary Duties Associated with Employee Retirement Plans

AAU joined 17 other higher education associations in submitting an amicus brief to the Supreme Court in the case of Hughes, et al. v. Northwestern University, et al. The question in the case is whether petitioners can plausibly claim that Northwestern University breached its fiduciary duty in administering retirement plans under the Employee Retirement Income Security Act of 1974. Since 2016, nearly two dozen universities and their employees have been sued for allegedly charging excessive fees for the administration of retirement plans and offering imprudent investment options. As the brief states, universities have a strong interest in ensuring that the court provides “workable guidance” to determine the plausibility of breach of fiduciary duty claims.

The brief highlights the significant concern that these cases have caused for plan fiduciaries, who are typically volunteer faculty and staff: “Fiduciary-breach lawsuits have real and substantial effect on them; it is a significant burden to be named as a defendant in a multi-million dollar lawsuit and accused of breaching duties owed to colleagues on campus.” Further, the brief notes, universities, and the personnel who administer the retirement plans expend considerable time and resources to fulfill their duties and must have the flexibility to administer the plans without constant second-guessing.

Arguing that the complaint overlooks important features of the university retirement system and the discretion that ERISA affords plan fiduciaries, the brief asks the court to affirm the Seventh Circuit’s decision and dismiss the case. Oral argument for this case is set for December 6, 2021.

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