Duke Retirement Plan Class Action Lawsuit Settles for $10.65M

Duke University employees were able to secure a $10.65 million settlement award in a class action lawsuit alleging the school’s retirement plan violated the Employee Retirement Income Security Act.

A group of Duke retirement plan beneficiaries alleged in two class action lawsuits that the university’s management of their funds resulted in excessive fees and underperforming investments.

Plaintiffs claimed that Duke University and the Duke Investment Advisory Committee violated federal law protecting certain retirement plans, the Employee Retirement Security Act, or ERISA.

ERISA mandates that retirement and pensions meet certain standards with regard to recordkeeping, administration, and fees. The law also holds those who manage investments for covered retirement plans to a fiduciary duty, or a duty to act in the best interests of plan participants.

“Billion dollar defined contribution plans, like the Plan, have tremendous bargaining power to demand low-cost administrative and investment management services,” alleged the Duke retirement plan class action lawsuit.

“Defendants failed to use the Plan’s bargaining power, causing the Plan to pay unreasonable and greatly excessive fees for recordkeeping, administrative, and investment services. Defendants also selected and retained investment options for the Plan that consistently and historically underperformed their benchmarks and charged excessive investment management fees.”

Plan participants are now asking a federal judge in North Carolina to approve a proposed $10.65 million settlement that would end the Duke retirement plan class action lawsuit.

Under the terms of the settlement, Duke will be prohibited from using retirement plan funds to pay Duke employees for a time. Further, the institution will be required to use an independent fiduciary to make investment recommendations.

Duke has agreed to revise its retirement plan investment options and notify 403(b) plan participants about the new options. The options are set to be available by 2020.

The university will also be required to follow certain standards in determining investments to be included in the Duke retirement plan.

“This settlement will enable Duke employees and retirees to receive compensation and to benefit from changes in the plan that will enhance their ability to build their retirement assets for years to come,” an attorney for the plaintiffs told Law360.

“Duke continues to deny all the allegations of wrongdoing and claims of liability in this case,” said a Duke representative in a statement to Law360. “We believe that the Duke Employee Retirement Plan has been well and prudently managed, and is in total compliance with ERISA and other applicable regulations.”

Though Duke has agreed to pay more than $10.65 million to end the class action lawsuit, it maintains that it did so only to “avoid the expense and inconvenience” of the litigation, reports Law360.

“Duke has acted in the best interests of its employees and retirees in designing the investment lineup, monitoring the fees, and selecting and monitoring investment options,” continued the Duke representative.

Top Class Actions will post updates to this class action settlement as they become available. For the latest updates, keep checking TopClassActions.com or sign up for our free newsletter. You can also receive notifications when this article is updated by using your free Top Class Actions account and clicking the “Follow Article” button at the top of the post.

The Class Members are represented by Jerome J. Schlichter, Michael A. Wolff and Kurt C. Struckhoff of Schlichter Bogard & Denton LLP and David B. Puryear Jr. of Puryear and Lingle PLLC.

The Duke University Employee Retirement Class Action Lawsuits are David Clark, et al. v. Duke University, et al., Case No. 1:16­-cv­-01044, and Lucas, et al. v. Duke University, Case No. 1:18­-cv-­00722, in the U.S. District Court for the Middle District of North Carolina.