Duke University is the second prominent college to face a certified class action over how it runs its retirement plan.
A federal judge in North Carolina granted class status to about 40,000 current and former Duke employees who say the school’s retirement plan carried high fees and offered bad investment options. In February, employees at New York University received class status in their lawsuit raising similar claims.
Duke and NYU are among 17 prominent colleges to be sued in recent years over their retirement plans. These lawsuits are the first to be certified as class actions and may ultimately provide a blueprint for how the other cases are resolved. Most other cases have survived early legal challenges, with judges allowing litigation to proceed against Cornell, Emory, MIT, Columbia, Yale, and others.
The case against NYU is scheduled to go to trial April 16.
The Duke employees met all requirements for class certification under the Federal Rules of Civil Procedure, Judge Catherine C. Eagles of the U.S. District Court for the Middle District of North Carolina said in an April 13 decision. The case involved many questions common to all class members, including whether the defendants acted as plan fiduciaries, whether they breached their duties, and whether any breaches caused losses to the plan, Eagles said.
Duke said class status wasn’t warranted in part because some of the employees may have read plan communications that put them on notice of the alleged problems outside of the relevant statute of limitations. Eagles said even if Duke was correct, the school “would be successful only in limiting damages, not precluding them entirely.”
Duke also argued that some class members may have profited by investing in the challenged funds, but Eagles said that was no barrier to class certification.
Finally, Eagles found the workers had constitutional standing to bring suit because at least some of them had invested in each of the plan investment options challenged by the lawsuit.
Schlichter Bogard & Denton and Puryear & Lingle represent the Duke employees. Morgan Lewis & Bockius and Parker Poe Adams & Bernstein represent Duke.
The case is Clark v. Duke Univ., M.D.N.C., No. 1:16-cv-01044, order granting class status 4/13/18.