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NYU Workers Say Judge Conflicted Out of Retirement Plan Suit

Nov. 20, 2019, 5:29 PM

New York University workers told the Second Circuit that they’re entitled to a new trial in their case over the school’s retirement plans because the presiding judge’s ties to the school disqualified her from hearing the case.

The workers filed a lengthy appellate brief disputing many aspects of how their case was handled by former Judge Katherine B. Forrest of the U.S. District Court for the Southern District of New York.

The workers, in addition to challenging Forrest’s legal analysis in her 2018 ruling in favor of NYU, argued that a conflict of interest disqualified Forrest from hearing the case. They pointed out that 43 days after ruling for NYU, Forrest left the bench and rejoined the law firm Cravath Swaine & Moore LLP, where firm chairman Evan Chesler is a key member of NYU’s board of directors.

The workers’ initial request for a new trial was denied in July by Judge Analisa Torres, also of the Southern District of New York.

NYU is one of 20 prominent universities to be accused of retirement plan mismanagement since 2016. The litigation has led to mixed results in court and nearly $70 million in settlements. Forrest’s ruling came after an eight-day trial—the only such trial in this line of cases.

The workers’ Nov. 19 appellate brief also seeks revival of their challenge to the retail-class mutual funds in NYU’s retirement plans, which the workers say were needlessly expensive. And they urged the Second Circuit to undo what they called Forrest’s misapplication of the Employee Retirement Income Security Act’s prudence standard and her “clear factual errors.”

The Second Circuit previously considered NYU’s retirement plans last month, when it revived claims against Cammack Larhette Advisors LLC over the investment advice it gave NYU about the plans.

Schlichter Bogard & Denton LLP represents the workers. DLA Piper LLP and Wilmer Cutler Pickering Hale & Dorr LLP represent NYU.

The case is Sacerdote v. N.Y. Univ., 2d Cir., No. 18-2707, appellants’ brief 11/19/19.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com

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