Two former Boston College employees are suing the University in a class action lawsuit, alleging BC mismanaged their retirement plans.
“Here we have a case where two BC employees, on behalf of a class of more plaintiffs … are bringing a claim in federal court under the federal law, ERISA, stating that when they turned their cash over to these trustees to invest and to manage it on their behalf, the trustees did not meet their duty of prudence,” said James Mulhern, a partner and law clerk at Mulhern & Scott PLLC and former executive editor of the Harvard Law Review.
Connie Sellers and Sean Cooper filed the lawsuit, Sellers et al. v. Trustees of Boston College et al., against BC’s trustees, the plan investment committee, and 10 “John and Jane Does.” Their complaints claim that BC provided retirement plans subject to excessive recordkeeping and management fees and that the investments themselves were imprudent.
“Plan Participants allege that Boston College has breached its fiduciary duties under ERISA-first and foremost, the duty of prudence and the duty to comply with plan documents in violation of ERISA,” a Dec. 27 memorandum reads. “Plan Participants also allege that the trustees failed to properly monitor the Committee and the ten John and Jane Does.”
The Employee Retirement Income Security Act (ERISA) imposes a duty on the trustees to act prudently while investing retirement funds to ensure a quality plan for employees, according to Mulhern.
“One of the big ticket items when it comes to litigation about the duty of prudence is the duty to invest money prudently,” Mulhern said. “That’s really what they’re talking about. They’re saying ‘When you took our money as part of this retirement plan, you did not invest it properly.’”
On Aug. 15, BC filed a motion to dismiss the case. This motion was denied by Judge William G. Young of the U.S. District Court for the District of Massachusetts in the Dec. 27 memorandum decision.
Young’s memorandum decision referenced a recent Supreme Court case, Hughes v. Northwestern, where the court unanimously ruled that trustees in charge of employee retirement funds fell short of their legal obligations by “failing to monitor and control recordkeeping fees.”
Sellers et al. v. Trustees of Boston College et al. mirrors this claim, with plaintiffs accusing the trustees of causing “higher-than-average recordkeeping fees and investment management fees” and breaching their fiduciary duties, according to the memorandum.
Young wrote in his decision that the court was denying BC’s motion for dismissal “specifically because Plan Participants have alleged sufficient facts to raise a plausible inference” that the trustees breached their fiduciary duties.
Nora Field, BC’s general counsel, said in a statement to The Heights that Sellers et al. v. Trustees of Boston College et al. is one of hundreds of cases targeting university retirement programs.
“The recent ruling is not a finding of any wrongdoing on the part of the University or any of the people responsible for managing the University’s retirement programs,” Field said. “Rather, it is only a preliminary, procedural ruling that allows the case to move forward to its next phases.”
Mulhern said that there is a national trend of employees filing retirement funds cases against their companies’ trustees. But, he said the court’s decision to proceed with this case is uncommon.
“The willingness among courts who are hearing these cases to dismiss at this stage has sort of been heightening the skepticism they treat these claims with and therefore heightening the requirements and the hoops that therefore they’re demanding the plaintiffs to jump through. And I think surviving a [motion for dismissal] is a big deal.”
According to Field, the University’s retirement programs are representative of the excellent benefits BC provides to eligible faculty and staff.
“We are confident that the facts will show that the University administration diligently managed these programs in full compliance with the law,” Field said.
Stephen Churchill and Osvaldo Vasquez, the plaintiffs’ lawyers, did not respond to The Heights’ requests for comment.
Mulhern said the case will now enter a period of discovery in which the plantiffs’ claims are investigated more thoroughly. While both sides can participate in discovery, Mulhern said the defense’s discovery process will be more involved.
“Discovery is expensive,” he said. “Discovery is time consuming. In these sorts of cases discovery is also very asymmetrical in that there’s going to be almost no discovery that needs to be done by the plaintiffs. Almost all the discovery will be on the trustees side.”
The current discovery period could last for months before the case can progress, Mulhern said.
“They’ve now demonstrated to the court that their claims are at least plausible enough, that immediate dismissal is not appropriate, and that further exploration of their claims through discovery is warranted,” Mulhern said. “Given that posture, it’s gonna take some time and I wouldn’t be surprised to see this thing settled.”