Schlichter Bogard & Denton, a leading national law firm based in St. Louis, is pleased to announce that the United States Supreme Court has ruled, in a unanimous decision, in favor of Northwestern University employees and retirees in a case alleging excessive fees in their 403(b) retirement plan. This affirms that under the Employee Retirement Income Security Act (ERISA), the fiduciaries of all retirement plans, including 401(k) and 403(b) plans, have a duty to monitor continually every investment option in a plan and “remove any imprudent ones.” The ruling in Hughes v. Northwestern University also reaffirms Schlichter Bogard & Denton’s unanimous victory in Tibble v. Edison, the first 401(k) excessive fee case to be argued in the Supreme Court.

“We’re pleased that the Supreme Court has unanimously ruled in favor of employees and retirees in the Northwestern plan, as they previously did in our Tibble v. Edison case, the only other excessive fee case they have taken,” said Jerry Schlichter, managing partner of Schlichter Bogard & Denton, attorneys for the plaintiffs. “With two unanimous decisions, the Supreme Court has made clear that the fiduciary duty for plan sponsors is a serious one, and requires that each fund must be monitored, and removed if imprudent. This is a victory for American workers and retirees in every plan.”

With this decision, the Supreme Court is making a strong statement to sponsors who load their plans with hundreds of options that they risk breaching their fiduciary duty to their employees if they fail to evaluate each one separately and that they must continue to do so. The Court ruled that it is the employer’s obligation, not the employee’s, to make sure funds in the plan are prudent and not excessively costly. The plaintiff’s position was supported by briefs from the United States Solicitor General, the AARP and the National Pension Rights Center.

Schlichter continues, “contrary to Northwestern’s contention, fiduciaries don’t get a pass on having unreasonably expensive or imprudent investments in a plan just because some others are prudent. Plan sponsors also don’t get a pass on monitoring each fund by simply having a large number of fund options.”

This matter will now be remanded back down to the United States Court of Appeals for the Seventh Circuit in Illinois for further proceedings.

Schlichter Bogard & Denton, based in St. Louis, MO, pioneered excessive fee 401(k) and 403(b) litigation on behalf of employees and retirees. Since 2006, the firm has filed over 30 such complaints and secured 16 settlements on behalf of employees. In 2009, the firm won the first full trial of a 401(k) excessive fee case against ABB. In the aforementioned Tibble v. Edison, on May 18, 2015, the firm won a landmark unanimous 9-0 decision in which both the AARP and the Solicitor General wrote supporting briefs for the employees.

Jerry Schlichter and his firm have been referred to by federal judges as “preeminent” in the field of 401(k) fee litigation; as demonstrating “extraordinary skill and determination”; as making “a significant, national contribution,” having “educated plan administrators, the Department of Labor, [and] the courts” about fees and fiduciary obligations; and has been referred to by federal judges as a “private attorney general,” causing fees to come down by over $2 billion annually in the entire 401(k) industry.

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