Hughes v. Northwestern University

Upon remand from Hughes, 142 S.Ct. 737, Ct. of Appeals found that Dist. Ct. erred in dismissing for failure to plead valid claim in Count III of plaintiffs-pension plan participants’ ERISA action, alleging that defendant-plan fiduciary violated its duty of prudence by failing to monitor and incurring excessive record-keeping fees charged to plan. Plaintiffs pleaded sufficient cause of action, where they alleged that there were numerous record-keepers in marketplace, who were equally capable of providing high level of service, that record-keeping fees incurred by instant plan were excessive relative to record-keeping services rendered, and that defendant could have solicited bids for lower record-keeping fees and for consolidating record-keepers. Ct. rejected defendant’s contention that plaintiffs were required to plead existence of another record-keeper that would have offered lower fees, or that consolidation of existing record-keepers was actually available. Dist. Ct. also erred in dismissing Count V of instant complaint that alleged that defendant failed to swap out existing retail shares that had high expenses and poor performance relative to otherwise identical institutional shares. Ct. noted that plaintiffs needed only to allege that cheaper institutional shares were plausibly available and further held that defendant’s claim that instant retail shares were superior to institutional class shares did not require dismissal of Count V, since plaintiff’s contrary allegations were equally plausible.