A federal judge on Thursday shot down USC’s attempt to compel plaintiffs to private arbitration, instead pushing forward the class action litigation related to allegations that the university’s retirement plans were rife with excessive fees and costs.
U.S. District Court Judge Virginia Phillips denied USC’s request to move the case out of federal court jurisdiction and into binding arbitration, despite a dearth of case law addressing the interaction between arbitration clauses and protections afforded plan holders under the Employee Retirement Income Security Act (ERISA). While that lack of guidance gave the judge pause, she made it clear USC’s request to remove the case from the court system was unpersuasive.
“Defendants would have the Court draw a line between (1) participants’ ability to release their right to pursue a plan’s claims and (2) participants’ ability to release their right to pursue a plan’s claims in court,” Phillip’s opinion reads. “Defendants, however, have offered no support for why this line should be drawn.”
The lawsuit, filed in August, claims USC retirement plan administrators breached their fiduciary duty to plan members. Plaintiffs allege that more than 28,000 plan members were swindled out of millions because USC overpaid for fees and services provided by third-party advisors.
The case was brought on behalf of plan holders by Jerry Schlichter of St. Louis, Missouri-based Schlichter, Bogard & Denton, who said in a statement that Phillips got it right.
“We are pleased that the District Judge has denied the defendants’ motion to compel arbitration and we are look forward to proceeding with the case,” Schlichter said. “Arbitration is not the right venue for ERISA litigation and we are delighted the court has recognized that.”
USC did not immediately respond to request for comment.
Deals & Dealmakers reporter Henry Meier can be reached at email@example.com. Follow him on Twitter @henry_meier.
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- The TV Judges
- Lawyers Work OT on Lawsuits
- Hueston Hennigan Could Be Booted From $160 Million Racketeering Case
- NMS Properties Booted as Rental Managers During Ownership Dispute
- Class Action Suit Against USC Targets Faculty and Staff Retirement Plans
- Disney, DreamWorks Antitrust Case is Dismissed
- Judge Won't Enforce $97 Million Verdict Against Dole
- Public Storage Defeats Shareholder Class Action Seeking $41 Million