A federal judge approved a $330,000 settlement in a class-action lawsuit alleging that Boston College mismanaged employee retirement funds.
In a release, the University maintained that the claims in the lawsuit are baseless and that it only entered into the settlement to avoid the cost and burden of further legal proceedings.
“Boston College believes that the lawsuit was without merit and that the University’s management of its retirement plans fully complies with the Employee Retirement Income Security Act,” the release reads. “BC also believes that had the case proceeded to trial, the University would have prevailed and defeated the plaintiffs’ claims.”
Under the terms of the settlement, one-third of the $330,000 will be allocated for attorney fees, with an additional portion covering administrative expenses. The remaining funds will be distributed to eligible employees proportionally, based on the assets in their retirement accounts between August 2019 and June 2024.
The settlement also mandates the University to hire a consultant to guide its investment committee on recordkeeping expenses and fund performance for the next five years.
Connie Sellers and Sean Cooper, both former University employees, filed the suit in June 2022 against BC’s trustees, the plan investment committee, and 10 “John and Jane Does.”
The lawsuit claimed that the 401(k) retirement plans BC provided for its employees faced excessive recordkeeping and management fees. It also argued that the investments themselves were imprudent and violated BC’s fiduciary duty under the Employee Retirement Income Security Act (ERISA).
“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.
The decision to settle came just months after Judge William G. Young—the same judge who approved the settlement—denied BC’s motion for summary judgment and ruled that the case could go to trial after a delay of almost two years since the lawsuit was initially filed.
“In short, this entire summary judgment exercise has been a monumental waste of time,” Young wrote in a memorandum. “And no one ought be surprised.”
Attorneys for the plaintiffs declined to comment.
Attorneys for the University said they believe the investment committee met its fiduciary duty and followed best practices in investment management.
“Among other things, the committee engaged in regular negotiations to lower fees and monitored the retirement plans’ investments and fees with the assistance of its independent advisor’s regular, industry-standard benchmarking, to continually provide BC faculty and staff with reasonably priced investments and services to best allow them to prepare for retirement,” said James Fleckner, an attorney for the University.